gabriel palo…, Real Estate Pro in Pompano Beach, FL

Suggesting a price to offer on listing is it like giving advice? How do you avoid it?

Asked by gabriel palotas, Pompano Beach, FL Wed Nov 2, 2011

Suppose they take your professional advice and sue you with proof that your advice for price was either a too low or just too high . Listing agents take this seriously how do they overcome this dilemma? Do they take it with a grin or just walk on ?

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Alma Kee, Agent, Tampa, FL
Wed Nov 2, 2011
Great question!

Ideally a Seller would be prudent to hire their own appraiser and then "shop" for a Realtor based on his/her success and not be skewed by a possibly erroneous opinion of value. I've actually gotten sellers to go ahead and pay for an appraisal to determine their asking price and it has worked very well. It's a great way for a Seller to get a "reality" check. It may almost be worth the expense for a listing agent to pay for the appraisal upfront but also not select the appraiser so there is no suspicion of the agent selecting a certain appraiser to come it at a lower value to allow an easy sale.

All the best,
2 votes
John Bennett, Agent, Orlando, FL
Wed Nov 2, 2011
If I am not in error, is not an appraisal also based on cost to replace at present days values? I seem to have seen that - am I crazy??? As near as I can tell the other part of what they do is just as we do as Realtors, a CMA. Question is, who is more in touch with values in current market????? I would give that edge to the appraisers as they are not caught up with Sellers, and if facts be on the table, they are better informed, as this is all they do, while we Realtors do many different things each day.
I find appraisers a valuable tool, and to have a $300 to $400 cost to get a second, dispassionate option is money well spent. At the end of the day, an appraiser is going to do for the lending bank, might as well
get the bad new out early.
And, I get to CMA with this third person look at the property.
1 vote
Lynn Brock, Agent, Sarasota, FL
Wed Nov 2, 2011
Gabriel, you have received some good suggestions. Alma has made a good point about suggesting an appraisal. Keep in mind that an appraisal is based upon historical information and that the comps selected by the appraiser are subjective. Time, market conditions, available inventory and property condition may have changed since the appraisal, especially if six months have passed.

In the past, most comps were aged 90 days or less.

As a listing agent you provide the most recent and relevant comparable information. As a realtor you have simple computerized analysis through the MLS, you have public records of the neighborhood, and resource support of Fannie Mae and Freddie Mac online guidelines. Providing the most recent sold data (solds within 30 days of closing) is best.

If your buyer asks you for a price to submit an offer, you could counter with providing them with recent sold comparables (in the neighborhood) , the subject property's recorded note (amount of mortgage owed) and tax sheet. Discuss this information with them and allow them to suggest a number to submit. If you are aware that market conditions place the property in high demand you can verify this by dom as available through MLS.

Call the legal hotline and ask about taking an overprice listing and consequences. I did and was surprised by their response. Good luck.
1 vote
Antonio Vega…, Agent, Saint Cloud, FL
Wed Nov 2, 2011
I show the comps of what has sold, what has expired and what is on market. Then suggest a price within the lowest highest 50% of what has sold, but the lowest 50% of what is on market. Sellers often ask to go hi, so you negotiate to make reductions at regular intervals after that. Withing a few weeks the price is where i would think we should had started, but the sellers are happy I listened and im good they reduced it. Win WIn. ANd like Ron said, we don't have to accept a listing. If the seller has the wrong attitude, don't take it.

Alma , Im trying to give you the thumbs up, but the system is prevent it.

Tony Vega
Charles Rutenberg Realty
1 vote
Lila Lopez, Agent, South Miami, FL
Wed Nov 2, 2011
Good Afternoon Gabriel,

The information that Alma has provided is rather accurate. I think having the seller get an appraisal does give them some additional information for them to consider. As realtors we all know just how placing a listing on the market is vital to having it sold for the highest amount possible for the owner in the shortest amount of time possible as well. As John has indicated, the job of an appraiser while more in depth than a market analysis that we as agents can provide, truly at the end of the day is his/her professional "opinion" of what the home is worth. We have all seen where appraisers either undervalue or over value property, and they are the ones that the banks truly rely on for pricing on homes. Appraisals done where there is no contract don't always reflect the full market value, although they do come in pretty close, but the reality is, that the value/price of a home is how much a buyer is willing to pay. Some appraisals do not provide the proper credit for a home that has been upgraded and has special features.

How we as agents assist a seller in pricing a home is based on the recent closed sales and comparing one home to another, and yes we are giving our professional advise/opinion based on our experience and knowledge of the market.

Lila Lopez
RE/MAX Advance Realty
1 vote
John Bennett, Agent, Orlando, FL
Wed Nov 2, 2011
For/too Alma,

you say "not be skewed by a possibly erroneous opinion of value" Just what then does a appraiser give?
Might this be a "opinion of value" - and if not what is it?
1 vote
John Bennett, Agent, Orlando, FL
Wed Nov 2, 2011
Gabriel, It's our job to offer good fact based advise. If we get it wrong, then we should be held accountable. I always suggest to get a appraisal from a appraiser to back me up.
If I am wrong then I should be held accountable for sloppily work.
1 vote
Don Tepper, Agent, Burke, VA
Wed Nov 2, 2011
Alma's advice is good in theory, but questionable in practice. Relatively few sellers are willing to pay before listing their home. If they're willing to, fine. But it's not going to happen often. And very few buyers are going to pay for an appraisal before making an offer.

So what do you do? As a listing agent, you provide some comps. You explain the variations (to the best of your ability), and compare the comps to the house the seller is planning on listing. In most cases, that produces a manageable price range. As a buyer's agent, you do the same.

If you're worried about getting sued as a listing agent, do your best (which you should do anyway) to make sure that the "comps" are legitimate comps.

You explain that setting a listing price is both an art and a science. Similarly, making an offer involves both as well. One may be able to determine fairly closely (the "science") what the house is worth, based on the comps. The art is in how the offer is presented, the seller's motivation, the buyer's motivation, and other factors.

From a listing agent's standpoint, it doesn't make much sense to take overpriced listings. Odds are, the house won't sell. The sellers will grow increasingly irritated/angry as the house sits there, month after month. (I answered a question here on Trulia earlier today from someone whose house has been on the market for 8 months. I looked at the comps and the house is seriously overpriced. The agent isn't making a commission and the sellers aren't happy. Where's the benefit?)

You ask about being sued with your client having "proof" that your advice was incorrect. What constitutes "proof"?

If someone lists a house and gets an offer the next day, is that "proof" that the price was too low? Not necessarily. Maybe the home was in a desirable community. Maybe there was something about the house that appealed to that buyer, but wouldn't appeal to others. And we all know that, often, the first offer tends to be the best one.

If a buyer makes an offer and it's accepted without a counter, does that mean that the buyer offered too much? Of course not. If the buyer makes an offer and it's rejected, does that mean that the buyer offered too little? Well, yes, too little for the seller. But maybe the offer was a fair one based on market value.

It comes down to providing complete, relevant, and useful data to your client. And letting your client make the final decision.
0 votes
Ron Thomas, Agent, Fresno, CA
Wed Nov 2, 2011
Statistics never lie!

I just show them the numbers and the reasoning behind them.

I don't work with Clients who just want to sue me.
0 votes
John Bennett, Agent, Orlando, FL
Wed Nov 2, 2011
and good answer to Alma- I agree!
0 votes
Liane Jamason, Agent, Saint Petersburg, FL
Wed Nov 2, 2011
Easy - pull comparables before making an offer and show them to your client. Then your advice is based on facts, not opinion.
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