Real Estate Agents Misleading Sellers On Market Value

Realtors Over Inflating Market Value

Massachusetts RealtorWhile a Real Estate agent is telling a seller an unrealistic value for their home is as old as the whole business of selling Real Estate, it becomes more prevalent when you see markets showing some signs of improvement.

When home inventory levels start to drop, and there is any positive news in the Real Estate world, Realtors will prey on unsuspecting home seller’s who are ripe to believe just about anything they hear.

When there are fewer homes for sale, it is always a good thing for those that are considering selling their home. It is the simple economics of supply vs. demand. When inventory rises prices come down. When they go down the opposite occurs. The problem is Real Estate values do not change overnight. This is especially true when going from what would be best be described as a “buyer’s market” back to a “seller’s market.” Markets change gradually as market forces change.

Right now in the Metrowest Massachusetts area inventory levels have dropped to their lowest levels in years. Some Realtors have buyer’s, but there are just so few properties for buyers to choose from at the moment. Getting a new listing to sell is a treasure for a Realtor in this kind of environment.

In destination towns like Southborough, Westborough, and Hopkinton a beautiful home, priced correctly, that comes on the market in a popular neighborhood could easily have multiple bids. This, of course, is perfect for the agent who is listing the property. Who wouldn’t want to have buyer’s fighting over a listing? A seller certainly would be pleased as they are more than likely going to get close to their asking price or even possible over it!

This kind of real estate market, unfortunately, increases the odds that a real estate agent will lie about a home’s market value. Real Estate agents are consistently misleading sellers on their homes market value!

Lower Home Inventory Equals Over-Pricing

Oldest Real Estate TrickEven though I specialize in working with home seller’s, this type of market is one that brings about situations I do not particularly enjoy. While getting multiple bids on my client’s homes is something I would never complain about, other aspects of a better Real Estate market can be real troublesome.

At the first sign of an improving Real Estate market, you will get Realtors who will start giving seller’s values not based on comparable sales data but their opinion of what someone will be willing to pay because there are no other houses around for them to look at! This is a real dangerous game that almost always ends up disastrous for a seller. Improperly pricing a home coming out of the gate is one of the worst things you can do because it is real hard to recover from.

Just recently I had a Real Estate interview with someone who was going to be selling their home. They had three other Realtors besides me come in and evaluate the market value of their home. You would expect there would be differing opinions on value as it is not an exact science. Frankly, in my experience, it is not all that uncommon to see values given by Realtors to vary by $25,000 on any given home.

Obviously, if you are selling your home that is quite a bit of a difference of money going into your pocket. If you are a seller, you never want to leave money on the table. I certainly get that! What if I told you the value given by the Realtors interviewed varied from low to high by $75,000. Yes, you read that correctly.

In this particular instance, I happened to come in with the lowest value of the four agents. Fortunately for me, the seller was very astute. They have been following the local Real Estate market very carefully and before they ever met with a Realtor had a general idea of what the value of their home was in this market. They were looking for validation and could see the data that I provided where the value of their home stood.

Aweome Real Estate ServiceThe other agents had the same data but instead of looking at it objectively they decided to tell the seller something they thought the seller would want to hear. This is called “buying a listing” in Real Estate circles. It is one of the oldest tricks in the book and very unprofessional for a Real Estate agent to do. In fact, is against our code of ethics, but unfortunately, it happens all the time.

If you are an ethical Realtor, this is one of the most frustrating parts of the business. Part of our job, when asked by a seller to provide a market evaluation, is, to be honest, and not mislead them on the value. When a Real Estate agent has little or no business they, often times become desperate. Saying and doing things they shouldn’t become more commonplace. Selling your soul to the devil, I guess.

Often a seller will choose an agent based on the fact they don’t have a lot of business thinking they will get better service. The rationale is that the busy agent won’t have enough time for them. Rarely is this the case. Great Realtors who do an outstanding business have systems in place that allow them to sell numerous homes. There is a reason why people continue to hire them over and over again. Track records mean a ton in Real Estate!

A Realtor that has no business doesn’t sell for a reason! It is not sound logic to pick the person nobody else is hiring because they will do a great job for you. It doesn’t work that way. It is no different than wanting to have the best lawyer representing you if you happen to be accused of something you didn’t do. Hmmm, let me hire Bob, the lawyer because he has a tiny amount of business. I am sure he will do a great job. Why is it that Real Estate seems to be the only business where people equate a Realtor having all the time in the world on their hands as a good thing?

Other Real Estate articles worth a look:

Use these additional resources to get your home priced accurately. Make sure you always look at the data carefully when pricing a home. Data does not lie, people do! Keep in mind that a significant amount of real estate agents mislead sellers on market value just to land your listing.

About the author: The above Real Estate information on realtors misleading seller’s on market value was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at [email protected] or by phone at 508-625-0191. Bill has helped people move in and out of many Metrowest towns for the last 29+ Years.

Thinking of selling your home? I have a passion for Real Estate and love to share my marketing expertise!

I service Real Estate sales in the following Metrowest MA towns: Ashland, Bellingham, Douglas, Framingham, Franklin, Grafton, Holliston, Hopkinton, Hopedale, Medway, Mendon, Milford, Millbury, Millville, Northborough, Northbridge, Shrewsbury, Southborough, Sutton, Wayland, Westborough, Whitinsville, Worcester, Upton and Uxbridge MA

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  1. says

    Great post, Bill.
    And run from the seller who insists they don’t want to leave that “$75K” on the table after you present the facts.
    A. That “seller” can’t lose what they never had.
    B. It’ll cost them more in time, money & stress along the way.
    C. The inexperienced or unethical agent will lose their shirt in time & foregone income as well…leaving them with even more time on their hands.

    Good people of Metrowest Massachusetts: Hire Bill Gassett!

  2. holly budde says

    SO True! This is part of what gives our profession a bad name. I can list residential or commercial properties all day long. It’s my job to Sell them. Taking an overpriced listing is not only misleading, it’s a debt to my business and waste of time. I won’t. I go to all listing appt deciding if I want it or not. Sellers may not want to hear it, but when it expires with someone else, they tend to listen to reason.

    • says

      Holly – we share the same feelings on this topic. My only goal when I list a home is to sell it for the most money possible with hopefully the least amount of headaches. Realtors that list properties just to have something to advertise drive me nuts!

  3. says

    I was just thinking why would a Realtor inflate the value of a home? To have a potential seller list their property? It can be tempting for Realtors to do so especially in a market with shrinking inventory like we are experiencing.But again, as you have said, ethical Realtors should not succumb to this pressure.
    Great article.

    • says

      Ryan unfortunately this is a part of the real estate business that has been going on for a very long time. It typically becomes more prevalent when inventory is low and markets are improving. Some Realtors become desperate for business and will do whatever it takes to increase their inventory of homes for sale. It is a shame because the seller is the one who suffers.

  4. says

    I tell all my potential sellers that they need to be serious about selling. If they are going to start high and “just see” what the market will do, I am not the Realtor for them.

  5. says

    Unfortunately it is common in any market for an agent to promise a higher price for a home just to get a listing. They prey on the greed and naivety.

    What sellers need to realize is it is almost impossible to under price a home. Given just a little market time and good marketing a home that is under priced will bid up to fair market value.

    A wise seller should choose their agent based on their marketing abilities and experience then select a price for their home based on comparable homes.

  6. says

    Being honest with clients is very tricky and must be dealt with carefully… but ethically. If I can’t get the home sold for what they want, I won’t list it. It’s a tough fact that sellers can either realize ahead of time or months down the line.

    • says

      Eileen – I agree with you completely. You need to be honest and upfront with all seller’s and never fear that you are not going to lose out on the listing because you didn’t tell the seller what the wanted to hear.

  7. says

    Great insights, Bill. Thanks for sharing!

    I hope more agents start to take a lesson from you that being an ethical agent can actually result is MORE sales, not less, in the long term.

    Michael (Mike)

    • says

      Mike it would be nice to think that but there are always going to be real estate agents who are desperate for business. What we need to teach is the ability for sellers to recognize it and stop believing what they want to hear!

  8. KJ says

    As a seller, I am in a situation now where a realtor lied to me about the value of my home to get a listing. She then later did another CMA with a much lower realistic price, but did not tell me. My home has lost buyer interest because it was listed too high. My house has been on the market for over 40 days without one single showing. The broker is wanting to talk to me stating that it is just a miscommunication. I have proof in emails and 2 CMA’s that she lied. Help…where do I turn? I already found another place to live and am moving in 2 weeks.

    • says

      Kathy that is just awful but unfortunately just like any other business there are some bad apples in real estate. This happens far too often in my industry. What you should try to do is see if you can get the contract terminated. The best way to go about doing it would be to speak to the owner of the real estate company where your home is listed. You should explain that you feel like you were completely duped and feel like you need to go in a different direction.

  9. KCalvo says

    How do you as a buyer, know if the sellers agent has over inflated the price and is therefore rejecting on price offers? Thank You

    • says

      The best way to know if a home is not priced properly as a buyer is to have a buyers agent in your corner. A buyers agent works on your best behalf and will evaluate a property for you. Their job is to make sure you do not pay anything more than fair market value and will attempt to get you an accepted offer for less.

  10. says

    That type of market and hype also increases the likelihood of a listing agent representing a buyer in the sale. Then all kinds of crazy things happen.

    Buyers would do well to avoid the listing agent who willingly or enthusiastically give them any hint that it’s possible to represent two people who likely have different objectives.

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