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10/15/12

When Agents Can Undermine Clients' Best Interests

Q- Recently, I asked a prominent real estate agent in my area about possibly listing my home for sale.  He went through my home and quoted a listing price.  Before I could say much, he indicated that if this price wasn't satisfactory, he would not list my home.  The price seemed lower than what I had anticipated but there was no room for discussion.  Is this normal real estate practice?

A - Absolutely not!

The agent's responsibility is to provide the client with information so that the client can make the appropriate decisions.  The listing price is the client's decision not the agent's.  If, however, the client picks a price that is outside the normal market range, the agent can certainly decline to list the property.

There are agents who make it a practice to list low so that they can obtain a quick sale.  This kind of practice can have a high impact on home values in a closed community such as a condo or townhouse complex or a mobile home park -- particularly when such an agent is the dominant agent in the complex.  Sales in this kind of community will often reference the lowest sale price in the complex and the trend to lower prices begins even though prices in a comparable complex may be considerably higher.

Some agents list low so that they can obtain a quick sale with minimum marketing.   This often applies to real estate agents who offer discounted fees.  The discounted fee only allows for basic advertising for short periods of time.  Such agents also encourage you to accept offers presented without spending time on evaluation.

There are also agents who are reasonably successful and use this success in a highly dominant fashion.  They demonstrate their success by dictating  -- price,  price reductions,  offers to be accepted and so on.  They utilize their success in the real estate industry and sometimes undermine their clients' decision making -- thereby making even more sales but at lower prices.   Such a practice robs the client from obtaining the best price for their home.  To obtain the best price for the client is a responsibility of the agent.

Fortunately, most agents look after their clients' best interests.  So don't get discouraged, interview 2 or 3 other real estate agents and ask for a Comparative Marketing Analysis.  Be sure you see the CMA in context of other properties listed and sold in your area.

For more information about CMA's -- you can refer to my book 'The Real Estate Process: Pros Discuss Buying and Selling Your Home' - starting on Page 104.

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