Central Ohio Real Estate Market News

Listing agents solicit feedback from buyer’s agents after they’ve shown a property. Most agents do this via their broker’s automatic email feedback form because it’s easier than playing phone tag to get the agent’s comments.

One of the sections on this form is “what did buyer think of the price?” Too high? Just right? Too low?

Now, I’ve yet to EVER have an agent check the “Too Low” box! DUH!!!

I’ve also learned that agents check the “Just right” box ONLY when the buyer isn’t interested in the home.

Therefore, the “Too high” box is checked 99% of the time.

Should the listing agent and the seller pay any attention to the “Too high” comment? Well, that depends because it can mean several things.

• It can mean that the buyer is looking at homes that are higher priced than the buyer has been lender-approved to purchase. This type of buyer is hoping to buy according to THEIR budget without considering what the home is really worth. The buyer may only be approved for a mortgage no higher than $170K, but is viewing homes priced in the $180’s hoping to select a home where the seller may accept their planned low-ball offer. Thus, the home is priced “too high” for this buyer to buy. It doesn’t mean the price is “too high” versus comparable properties.
• It can mean that the buyer is comparing the absolute price point of non-comparable homes. Perhaps, a buyer is wanting to locate in a given area, school district, or community. The buyer may view numerous homes that have a price range gap of $50K-$100K difference. I had a listing where the buyers typically viewed upscale homes within a $100K range. My listing had upgrades/location/size/amenities of homes priced $60K higher. But it’s absolute price was being compared to homes priced $50K less with none of the benefits of the size, location, amenities, or privacy. Had the buyer’s agent analyzed the comps, the buyer would have realized that the price/sq ft was competitive (or lower) with other similarly appointed homes. I feel sorry for these buyers because they are comparing prices of apples-oranges not oranges-oranges and as a result, they are very likely to miss out on a “good buy”.
• It can mean that the buyer is interested in the home, but the agent wants to set the stage for contract negotiations to help the buyer buy the home at a lower-better price. Even if the buyer and agent think the home is “priced right“, the agent won’t reveal that in order to protect the buyer’s negotiating position. So the agent gives feedback that the price is “too high“, when in reality it isn’t.
• It can also mean exactly what it says … that the home is priced “too high“ when price/sq ft is compared for comparably appointed homes. The listing agent knows when this is the case, and will use this information in their discussions with the seller.

As a buyer, what should you do?

First of all make sure you’re comparing apples-to-apples. Calculate the price/sq ft and consider the total finished living space of the home and extra features or upgrades that the home has versus others to get a feel for the range of similar homes. After you’ve done that, then consider the absolute price within the nearby area or community. It may have a good price/sq ft but if it’s absolute price is much higher than others, then you must consider whether you want to buy the most expensive property in the neighborhood. Always think about RESALE when you buy.

Examples from my showings this weekend …

I showed five homes to a buyer over the weekend that illustrates this “too high” price very well. All the homes were in close proximity to each other - same general neighborhood and similar amenities with some differences. Three had finished basements. The price range was $299 to $350K. Of the 5 homes, the one with the highest absolute price ($349,900) had the lowest price/sq ft ($110). The lowest priced home ($299,900) had a mid-range price/sq ft ($122). The home with the highest price/sq ft ($144) was priced at $309,900. The price/sq ft range of the three with finished basements was $118-$144. The absolute price range of those three was $299,900-$337,500.

Knowing the general pricing range now will allow the buyers to better consider the amenity differences each home offers and they can use that info in deciding what a fair price is for the home they liked best. The next step for ME will be to do this same analysis for them on recently sold homes. That way, they’ll have all the info they need to make a good buying decision.

Bottom line, before writing off a home as being “too high priced“, do your homework - and have your agent do theirs - then decide what a fair price would be for the home you like the best.

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