How do realtors increase real estate prices?

In social networks it’s common to see comments that realtors are defining the real estate prices. It’s because of them the prices of homes are so high in Prague. How do realtors increase the prices? Watch in my video or read in the article below.

I am always amazed how some people believe that the selling price of a real estate is defined by – not the owner, not the market but the realtor! Sometimes I see comments under posts of apartments or houses for sale that the agent/agency wants too much, that the price he asks is too high. Those are reactions of potential buyers.

On the other side similar lamentations have sellers but vice versa – sometimes they are unhappy that the price evaluation made by a real estate agent is too low. Only couple days ago a lady who requested a price evaluation for her apartment in a small village with no bus connection to Prague was unhappy that the price I recommended to start with was too low according to her opinion. So she decided to ask other agents and to choose the one who would tell her what she wanted to hear.

In fact the last scenario is very common among sellers. It’s obvious – they want to get as much money as possible for their property, so some decide to look for an agent who despite a market analyze would agree to “their price”. Such an agent would be awarded with a possibility to sell the property. In most cases this strategy leads to long sale and in the end decrease of the listing price.

My point is that it’s not an agent who determines the price of a real estate. The price is an agreement between a seller and a buyer. In other words the buyer makes a proposal and the seller decides whether to accept it or not.

A great example happened recently in my area. There were two identical houses standing next to each other. One was for sale on behalf of a foreigner who has left the country and couldn’t return anymore. The house was fully furnished, had a sauna and a winter garden. Another one was for sale by a Czech person. It was in a good condition, but nothing special.

The second one by the Czech person was sold faster for a pretty high market price of almost 12.500.000. The one by the foreigner has been still on the market for other couple months and then was sold for amazing almost 8 mln. czk! The price difference for very similar houses standing right next to each other was 36%! So how come? Well, the house from the foreigner wad bought by a person who lived in the same village and has just sold his own smaller house for 7.5 mln. czk. I assume that he gave to the seller his offer and told him he’d pay fast, with no mortgage involved. And this is how he’s got the deal.

Another crazy example happened again in my area when a foreigner managed to buy a 100 square meters bungalow for the price of a 300 sq. meters villa. I couldn’t believe my eyes when I saw this transaction in statistics. He paid over a 100.000 czk per square meter while the “normal” price is barely reaching 50.000 per sq. meters.

So my point is that the right price for the property is the one that the buyer would like to pay for it.

Agents do not determine the listing price. Obviously they are interested to sell for more – they will get higher commission. And for that a good realtor would make a high quality presentation, run ads campaigns and conduct negotiations with potential buyers. But the agent does not buy the property. So he cannot guarantee for how much the property will be sold.

My recommendation is to choose an agent that proves to do maximum for the sale of your property and not the one who will tell you what you want to hear just to get the deal.

If you need my help with the sale of your property, feel free to reach out to me.

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