Pricing your property to sell in any market. What’s a BPO?
by Scott Robinson
A “B.P.O.”. is a Brokers Price Opinion. Banks now a days like to use B.P.O.’s to ascertain value of their inventory before they list it with an agent in the M.L.S. (Multiple Listing Service) for sale. B.P.O.’s are much cheaper than an appraisal (Usually done by and agent for free hoping to get the listing.)but can be very accurate. Sometimes the bank will use three agents B.P.O.’s to make sure of the value.
Pricing your home to sell in any market. The best way is to hire an agent that knows what he or she is doing, you can trust and do just that, trust them and let them work their magic. It usually takes a few years to learn the ins and outs of adjustments and neighborhoods, larger vs. smaller lots and houses, valuing a view… etc.. So choose carefully. Some agents will tell you a high price just to get the listing. So make sure whatever you are told is backed up by comps/facts, that you understand. And be sure to be patient and give the agent all the time they need to make things very understandable for you. You should never agree to or sign something you don’t completely understand and are comfortable with.
It is very important to time the market properly and price your home accordingly. Generally the best time of year to list your home is the first of April. Normally the beginning of the hotter time of the market, Spring. Like I often say you can’t really time the market, but you can pick the best time of year, if you can plan and are lucky enough to choose.
It takes years of training and in the field experience to become a licensed appraiser or even to do a good B.P.O. so please don’t think you can outguess a real pro. Let me or your agent share the comparable listings with you. I/your agent will explain how each property compares to your property and what adjustments are made to come up with a value of your property.
I can’t tell you how many times I have taken my few months to thirty years of experience and training (I taught at Pierce Jr College for years.) and hours of specific work on a valuation to give a value and they tell me I am $100k to low?????? And “You are not giving your house away!!” (I really have heard that line a thousand times.) So if I am nice enough to take this overpriced listing, after about two weeks, I am almost guaranteed to hear my marketing sucks, why are there no offers. Well if my expert opinion had meant anything you would likely be in escrow by now. So make sure you have all the facts and understand your expert’s opinion.
I really am on your side. When I do a good job and you like me, I will get your referrals. That means a lot to me since I am a long term part of the business. But if you don’t believe me? it won’t get priced right and it will never sell, and you will tell everyone my marketing sucks. In most cases there is some “learning curve’, the time it takes you to start really believing me, and that’s when things start to happen. So most of the time it just takes a little time for people to really understand what’s going on. I wonder why? It took me years and I need them to get it in weeks. That’s why I like the idea of the this blog, it’s all here in writing. Even better if the friend that sent you to me had me happen to them, but life isn’t always that easy.
I could really write a book on that one. I guess I will do a blog at least. I have seen buyers pay fifty thousand more for a worse house, because they wouldn’t give up $2000 or so in negotiation on an ego issue and often lose the house of their dreams. Seller’s with buyers spending hours and not writing the offer because it was overpriced screaming I won’t give my house away. Well when the market dropped more than a hundred thousand for the house they did end up giving it to the bank. So if you aren’t willing to look at the facts/comps I present, and listen reasonably to my answers to your questions. Please hire someone else, and when it doesn’t go so well, please remember who told you the truth. In a good market or booming market inexperience can cost you tens of thousands, in a crashing market it can cost you hundreds or worse. I hope someday you will let me be part of your team, because I care about you and hate to see things like that happen.
So if I price your house to low what will happen? Well truth is it’s not a bad tactic to get top dollar for your property??!! List it low and don’t accept any offers for two weeks. Agents and educated buyers know the market. So when a real good deal comes up, it causes excitement. Excitement can cause a bidding war and high profit. You have to know what you are doing though. Many emotional sales fall apart when the air clears and the appraiser and or home inspector shows up. So it’s critical to have an agent with foresight who will say demand a non refundable deposit(Now a little harder to get than in the past.) on the property to show who is really serious about buying the property, and other things to create a contract that will be difficult to get out of when things cool off. A good tactic in a really flat market.
Bank/REO listings use listing low to cause excitement often. I tend to like to price it properly and take about two weeks to sell at a fair price. Truth is an appraiser will be valuing the deal and if he doesn’t give his approval the deal generally won’t close. So why not just do it right the first time?
This business is more about referral’s, then sales. If you put it any other way you lose. I admit many don’t get it. If I make a mistake valuing a property I am helping you buy, the appraiser will be right behind me with a lot of truth, making me look real dumb. If I list too high I get the listing but it won’t sell till I get the price down. Not fair to the seller.
I once knew a C21 agent we can call Greg. He was the top agent as I remember it in the country! His thing was to tell the owner/potential seller the highest price he could without laughing. It’s a long story but I went to work for him to find out his secrets. I was very disappointed. After listing high, a weak tactic, he would harass the people constantly to lower the price. I am really amazed this worked for him, and feel bad for all the people he pushed around.
The best way to sell your home is to find a place to go (May sound strange, but if you have no place to go, it is real hard to get there.). Then “time the market” if possible and price it accurately without your ego involved. I have sold a few brokers homes because they didn’t want to be involved. As I have said before, to price your home properly you must hire an agent you can trust, who will do the job right for you.
You must know the market you are in. In a raising/hot market it is generally very easy to sell your property, by “hot market” we mean one where prices are going up and there is a lot of money out there financing it. Price it to high and wait a short time and it will sell. But this is the only time that pricing high could ever profit you and it better be booming, because pricing high is dangerous. Even in these markets agents see your house has been on the market for a while and assume something is wrong with it and don’t show it till the price gets very attractive. I really like doing it right the first time.
I wonder, after seeing the work some agents do if the client ever looked at the actual work the agent does. Do they look at the listings an agent has in the MLS and read the wording they use or judge the quality of the photo’s marketing their listings. If you think “reduced thirty thousand, now priced to sell” will get top dollar and not express desperation, please help me. Do they keep track of how long it takes for an agent to call back or how often they answer? These things are critical when you are hoping someone is doing a good job for you.
If you price it too high in a flat or falling market you will generally lose a large amount of money. One March I met a client who showed me a home that needed a bit of work. I pointed out that I felt the market was going to fall in the near future and that they should fix up their home and get it on the market in the next few weeks or the market would drop and they would lose money. I am not sure but I think I told them it was worth about $730.
She didn’t listen to my timing concern but loved my fix it ideas and went to work. A year later after many visits helping her with her ideas to remod., she called me to list her home. When I told her $699,00. she cried for a minute and looked at me and told me I lied to her!! I tried to point out what I told her a year ago and she just didn’t get it. So she ignored my advice and listed it for $725,000.
I watched many real buyers spend hours and never come back. As I understand it they sold a few years later for around $500,000. That’s a horrible loss, due mostly to not taking the advice of the person they hired to trust?? and a falling market.
So if the market is falling and you price to high. Sooner or later you realize the agent might be telling the truth and lower the price. The problem is, that by the time you lower the price, it’s gone down so much that you are still way high unless you take a really large drop. The sooner you get it the sooner you will sell. Or if you can wait out the market. In L.A. I believe it will always come back and boom again.
If we list your home at $750 when I tell you $699,000. . If we sell it at $750 it won’t appraise, because if I can’t find the comps the appraiser won’t be able to either. So if it’s a raising market you probably will sell at some point. But if it’s a flat market or falling market, in about two weeks you will start telling me how to market your home…. So listed at $750 and I suggested $699 it sits for a month and doesn’t sell. The price now slips to $689 and seller agrees finally to go to $699, but now what you originally suggested it to high and if you don’t do your home work and convince the seller it will just keep getting worse. That’s why some listings sit on the market forever.
The truth is I know how to market a property and get top dollar for it. I love what I do and if you let me, I will do it. But if I have to overprice a listing and deal with a seller who knows more than me, we are in trouble. I have to over come the sellers learning curve. So buyers come and sit there for hours loving the house and don’t write an offer and the seller wonders why. When I call I report they bought something else, we lost a perfect buyer.
So in a flat market it won’t sell and if the market then lowers…..
In a falling market it can really get sad. I suggest you list at $699,000. Why that price? Because I took my two months to thirty years of experience and three or four hours of my time to come up with that number. I know you are probably talking to other agents and if they are higher may get the listing. I also know if I get the listing and it is too high I will have to spend most of my time working you to get the price down and I don’t feel that should be my job ( I should price it right in the beginning.). Doing my job with marketing/other agents/solving problems. So I come up with what I think is absolutely the highest possible number I can list and sell it for, really. And when I bring my comps and other proof and obvious experience, I am often told to list it about fifty to a hundred thousand dollars higher???? Guess what happens.
The good news is that sooner or later the learning curve works out, with a little patience and we get the deal done. I really love to see the smiles on people’s faces as they get it.
Your comments and questions are really appreciated. Please email me and I will try and do a good job for you. Promise.