A real estate agent’s primary focus is winning the contract to sell a property you want to put on the market. Getting your business is the hard part; in comparison, selling your home can be easy.
So, bearing this in mind, who should you believe when you ask agents to assess your property’s value? You’ll certainly get a variety of answers and price ranges, and even though you’d expect agents’ opinions about the market value of properties to differ a bit, particularly for unusual properties or those in rising markets, how much of this is agent’s genuine disagreement and how much is part of the sales tactics?
For a start, going with the agent who gives the highest estimate (in some states only licensed valuers can give a ‘valuation’) could be a mistake. While the national industry body says it’s misleading and deceptive conduct for agents to mislead prospective vendors about their property’s estimated selling price, agents told us the exaggeration of property values to sellers is a practice that’s still ingrained in the industry.
And CHOICE’s spot-check of agents’ quotes (called a 'shadow shop') found a wide range in the estimates some agents gave for the same property. In some cases, participants in the shadow shop felt the overestimation of property values was to get their business. In other cases, if the shadow shopper had sold at the lower range of values suggested by the agents, they would have made a very costly mistake.
Please note: this information was current as of September 2007 but is still a useful guide to today's market.
Range of estimates
Our shadow shop included 10 volunteers, all of them planning to sell a property, from various states and territories. Each spoke to three or more real estate agents and received market value assessments from them.
In most cases, different agents provided different estimates for the same property. The results table shows the results, and here are some examples in more detail:
- Lisa felt that the highest quote she received (which was $150,000 above the lowest) was an attempt to get her business with an unrealistic quote. “We feel he may have overpriced our property, possibly to gain the contract,” she says. “A number of the same agent’s properties of a roughly comparable standard in the area have been priced high, haven’t sold, and the asking price has been reduced after a few months.”
- Sheryl received an estimation of $350,000 from one agent, and “low to mid 400s” from another. The property was advertised at $420,000 and eventually sold for $398,000.
- Lizzy received appraisals ranging from $200,000 to “$320,000 to $340,000” — the highest estimation was between 60% and 70% more than the lowest.
Selling your property can be a very testing and emotional time, so you really need to have your wits about you. In this report we tell you how to get an accurate market value assessment and pick a good agent.