by Eric Peterson
on Monday, November 11th, 2019 at 4:27pm.
In our neighborhood everybody talks about the ways in which home values are affected in the community. Maybe it is new apartments being built, sometimes it’s cars parked on the street, many people are concerned about cars being broken into, for others the hot button is landscaping and how the community is maintained.
When I talk to our neighbors the conversation often turns to some of these issues and how they are affecting our property value negatively. They talk about all the visible things that may potentially affect home value in a neighborhood.
In reality there is a hidden killer of home values that very few people know about. The hidden killer is the average agent that listed your neighbor’s house.
Let me tell you why.
Because when you get an average agent they either don’t know or don’t have the courage to make recommendations to better prepare a home for sale. The average agent only sells 1 or 2 homes per year. In many cases that means they don’t have an understanding and enough experience to make correct recommendations.
In other cases the average agent is concerned the owners won’t hire them if they make suggestions. Many home sellers want to hire a cheerleader and if an agent points out an item about the house that should be corrected they will hire someone else. A great agent will not be afraid to give you the truth even if it isn’t what you want to hear because they know the dramatic difference it will make in sales price.
When you get an average agent they likely do not have any marketing plan or understand how to attract buyers in today’s market. This often leads to a home sitting on the market for an extended period of time.
A final and perhaps most important killer of home value is when an average agent does not understand home pricing. Not only when the home initially comes on the market but being able to react to the market before it is too late. The result of not having a solid pricing strategy is a home is often listed unrealistically high, stays on the market for too long until inevitably the seller gets desperate and accepts an offer well below market value.
What happens next is buyers of future homes look at those comparable sales and assume that is market value. Buyers don’t give you the benefit of the doubt and say “that home sold for $40,000 less because the seller didn’t spend $1,300 on a handyman, do any type of home staging, didn’t have a marketing plan to attract a buyer and got desperate and accepted a low ball offer.”
In addition, these low sales cause appraisal problems throughout the neighborhood. This week I will be meeting with appraisers at 2 different home we have under contract. In both cases there have been 2 similar homes that sold well below what they should have. Somehow I will have to come up with a believable reason for why the other homes sold so far below the contract price for our listings. We always provide the appraiser with all the information about the property, recent sales and reasons why other homes sold so low.
Unfortunately, appraisers look at things as black and white. Appraisers don’t care about all the things my neighbors think affect market value. Most importantly they can’t make an adjustment for the seller having an average agent. Appraisers are primarily going to be looking at the sales prices in the neighborhood.
Are you are concerned about the value of home’s in your neighborhood? If so you should be concerned about all those other items about the neighborhood you can see. You should also be concerned about the approach your neighbors take when selling their home and the agent they choose to represent them. Encourage your neighbors to hire a great agent for their own benefit and also the benefit of the entire neighborhood.