Siblings disagreeing on listing price on inherited home

[2HOTinPHX]

I will try and keep this brief so feel free to ask any questions you might have.
4 siblings inherited house we grew up in when both our parents passed away in late 2019 and early 2020. Its in the SF bay area and no one party can afford to buy out the others and keep it even if we all agreed to give the buying party a deep discount. Plus the house could really use total remodel inside.
Due to Covid we had delayed the sale till now. Two brothers who live in the area have been clearing things out and getting the place ready for selling. Parents were smokers so they removed the carpet and had the inside repainted. Still things are going to look outdated.
The one brother who has done the majority of the planning and work has lined up a realtor he knows of who is going to do the sale at 5%. They are suggesting listing it on the lower side of what houses in the area are going for. Expecting multiple offers in the hot housing market.
One sibling who is watching Redfin and Zillow estimates and recent sales thinks we should list it much higher because of the hot market.

I can see both points of view. Any thoughts would be appreciated.

 

[TrvlBug]

It's an incredibly hot market here in the Bay Area. However, houses overpriced are not selling. Ask the guy up the street...had to drop his price $300K. Priced well (underpriced) and you'll get multiple bidders. My 2 cents. YMMV.

 

[HarveyS]

Have it appraised by two different appraisers. Use the mid-point.

 

[Jerry1]

Let’s assume the house sells for $500K. I know it’s probably way more than that, but at 5% commission, that’s $25K. Maybe it’s just me, but if I was going to pay someone $25K (insert your real number here), I think I’d listen to them. Generically speaking, don’t you think the RE knows best?

My gut tells me that it doesn’t matter. Since there will be significant interest, you’ll figure out what the top of the market is no matter which end you start at.

 

[1242Vintage]

We live in CA in the foothills east of Sacramento. Market is obviously very hot here too. If I was selling in this market and wasn’t pressed to make a quick sale, I would list on the higher end.

Two homes down the lane here were recently listed for 30 days and sold at a premium, significantly above the asking price. Both homes hadn’t seen any updating in years and had significant deferred maintenance. Didn’t matter. Both sellers received numerous offers above asking and ultimately sold “as-is” to flippers.

We now are frequently getting letters in the mail and stuck in our front gate asking if we are selling. The letters are made to look like they are coming from a desperate growing family looking for a larger home. Who knows if they are. Haven’t seen that tactic since the last hot market a couple decades ago.

 

[RetireeRobert]

It's an incredibly hot market here in the Bay Area. However, houses overpriced are not selling. Ask the guy up the street...had to drop his price $300K. Priced well (underpriced) and you'll get multiple bidders. My 2 cents. YMMV.

+1 In western Oregon the prevailing advice of realtors I have talked to seems to be to price the house fairly, perhaps even a tad under market. With almost every house hitting the market around here getting multiple offers, the sales price in nearly every instance is above listing price. I have seen a few homes for sale obviously overpriced greedily, and those few have indeed sat on the market.

That said, the SF Bay area home you are putting up for sale, it would not hurt to have a couple other realtors, besides the one your brother contacted, give you a market price evaluation of that home. At least in my own case, in getting a market appraisal for my own house, three different realtors, all reputable, gave me three different "fair" market values! It seems to be as much, and maybe more, art than science, pricing a home.

 

[tb001]

We sold our home in the Bay Area two years ago. We had three different agents come out and give us their thoughts. The ‘top’ agent in our area who everyone used told us to list it low. The hungry agent trying to win business suggested a high number. The other agent was in between.

We went with the hungry agent and gave her the opportunity to list off the mls and see what kind of interest she saw. We sold for 25k less than our listed price, but had an offer for 75k above it from a less qualified buyer. Our sale price was 700k (!!!) above where the top agent suggested we list.

There is a fundamental misalignment regarding pricing when it comes to the incremental work for an agent vs the incremental commission, which is not in favor of the seller, imo.

I would get a number of opinions, including Zillow and Redfin. We’ve found Zillow to be aggressive and redfin to be pretty close to reality in the Bay Area and So Ca. But neither is hugely off.

 

[2HOTinPHX]

Thanks for the feed back everyone.

Agent and Sibling working with them thinking of listing at 910000 and hoping for multiple bids over asking.

Redfin shows estimate 1,085000 and Zillow shows 1,125000. So one sibling thinks 910000 starting price is to low.

Home does have 4 bedrooms but both bathrooms and kitchen could use updating but we agreed we didn't want the hassle and cost of major upgrades.

 

[2HOTinPHX]

Let’s assume the house sells for $500K. I know it’s probably way more than that, but at 5% commission, that’s $25K. Maybe it’s just me, but if I was going to pay someone $25K (insert your real number here), I think I’d listen to them. Generically speaking, don’t you think the RE knows best?

My gut tells me that it doesn’t matter. Since there will be significant interest, you’ll figure out what the top of the market is no matter which end you start at.

I agree in this market things are gonna sort themselves out. Gonna come down to how much someone is willing to pay for the house in the location and condition it is in.

 

[daylatedollarshort]

A house in our Bay Area neighborhood was priced probably a bit undermarket and just sold for several hundred thousand $$$ over asking price. In their case the under pricing seemed to work well. A lot of potential buyers came to look at the house as soon as it went on the market. The owners had multiple offers pretty early on.

Prices are going up pretty crazy here right now.

The Freakonomics guys showed that most realtors, when they sold their own homes, usually priced them a little higher and held out for more money, than when they sold client's houses. Realtors make more money by moving more houses, not by holding out for top dollar when they only get 6% of the extra money. However, in our neighbor's house listing it lower and attracting a lot of interest seemed to be a good strategy.

Related article - "A national study by Redfin found 39% of homes sold over their list price in February and March, and 76% of Bay Area homes listed on the site faced a bidding war in February. The Bay Area was the fifth most competitive market in the country, behind Salt Lake City, San Diego, Phoenix and Denver." https://www.mercurynews.com/2021/04/05/bay-area-home-prices-soar-on-suburban-land-rush/

 

[donheff]

The DC area is a hot market and the prevailing wisdom is to list a little low and let the bidding wars begin. Listing just below the $1M level will draw attention, I would go with the realtor's recommendation.

 

[pb4uski]

.... My gut tells me that it doesn’t matter. Since there will be significant interest, you’ll figure out what the top of the market is no matter which end you start at.

+1 as long as it doesn't start too high, though I would go with the realtor's recommendation because it creates more interest and more interest/eyeballs equals more demand in a hot market.

 

[rayinpenn]

Have it appraised by two different appraisers. Use the mid-point.

+

 

[pb4uski]

+

rayinpenn.... a man of few [-]words[/-]characters.

 

[rayinpenn]

rayinpenn.... a man of few [-]words[/-]characters.

Did you say I was a man of little character? My gosh!

 

[Aerides]

Right now if I were listing any home anywhere, I'd take the highest it would comp at and add 5-10%. Houses are selling like crazy, if there's ever a time to ask more than you think it's worth, it's now. Can always drop the price in 2 weeks if it doesn't pan out.

That's basically what I did in 2005, the last time the market was stupid. Was selling a small 2bed/bath villa in a new development with hardly any sales, the comps were from the zip and surrounding area, but older places, not as nice. Comps said $170-190. My realtor knew I wanted to go higher and let me list at $269. It sold for $260 in 2 weeks.

 

[ivinsfan]

I think the brother that lives local, has done most of the work, and found the realtor should get some respect. I wouldn't be happy if I'd done all the work on behalf of my sibs and they blew me off.


Do you guys asking for two appraisals know how long that can take in an explosive market? A long time.


Tell the sib to get off Zilliow since they don't have any actual knowledge of the local market.

 

[ivinsfan]

Right now if I were listing any home anywhere, I'd take the highest it would comp at and add 5-10%. Houses are selling like crazy, if there's ever a time to ask more than you think it's worth, it's now. Can always drop the price in 2 weeks if it doesn't pan out.

That's basically what I did in 2005, the last time the market was stupid. Was selling a small 2bed/bath villa in a new development with hardly any sales, the comps were from the zip and surrounding area, but older places, not as nice. Comps said $170-190. My realtor knew I wanted to go higher and let me list at $269. It sold for $260 in 2 weeks.

That was 05, the model now seems to be list it a little lower, have people pouring in the door with FOMO and stand back.

 

[Aerides]

I think the brother that lives local, has done most of the work, and found the realtor should get some respect. I wouldn't be happy if I'd done all the work on behalf of my sibs and they blew me off.

Totally agree here. The one who is doing the clean up, and will be most involved due to being there, gets the vote. The rest need to back off.

That was 05, the model now seems to be list it a little lower, have people pouring in the door with FOMO and stand back.

Probably depends on the market. Here it's still list high and then STILL have people falling over themselves.

 

[Bigdawg]

Generically speaking, don’t you think the RE knows best?

No, I don't. In college (35 years ago) I got my real estate license over a 4 week winter term. I have owned only 7 properties in 35 years since but have had mixed results with real estate agents. Mostly bad. Some great. Just like doctors, auto mech's, FA's and any other experts, I take what they say with a grain of salt. Trust, but verify. I would get as many opinions as possible from as many sources as possible. Lean toward opinion of local sibling. Good luck. I'm sure the haul will be nice with such a hot market. I read that rising interest rates actually dipped down again this week.

 

[HarveyS]

Do you guys asking for two appraisals know how long that can take in an explosive market? A long time.

Since the OP has already held the property for 16 months, another few weeks or a month to get a few appraisals on a million dollar asset does not seem to be out of line. It also addresses the sibling(s) that have issues. There is a lot to be said for making this as much of an "arms-length" transaction as possible for the sibling that has done (and will continue to do) the bulk of the work.

Lots of armchair quarterbacking by the least involved sibling(s) can go on in this situation and lead to bad feelings/lost relationships. Ask me how I know?

Of course, in a hot market, as others have said, the buyers will set the market value via a bidding war. But, the armchair quarterback(s) can still assume there was some back-room deal that negatively affected him/her/them.

Here's a new idea - let the one who is pushing for the higher listing price take over and handle the sale. Find the agent, list, negotiate, punch list post inspection, closing atty, closing, etc. I'm sure they won't be eager for this role.

 

[Music Lover]

Generically speaking, don’t you think the RE knows best?

No. A realtor could do the minimum amount of work and sell a house for $500k and get their commission of $25k. Or they could put twice as much time and effort into it and sell it for $520k, earning $26k.

There is no incentive for an agent to double their work load for a tiny increase in commission.

*Edit - In a hot market they just have to set the price a few percent lower than market value and wait for the offers to roll in.

 

[2HOTinPHX]

OP here again. Appreciate all the input so far.

 

[Bamaman]

Times like this is when a realtor's reputation is so important. To many, it's all about fast turnover--and go on to the next seller/buyers.

We've had a couple of times where realtors have wanted to set a low price on our home so it would sell fast. But we have set the price fairly and not fell to the realtor's advice on price.

We sold the last 3 houses for list price to the 3rd person that looked the property.

Our granddaughter recently paid too much for a house. And 2 mos. later, decided to leave the area and sold the house for enough to cover realtors fees, etc. Millennials will buy anything to get out of their overpriced apartments--or out of Momma's basement.

 

[OldShooter]

... Generically speaking, don’t you think the RE knows best? ...

I agree with @Muisic Lover and @Big Dawg. The way I would say it is: Yes, the realtor knows best but there is an agency problem that may tempt him/her to underprice the property for a fast turn or to suggest a high price in order to get the listing. In both cases the realtor's goal is to collect a commission, not to get the best price for the client.

That is not to say I would ignore any realtors' inputs but I would do my own homework (as the OP has recognized) and at the end I will tell the realtor what the initial price will be.