Question

The Orange Brokerage has the following listing policy: "Salespersons are not allowed to enter into any listing at a listing price of 20% greater of the Competitive Market Analysis (CMA) with an agreement with the seller to lower the price to no more that 5% of the CMA after 30 days."   A primary reason for this policy is

Question options:

a)

Overpriced listings are unlikely to sell and recoup the advertising expense.

b)

Listing a property at a higher than market price decreases the chance that the property will sell for a premium price.

c)

Properties always sell for more than the Competitive Market Analysis

d)

The policy lessens the liklihood that the salesperson and seller will get into an arguement about the value of the property.

Answer 1

Overpriced listings are unlikely to sell and recoup the advertising expense.

Competition is the keyword here. CMA does provide some reliable estimates of what is the trend in the market. Overshooting the market expectations means that there is very less probability of the property to be sold. The listing or advertising expenditure then becomes a overhead.