How Court-Mandated Listing Prices Can Hurt Your Divorce Real Estate Sales

June 21, 2022

Aka Why the Court Shouldn’t Set Your Clients’ Listing Prices

One of the first issues real estate agents run into at the start of any listing contract is determining the property’s price. Thanks to Zillow, clients often believe they have insider knowledge that makes them industry experts—and in divorce cases, that’s a mistake that can set an unfortunate tone for the whole transaction.

As an attorney, when parties are already on opposing sides of nearly every aspect of their divorce case, your job gets harder. You might appreciate having the court step in to take certain tasks off your long list of things to do; unfortunately, letting the court mandate listing prices can cost your clients big money, and may even prevent a timely sale.

Here are some of the reasons why:

List Prices are Strategic

When a real estate agent recommends a listing price, they do so with the goal of attracting the right qualified buyers. When you let the court dictate a home’s listing price, you and your client lose the benefit of insider knowledge, and you might fail to reach your buyer pool completely. For instance, if the court sets the price too high, your client’s home may not be seen by buyers who are shopping at a price point that is in line with where your client’s home should be. And the buyers who do see it are likely looking for features that aren’t available at your home’s true price level.

Setting the price too low is a problem, too. A low price is a big red flag that tells prospective buyers something is wrong with the house, even when there’s nothing wrong with it at all.

Either of these problems can cause a property to languish on the market, which is the kiss of death for today’s home sellers.

Keep in mind that today’s buyers don’t rely on real estate agents alone. Most of the time, buyers are trawling Zillow, Redfin, and Realtor.com to catch properties that don’t appear on their local MLS (and inactive buyers—people who weren’t planning to buy, but might change their minds when they see your client’s home—don’t use the MLS at all), so when setting a home’s listing price, experienced real estate agents know to account for AVM parameters that could knock your client’s listing out of the very buyer pool they need the most exposure to.

Prices are Fluid

Real estate markets move much faster than court systems do, so the price a court sets today might be obsolete by the time the home is prepped and ready to go on the market.

California homes often sell for much more than their initial asking price, so real estate agents need to have the flexibility to apply upward adjustments to listing prices so they can match the latest neighborhood comps and capture the highest possible value for their clients. Sometimes, they’ll even need to make downward adjustments to keep a listing viable when the market shifts, such as in the case of a sudden economic downturn.

The Court Doesn’t Know What Your Client’s Home is Really Like

Pet odors, unpermitted “upgrades,” weird wallpaper, argumentative tenants…there are a plethora of ways home values can be affected for better or worse, and the court can’t see any of it. You can tell them, of course, but unless the judge is actually standing inside the structure, they can’t know just how much these intangibles can (or should) affect the value of the property.

My Recommendation:

Don’t allow the courts to mandate the listing prices of your clients’ homes. A properly trained real estate agent—especially a Certified Divorce Real Estate Agent—can help you determine the true value of the listings in your cases and make sure you make good on your fiduciary duty to your clients.

If you need advice on this or any other real property issue—or have a property that needs to be listed—give me a call or send me an email. I’m always happy to help!

 

650-550-8646

 

Shannon Rose
CDRE, SRES, CDPE, CLHMS, GPS
DRE# 01422955
Los Gatos, CA
1-650-550-8646
DivorceRealtor@RoseGroupRE.com

BAY AREA DIVORCE REALTOR®

SHANNON ROSE/ROSE GROUP
DRE #01422955

KW BAY AREA ESTATE
DRE #01526679

16780 LARK AVE.
LOS GATOS, CA 95032

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