Top luxury home seller hang-ups

February 3rd, 2011 9:40am
REThink Real Estate

Tara-Nicholle Nelson
Inman News™

Q: Our custom, four-story English Tudor has 3,600 square feet with an average electric bill of $200 per month. It was designed to be energy-efficient, with high-end windows, steel doors, etc.

We also have about $500,000 worth of mature azaleas, rhododendrons, and other plants in the garden; it is a mini-version of the National Arboretum.

We are looking to sell and have had lots of listing agents who want our house to be like everyone else's, but we don't have 10-foot ceilings and don't want to change our ceramic foyer for oak floors. What is the best way to proceed? --Valerie

A: I feel your pain, but want to caution you about a couple of common home-seller danger zones I fear you may be circling.

First off, it's a major fallacy to think that the things you value will have the same level of value to prospective buyers of your home. While your energy-efficient design and amenities may be important to you, they are not upgrades of the highly visible, sexy variety that make buyers leap off the fence and make premium-priced offers on homes.

Your home might have some of these qualities, like curb appeal and a lush garden, but the chances that you will see a $500,000 premium on your home's price in proportion to what you may have invested in the garden are between slim and none.

Rather than arguing with agents about the value of these items to prospective buyers -- because agents' particular area of expertise just so happens to be specifically around what buyers will and won't pay for -- rational sellers take into account the fact that they selected the features and enjoyed them while they lived there, and move forward to price the property in accordance with the market's indicators of then-current value so they can get the home sold and move on with their lives.

The second danger with which I fear you may be flirting with is the negative or adversarial sentiment you seem to be feeling vis-à-vis the listing agents that have given you low estimates of what they feel your home is worth or should be listed for.

When you say these agents "want your house to be like everyone else's," I'm assuming you mean that they are telling you that your home is worth less than you believe it is and, when you press for an explanation, they are pointing out features of your home that are not in line with buyers' preferences or the most popular home features in your area.

I urge you to reconsider the sentiment that these agents "want" your home to have a lower value than your expectations. Remember, agents get paid on commission as a percentage of the sale price of your home. Accordingly, the more your home sells for, the more they get paid!

However, agents also expend a great deal of time and their own money marketing homes -- time and money they will never recoup, in many cases, if the home does not sell.

So, while agents would love for your home to be worth many millions, it is more important to them that the home (a) is priced realistically -- in line with its true market value -- to attract buyers; (b) is not overpriced, which is the easiest way ever to turn off buyers; and (c) sells.

It's one thing if one listing agent candidate gives a low estimate of your home's worth; it's another animal if (as you suggest) multiple agents give you similar, low estimates. The more agents think your home's value falls in a certain range, the more likely that range is accurate, like it or not.

(If you truly, deeply believe all these agents are wrong, put your money where your mouth is: Hire an appraiser, but decide upfront that you'll take their authoritative word for it.)

One more thing -- in terms of whether you "want" to replace ceramic with wood -- if you are serious about selling your home, you must immediately shift your thinking from what you want to do or live with to what will be the most attractive to buyers and whether it is a cost-effective change to make to your property.

If things go as they should, you won't live there before too long! Don't let your "wants" get in the way of getting your place sold.

In the final analysis, this conversation about what your home is worth is not about what the agent wants or what you want, for that matter. It's about what your home is actually worth to today's qualified buyers, as demonstrated by what buyers have recently paid for similar homes in your area, and what your priorities are -- selling the home, or getting a particular bottom line.

If you are seriously committed to selling your home, you need to manage your expectations and let go of the attachment bias (that's the name behavioral economists give to the sense that what you own is worth more than it actually is, just because it's yours!).

If you don't mind one way or the other whether your home sells, and only want to sell it if you can get "your" price, I would normally tell you to go ahead and list it at "your" price to test the market.

The problems with that are that (a) you can seriously impair your home's perception by buyers for the long term if you list it at an unrealistic price, setting yourself up for a lowball offer even if you do drop the price, and (b) most agents who are still in business won't let an unrealistic seller test the market at a too-high list price on their dime (and reputation). And I don't blame them.

Tara-Nicholle Nelson is author of "The Savvy Woman's Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Tara is also the Consumer Ambassador and Educator for real estate listings search site Trulia.com. Ask her a real estate question online or visit her website, www.rethinkrealestate.com.

                                                   
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