Neighbor's role in sales of homes not always a plus

The phone company repairman was scouting for an affordable starter home when the phone rang one Sunday. It was his mother's friend, calling to suggest that he drop by an open house in her neighborhood. Before long, he was driving over to see the three-bedrrom, ranch-style house which had just hit the market. Pleased with the place, he bought it at once

As this story illustrated, neighbors can influence the sale of a home by coming up with serious buyers. "Any time a home is listed, it should be marketed to the neighborhood as a whole," says Harry L. Bithell of Prudential Realty. Your neighbors may know at least one good prospect.

Indeed, Bithell estimates that up to 20 percent of buyers become interested in a neighborhood or a particular property on the recommendation of those who live in the area. Residents of gated communities are often especially strong advocates for their location.

About a quarter of those who visit open houses are from the neighborhood, according to Bithell. Although many are merely curious about their neighbors' lifestyle or decor, others may be searching on behalf of someone they know.

Nevertheless, neighborly "help" can prove counter-productive when it comes from local residents who believe they have more real-estate expertise than they do. "Neighbors can be a help or a hindrance when you're selling your home," says Mona M. Dailey, a Re/Max broker-associate.

Here are pointers on neighbors' involvement in marketing your residence:

- Be careful about neighborly advice on pricing. Residents often attempt to follow home sales in their community, perhaps because they're curious or trying to track their net worth.They may assume falsely that the list price of a property ultimately becomes the sale price. A home may go for as much as the owner asks or even more, yet the raw numbers may not tell the full story. The final price may have incorporated concessions by the sellers, such as home improvements, or the payment of home warranties, HOA fees or the like.

"Neighbors often have an inflated view of what their properties are worth," Bithell says.

"Most homeowners think their place is a castle and that they live in the best domain in town," Dailey says.

Your real-estate agent or an appraiser can interpret the statistics on recent transactions in the area and set a more realistic sale price. "You wouldn't take legal advice from a neighbor who is not an attorney. So why listen to neighbors on pricing your real estate, especially when they may be operating on misinformation?" Bithell asks.

- Be wary of neighbors' suggestion on upgrades.

Your home may need to be updated. Perhaps you should replace your functional kitchen appliances, which are eyesores. Most potential buyers prefer white and sterling silver to out-of-date harvest gold and avocado green. So don't heed neighbors who try to talk you out of replacing those gold or green appliances that "look fine."

"We all tend to be comfortable with what we have. Anyway, some people won't want your house to be better than theirs or they'll feel pressure to upgrade too," Dailey says.

- Consider selecting a listing agent who lives in your neighborhood.

Chances are that a real-state specialist who resides nearby will be eager to sell your property for the best possible price. "The agent's best interests are to keep up neighborhood values," Dailey notes, "because she lives there and has a local reputation to protect." In addition she'll have an intimate knowledge of your community's high points and be able to show your property on short notice.

But don't select an agent solely to please a neighbor who happens to be a friend. Even when the agent lives in the neighborhood, she should come with sterling references.

- Encourage neighbors to promote your sale, but don't tell them too much.

Word-of-mouth marketing can be one of the most effective ways to stimulate interest in your house. At the same time, avoid confiding your bargaining position to neighbors. Though well-meaning, they might pass on information that should remain confidential.

You should avoid revealing to neighbors your bottom line on price or your fall back position with a balky buyer."Questions posed by neighbors about your negotiation position should be answered by the real-estate agent," Daily says. Only your agent should know how far you might be willing to come down on price or that you would give up items excluded from your initial listing, such as a top-of-the-line playground set.

-Ellen James Martin