As the market is normalizing and beginning to balance, having an experienced broker who knows how to work in a cooling market is paramount to success. We’ve put together a general guide to understanding what a broker does and how to know if your broker is doing what they should for you.
One of the most important factors in selling your investment is deciding on a price that can be validated and justified. Your broker should be able to price your home on three factors:
- Active Comparable Properties
- Pending Comparable Properties
- Comparable properties with similar materials/quality of finishes
Brokers also have access to additional market data and statistics for your area. Ask your broker why they chose the price point that they have, and they should be able to back-up the price with competitive market analysis.
KNOW WHEN TO ADJUST PRICE:
Since the market is starting to slow, people tend to panic and think that prices are going to drop. A good broker knows when a price should or should not be dropped. Ideally, if your broker has done their research, your home should be priced correctly. However, the housing market can change quickly, and sometimes a slight drop could help move your investment quicker. Keep in mind a slight drop should be all that is needed, erratic price drops and drastic changes in home prices cause instability in the market. Your investment does have a legitimate value, that can be justified with facts, a good broker will not be scared by a little extra time on the market or a couple of low-ball offers. Recently we reduced the price on a couple properties but only for these reasons:
- The home was priced on one single comparable that justified the price.
- Newer listings were priced lower, making our properties look about 5% higher than the new comparable listings. A slight drop brought our property in range with the current trends in the data and sales.
- The newly adjusted price was still at the top-end of the comparable range, however, our product had a complete remodel with all new major systems and upgrades. Potential owners would have little to do on the property over the next 10 years – saving money on upkeep.
GOOD BROKERS KNOW THEIR PEERS
It’s important to remember that there are two brokers involved in each transaction. When you are selling your investment a good broker can recognize a good offer vs an offer that is a shot in the dark. With newer brokers adjusting to a normal market, it’s common to receive very low offers for properties that have been on the market for longer than two weeks. Low offers does not mean that you’ve priced the home too high, it could mean inexperienced brokers making unjustified offers. An experienced broker should negotiate on your behalf and recognize invalid offers to know when you need to adjust your price.