Why the Traditional Way of Buying Homes is Fundamentally Flawed

Buying a home is one of the most complex and stressful transactions that many people go through, and there are significant drawbacks of the traditional home-buying process. One of the most significant is pricing the home.

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The fair market value of the home is unknown

1. First, the seller along with their listing agent must come up with a reasonable list price based on their estimate of the home’s fair market value. 

2. Then, each buyer who’s interested in the property must independently price the home with the help of their agent. 

3. Then, during the negotiation process, the listing agent often argues with the buyer’s agent about how much the home is worth.

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The inefficiency of this pricing process is bad enough, but to make matters worse, most listing agents aren’t trained to analyze the market in the most rigorous way. It’s important to remember that pricing homes is only a small part of what real estate agents do.

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Moreover, because competition for listings is so fierce, many agents are tempted to give in to their sellers’ unrealistic price expectations and inflate the asking price, hoping to secure the listing.

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As a result, according to the National Association of Realtors, around 40% of listings typically experience at least one price reduction, while most homes typically sell for less than the initial asking price.

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This means that a significant portion of homes on the market are overpriced. The issue is that just as with listing agents, most buyer’s agents don’t have the rigorous training needed to pinpoint the value of a home.

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Reverified offers a simple solution to these issues. Notice that in 
the traditional home-selling process, the appraiser—the person most capable of accurately and impartially determining the value of a home—is called in only after the buyer and seller have already agreed on a price. Even though this is the way that homes have always been bought and sold, this system doesn’t make much sense.

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Instead, we believe the pricing expert should analyze the market before the home is ever listed and derive the Fair Deal Zone of the home
in a neutral way that does not advantage the seller or the buyer. The seller and all prospective buyers could then review the Fair Deal Zone report and decide for themselves whether they agree with the fair pricing range. If they are convinced, which they should be since it is being priced by a neutral third-party expert, then the whole transaction can flow off of this one value and there would be much less risk.

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The traditional offer process is inefficient and
lacks transparency.

There are five major downsides with the traditional offer process from the homebuyer’s perspective.

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1. The process of submitting offers and responding to counteroffers is tedious for both the buyer’s agent and listing agent. This back-and-forth is inefficient and time-consuming.

2. Buyers have no way of knowing whether any other offers have been made on the property and certainly not what those offers are. The only way for buyers to gather this information is to reach out to the listing agent, who is working for the seller and is under no obligation to share 
this information with them. 

3. The buying process can be particularly frustrating for buyers if sellers ask for buyers to submit their highest and best offers. To explain why, suppose there are three buyers interested in a property. One buyer’s highest and best offer is $500K, while a second buyer’s highest and best offer is $520K. Let’s now analyze the situation from the perspective of the third buyer. Because the third buyer doesn’t know how much the other two buyers are willing to offer, their decision on how much to offer is essentially a shot in the dark. If their highest and best offer is $540K, they would win the home but would never know that they overpaid by $20K. Alternatively, if their highest and best offer is $519K, they would lose the home and would never know that they could have won it had they just offered an additional $2,000.

4. Buyers don’t have a full picture of what the seller cares about. Of course, they know the seller wants the highest price, but they don’t know how much the seller values other factors, such as closing quickly or certainty that the deal won’t fall through. 

5. When a buyer submits an offer, they don’t know how long 
it will take for the seller to respond. 

6. The buyer doesn’t know what it would take for the seller to immediately accept their offer.

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Reverified addresses many of these deficiencies:

1. The Fair Deal Zone report provides a range of reasonable pricing for residential properties. This helps sellers know how much their home is really worth, and informs buyers to what a reasonable bid would be. Thus, reducing the ambiguity that results in too much back and forth.
2. Buyers know exactly the range they should be aiming for when bidding on a home. As a result, there's less risk that buyers overpay for the home or waste time submitting low offers with no chance of winning.
3. Sellers who list their homes understand the monetary worth upfront. Therefore, buyers know exactly what matters most to sellers and can tailor their offers accordingly.
4. Homes priced properly sell more quickly and at the right price, resulting in lower risk of stale properties, price drops, and frustration.
5. The Fair Deal Zone represents a win-win for buyers and sellers because everyone benefits from pricing a home within this range.

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For all these reasons, once you experience your first Fair Deal Zone report from Reverified, you’ll never want to go back to the old stressful way.

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Order your Fair Deal Zone report today!