8 responses to “Why is there such a wide price range in home values between real estate agents?”

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  jeanette F August 7th, 2009 at 15:02

  Melinda

  berserk

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  src50 August 7th, 2009 at 22:12

  Mario

  Those are not “appraisals”, just subjective market evaluations.

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  Floydian Trooper August 8th, 2009 at 03:01

  Tara

  It might have a lot to do with honesty. With current market conditions it is in reality probably closer to the 60000 dollar mark. That was probably a realtor that was really going to help you sell it and quick. The ones that are hitting 195000 are probably going to post it high and leave it on the market longer while slowly lowering the price until you have a taker. I’d maybe go with the one that is in the middle of that.

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  realtor.sailor August 9th, 2009 at 08:06

  Dolores

  The should be providing you with a CMA – competative market analysis. This will show you the price (listed and sold) of comparable homes. 60 to 195 is too big of a range. Talk to more agents.

  realtor.sailor

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  goz1111 August 9th, 2009 at 23:31

  Adam

  In this current market down turn it would be very hard to get comps, since home prices are continuing to spiral downward, so a house that may have been comparable 3/08, does not equate to you getting the same value in 3/09 since the market is still heading downward,

  Then you combined the fact builders are consistently discounting, so a person who purchased a home in a new development in say 8/08 would most likely find the same house by the same developers is now 25% less if you buy in 2/09

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  flustered_homeowner August 11th, 2009 at 03:23

  Clyde

  The high value was probably a realtor willing to hold out in hope of selling for a higher price and get a larger commission. The low estimate was probably a realtor who just wanted to make a quick and certain sale. They are not interested in what’s good for YOU, they are interested in making the most money in the quickest way for THEM.

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  I Buy And Sell Houses August 12th, 2009 at 21:19

  Teresa

  There shouldn’t be that degree of variation. There’s no absolute rule, but the figures generally should be within a range of about 10%-15%.

  There may be a couple of things going on.

  First, with all the recent foreclosures and short sales, some agents don’t know how to deal with the variations. For instance, let’s say that 5 houses sold in your neighborhood in the past 90 days. Four were “conventional sales” at $190,000-$210,000. But one was a foreclosure, in bad condition (mold, etc.) that the bank got rid of for $60,000. Maybe it needed $60,000 in repairs. Many agents would give you a number in the higher range–like $195,000. Some might give you a much lower number, based on that one foreclosure.

  Again, though, those numbers really are extreme. If other homes were selling in the $200,000 range, even some property with a lot of damage and mold–assume $60,000 in rehab–really ought to sell for around $100,000.

  Another possibility: There aren’t good comps. In a neighborhood where most of the houses were built around the same time, and there’s little variation in style, it’s easy to come up with comps. But in rural areas, or areas of custom homes, it’s sometimes more difficult. Then it becomes an art as well as a science to come up with valid comps.

  Another possibility: One agent may have been trying to “buy” your listing with a really attractive, juicy, high number. It’s not ethical, but it sometimes happens. Maybe an honest range would be $140,000-$160,000. Some agents might be tempted to offer significantly above that in order to get your listing. (That still doesn’t explain the low offer of $60,000, though.)

  Another possibility: Was the low offer from a real estate agent? Investors will offer significantly less than fair market value. For example, if your home actually would sell for $195,000 today, an investor would generally offer you no more than $125,000 or so. (The formula is: Maximum Allowable Offer=(After Repair Value * 0.65) – Repair Costs.

  What you really should do is look at the comps the various agents used to give you their estimates. The comps should be homes physically close to yours (within half a mile), approximately the same size, that have sold within the past 60-90 days. It’s possible the agents have already given that information to you; I do when making a listing presentation.

  One other thing that can account for some variation. After doing the comps, an agent will have a range. Let’s say between $165,000 and $195,000. At $195,000, it might take 6 months to sell your home. At $165,000, it might sell (even in today’s market) in just a few weeks. You have to know (and, thus, ask the agent): “At this price, how long do you think it’ll take to sell my home?” Both figures are OK so long as you understand the time frames involved.

  Final Recommendation: Take a look at the so-called “comps.” Figure out which ones really are comparable. That won’t give you a perfect number, but you’ll be able to quickly determine a general range, and thus which agent grossly over- or under-estimated the value of your home. Like I said, a variation of 10%-15% is pretty normal. The variation you encountered isn’t.

  Hope that helps.

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  WENDY B August 16th, 2009 at 04:42

  Doris

  Firstly in the current market, nobody really knows how much property is worth, and the only way of finding out is by marketing it and seeing what people would be prepared to pay – “sticking your toe in the water”.

  However, in more normal times, people can get some idea by ascertaining what similar properties in the area are selling for, and then maybe adjusting for particular items such as whether it is near a good school, main road, good or bad transport, nice view, overlooked, near a factory and so forth. But you should be aware that some agents will suggest a higher price than they anticipate you would actually achieve just to get your instructions. They might put it on at that price and then cynically reduce it after a couple of weeks, saying they’ve had no buyers and that you should be more realistic (even though it was them that suggested the high price in the first place).
  Sometime, if an agent doesn’t know the area well, they might simply be mistaken. Others might want to sell at a low price in order to get a fast turnover and make a quick profit.