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Ted’s Monthly Rant – November 2021

How Overpriced Listings Can Lead To Bad Decisions

Whenever I plan to meet with prospective listing clients, I always send them a list of the last ten SOLD comparables within a specific search criteria (price range, size, geographical area, etc.)

Why? Because I want my clients to have ample time to review every detail on each sold listing before our meeting. This is a reality check in most cases, clearly demonstrating that the SOLD prices tend to be significantly lower than the prices on current active listings. 

I call it reality vs. fantasy.

Overpriced listings are so much more common than most people realize! For example, there’s one nearby me right now that is overpriced by at least 20%. And, when you’re talking in the high hundreds of thousands of dollars, that’s a massive amount!

Here’s my prediction for this particular house. First, it will sit on the market for several months, and the price reductions will start coming, one after another. It’ll get listed, and re-listed, and re-listed again. Then, sometime next spring, it will finally sell for around $200,000 less than the current list price. And guess what? The agent will then claim that it sold for 98% of the asking price (the last price it was listed for). This is one example of how Real Estate statistics can be highly misleading, but that’s a topic for another day.

Now, what if you were thinking about listing your home today, and you used this grossly over-priced property as a comparable? You see the problem?

But why are there so many overpriced listings on the market? There are many reasons, including inexperienced agents who don’t know how to correctly price a property or agents who will say anything to get the listing and then work on getting the price down later. And there are plenty of other reasons too, but this is also a topic for another day!

So, what is the point of this post? Simple: You cannot determine the correct list price of your home by looking at current UNSOLD active listings. If you do, you’ll be setting the price of your home based on the FAILURES – the ones that haven’t sold!

Instead, you need to look at the successes, the properties that have successfully sold.

What I find is that if I send my clients the correct information, and if they look at that information as objectively as possible (there’s always some level of natural attachment to their own home), nine times out of ten, they can figure out a competitive price for their own property, which dramatically increases their odds of success.

If you’re interested in receiving a list of TEN sold properties that are comparable to yours, just drop me a line, and I’ll be happy to send it!