Here is a typical house-listing scenario.
The agent tours the house while complimenting the homeowners on their decorating expertise. The agent wants to befriend the homeowners. She wants to gain their confidence and approval. At this time, the agent will also help the homeowners alleviate any fears they may have about the pending sale. If the homeowners are concerned about the economy or leaking cesspool or the cracked foundation or lead paint, the agent offers comfort. Don’t worry. Don’t worry. The agent thinks to herself that she will deal with any concerns after she has gotten the listing. The agent is laser focused on getting the listing. Without the listing, there is nothing.
After the house tour, the agent and homeowners sit down to begin a cat and mouse quiz. The aim of the agent is to pry a value figure from the homeowner. How much does the homeowner think the house is worth? Regardless of economic conditions and comparable sales data, the agent doesn’t dare risk insulting the homeowner with a low number. The agent wants the homeowner pleased no matter how inflated the price.
“Free Market Analysis” evaluations always start high. If the house doesn’t sell quickly, the agent rationalizes that there will be plenty of time to knock the price down at a later date. The agent tells the owner what the owner wants to hear in order to get the listing. The agent needs to get the listing before leaving the house. The agent doesn’t want the homeowner to seek a second opinion and run the risk that the second opinion will come in even higher than her inflated figure.