Fixated on Price



As an Honours Economics graduate, I never in my wildest dreams thought I would end up as a Realtor.  But I must admit, this job has given me more hands-on experience with economic theory that I could have ever dreamed of.  It's not so much the basic economics of buying and selling, but how people react to things such as prices, incentives, and cooperation. 

For example, in university we studied a lot of theory on pricing and how it affects our decisions.  Theory is great, but it is incredible how different it is in the real world, where humans are admittedly not as stone-cold rational as an equation. 

Whenever I go to a listing appointment, the first thing the potential seller wants to know from me is the price I think their property will sell for.  If I was an investment banker or stock trader, I would tell them right away what the price will sell for.  That's because in stocks, you are dealing with a large quantity of the same product. One person's share of Apple stock is no different that another person's.  (for simplicity, we are not talking about different classes of stocks)

In the housing market however, it's a mix of the hard stats (square footage, bedrooms, bathrooms, past sales) and intangibles (view, area, personal connection, light).  Every single buyer that goes through your house has a price they are willing to pay for it.  If they don't really like your house, they would pay way less than asking.  If they absolutely fall in love with your house, they will sometimes pay more than asking.

What makes this so fascinating is that although the buyer decides the price, the seller is absolutely fixated on the price I estimate for them, as if I am unilaterally giving or taking money away from them right then and there.  Some sellers even choose their agent based on who gave them the highest estimate, as in us Realtors just arbitrarily decide how much your house is worth and that's the price it sells for.

Remember, there things sell your property; your property, the marketing, and the price. 

The seller has control over the property and the price.  The Realtor handles the marketing.

There are many benefits to having a Realtor help you.  Knowledge, expertise, and experience play a huge role in choosing your Realtor, and part of that involves advice on how to price your home.  But Realtors do not determine price.  Buyers do.  Realtors market your house (in many different ways depending on the agent) to try and give you the best possible chance to sell at the highest possible price.  That's our job, and our legal obligation to you.

When researching the best agent to sell your property, remember that an agent is there to market your property, not decide how much money is in your pocket.  That's your decision.