Question:
“I’ve heard you say that you can’t look at the asking price of a home as an idea of value. But those prices were set by a professional real estate agent. So they must be fairly accurate, don’t you think?”
Answer:
Nope.
I’d like to think what you said was true. But reality is another story altogether.
Agents very often list homes at a price that’s off the mark for many reasons. Here are a few:
- Seller insisted on higher price
- Unethical agent inflated price to get listing
- Another unethical agent inflated the price, so the actual listing agent agreed to start high to satisfy the seller (really a version of #1)
- Agent was not confident in pricing skills so suggested a high price to be “safe”
- Agent and seller had to start high to satisfy a third party, be it a lender on a short sale or a court-ordered price
- The home was unique or the market was fluctuating, making the home truly hard to price (rarely the case)
- Simple human error
