If you own a lakefront or lake access home in the Lake Geneva market, you’re well aware of the increased broker competition in our area. New agents, new brokers, new this and new that. The old ones, they’re here too. Everyone is an expert. Everyone a top producer. Everyone won an award at their company party. They’ve got the photos to prove it. Facebook, photos. Instagram photos. Best Use Of Technology To Showcase Expertise. That’s a nice trophy, fella.
The state legislature is about to pass a bill to make it easier for developers to develop. Life is hard on these developers, what with the annoyances of existing zoning laws. They should be easier. More homes, more agents, more of this and definitely more of that. The market is hot. So hot. Hot Hot Hot. That’s what the ad says. Name your price. I mean it. Trust me, I just won this Top Producer Award for Most Residential Sides On The South Side Of Main Street During The Second Half Of January. Surprised you didn’t know that. Look for picture of the trophy in my upcoming newspaper ad.
Name Your Price. You think I’m kidding? Go ahead, seller. Name it. I’ll go get it. Your house is worth $2.8MM but you want $3MM but you’re not actually going to sell unless you get $4MM? Let’s list it! You must have seen my most recent press release, right? The one I wrote about myself and the incredible awards I won at the mid-February meeting? Well, trust me. Name your price and I’ll get it. I’ve been selling lots of houses for many, many months. I’m certain I can get that number for you. I’m super enthusiastic! Can’t you tell? In 1992 my senior class voted me Most Bubbly.
It’s February now, but it feels like March. March feels like April, sort of. It might snow tomorrow, but that won’t matter. The market is hot and sellers know it. Buyers know it, too, and they lament the heat. But really they don’t. Because many of those buyers who are buyers now where buyers in 2013 when you could have bought anything anywhere and made money on it. Except maybe Michigan. Buyers buy when they feel motivated by competition, and sellers list higher when they feel as though they have none.
Today, the market is full of promises. Brokers will sell your house for the highest possible dollar, guaranteed! Sellers enjoy this attention, and there’s nothing that makes a seller feel more pleased than encouraging a listing competition for their home. Here’s how that works. Invite three or four brokers to your house. Tell each of them that there are others coming after they’re done. The brokers know this, and now they know there’s competition. Competition to list the house. Competition to come up with the highest list price possible. Any seller likes a competent, skilled broker. But you know what sellers like more? Super high list prices.
The problem, of course, with the super high list price (SHLP) is that the SHLP is actually detrimental. Sure it’s tempting. Sure it seems like a wonderful windfall. Buy Bitcoin at $19,000 because it’ll be $50,000 by the end of the month! And certainly there’s a slim chance that the SHLP finds a sucker (Zillow buyer). If that happens, congratulations, you win. But what if that doesn’t happen? What if you list the house and many months later you’re still the owner? What then?
I’ll tell you what happens then. Your house sits. You reduce your price a bit. Then you reduce it some more. Then the market stops paying attention. So you reduce again. And again. Quickly you’re below the list price that was initially suggested by the skilled agent, the one who visited on that Saturday before the other agents. You’re below that price and yet the market doesn’t respond. What to do? Red carpet open house? Balloons on the yard sign? A second yard sign? A plea on Facebook?
The answer is another reduction. This is the cycle of the seller who chose to shoot for the moon. And this is the mistake. It’s so tempting to make it. The outcome has so much potential, yet when the dust settles and the lame agent has won your listing, the only thing left to do is wait. You’ve missed your window, and now the market is going to punish you. We manage risk in our investments. We manage risk when we drive down the road. Let’s manage risk when we list our houses as well. How?
Hire the agent with the best track record in your individual market segment. Demand a thorough market analysis. Understand your sold comps and current competition. Understand the drawbacks of your property, not just the benefits. List the house for a price near the top end of the expected sales range. Sell your house. Be happy.