I wonder if my plea will be heard...
Back in August I had a suggestion in this blog post "I have a cure for the housing market but I need your help" which stated that every realtor and seller (including FSBOs) should immediately withdrawl their listings that would knowingly never sell. If that did happen, probably at least 10 percent of the inventory would be cleared ! That in and of itself would be a great stimulus to the housing market !
As an add-on to that post, my next plea is simple and straightfoward. Please Please Please do not take the overpriced listings - it confuses the sellers (and realtors as well as the public) in the neigborhood and it wastes everyones time. We are all better served by having realistic priced homes on the market as the inventory will begin to move and take some of the sting out of the sluggish marketplace.
A couple of examples and I'm sure you will have many more but case in point:
1. TIME WASTING
There was a Fishtown home that was about to expire approximately 6 months ago that was listed at $240K. I told the seller the max listing price I would do was $199,900 as his sales price really would be around $185K. He re-listed with his current realtor and then later listed with someone else at that higher number. This is a perfect example of how time will end up being wasted.
So this week, an agent from my team writes an offer on this property: you would think the seller should be celebrating ! Buyers agent writes a deal for $185,000 (a gift because it would be the high price range for this area). The seller wanted to straight-out reject this offer but did come back with a counter of only $2K below his listing price of $215K. Deal dies - buyers agent writes a deal for another property. What we should look at closely here is how much time is being wasted by buyer agents and consumers (not to mention the listing agents fielding calls and marketing the property). Even in the unlikely possibility that this seller finds a qualified buyer to write a deal for what he wants "to break even" the house will not appraise by the bank ! That would be a waste of time of another industry ! So for plea number 1, let's stop wasting time. My suggestion would be to recommend these sellers to rent the property or sell and take a tax loss !
2. CONFUSION
Agents and sellers who list overpriced homes confuse the consumers. One mindset that a seller has which becomes a trap is their fear that they are "giving it away" because the one down the street is listed for so much more.
I would like to say that most of this consufsion can be overcome by an experienced agent but sadly, and more often than not, it cannot. With all the overpriced inventory, it is very hard to convince a person of the truth. These high listing numbers can be very persuasive to a seller with high hopes. Rumors and undocumented values can fly from everywhere for what a house sells for which may not be the truth. As a result, you get a real estate market filled with listings that are inflated and consumers questioning realtors who are actually giving sound advice.
Plea number 2: PLEASE do not be part of the CONFUSION, be part of the solution ! Price and list the properties accordingly.
Price your listings accordingly and be firm and communicate with a potential seller. I subscribe that there is nothing wrong with being a little high in the beginning (heck I do not have a crystal ball) as long as a seller initially agrees to a strategy of price reductions. I have been doing price reductions based on both (1) days on market and (2) number of showings so whatever happens first can then allow for a predetermined price reduction !
Let's work together and sell some properties !
My question is... Consumers, agents, tell me - what are your thoughts ? Overpriced listings, should we take them or should we leave them ?
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The Somers - Philadelphia Real Estate
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Elayna Fernandez | Marketing Consulting in Naples FL
Yes Yes. You both get it. thanks.
I call this a list and sit approach. With the tight credit market if the home is not priced right in the market it will not move. So now you have a seller who is not happy and we have to thing that your name will be brought up in many conservations as a non-producing agent. You can't defend your position when your seller is speaking to all the neighbors and as we have seen in the past that the sellers always believe they understand the market better than we do. If the house is not priced correctly let someone else list it and stand your ground on pricing the house to sll it and not to sit on it.
We agree 100%. The problem is that there is always going to be an agent who will take any listing at whatever price the seller wants. Nevertheless, we're on board with you.
I just refused one this morning. wants $65k more than it would sell for.
One of the "I DON'T NEED TO SELL" clients. SO I TOLD THEM - DON'T LIST IT!
THANK YOU ! I don't think this could be said enough. If we could remove all overpriced listings we would easily have a buyer's market.
But guys this is the time of thing that keeps us good Realtors in business:) Let them flounder and then be the 3rd agent in when they have finally come to their senses.
Bill, That is a good point. I agree that when a seller is on their 3rd Realtor (me) they are much more willing to see me/us as a the "good realtors". Believe me, I take the praise proudly. So, yes, in the short term allowing a consumer to "flounder" may eventually mean I will get them once they have been beaten up by the market but, that does not solve the bigger problem. The problem is too many overpriced homes, seller's unwilling to let go of unrealistic expectations, and the result is ultimately negative to the integrity of the profession and the market. -Steph
Christopher and Stephanie:
One of the reason I have come up with for overpriced listings is, an agent figures they will go along with the seller and hopefully wear them out. That agent usually doesn't get a lot of listings and just wants to have something in their name.
The Broker/Manager should be involve in reviewing the listing their office takes, it will ultimately cost them money.
Richard
Chris, I might sound naive but I don't understand how they can still overprice---when they see what's for sale (and those prices) in their neighborhood. If they seriously want to sell they'll have to list at a lower price.
Christopher and Stephanie - I wonder about under-pricing listings too. I've seen some agents convince their sellers to slash prices (deeply) in order to push the sale and come out the hero. Although I understand "fair market value" I think sometimes agents may be too quick to panic and push for a price change. Now if the listing is overpriced and it always was, it needs a price reduction, but I am seeing a little too much of the price slashing to think that its all agents overpricing. With buyers out there on the fence, you can always get them off the fence for a steal, but at what cost to the seller? Buyers are taking longer to make decisions, so cutting prices quickly may work, but may not necessarily be in the best interest of the client (ie, the buyer might buy it at the higher price, they just need to think about it longer) - now of course if the seller is in a hurry, this argument wouldn't really apply. I'm curious to see what you think of this side of it all. Look foward to hearing it.
Christopher and Stephanie, I see very few over priced in MI but then again we have been a one state recession until lately so our sellers are use to it. I started turning down over-priced listings a couple of years ago. It was not worth the headaches and frustration of marketing a home that I knew was too high.
I still see a few year, not saying I don't see any but it is usually by older Realtors who only carry a few listings at a time.
Don't you sometimes wonder why they even hire a pro when they are already geniuses and take no advice? The one benefit I have noticed with realtors that I work with, is that after they see this situation enough they can speak with straight confidence. That is huge for sales and consulting. Amd they can walk away from a listing that will waste time and money. It is a freeing experience. (albeit aggrevating initially).
Ok I am going to throw everyone a curve ball here. Sometimes the banks force us to list it where the loan would be covered. They need to see it sit on the market for a while. I have seen it before where a home was listed where it should be and then the bank refused the short sale because they said it was priced to low. UGGGHHHH So what I do is come to an agreement on when the price reductions will be and get them signed ahead of time. We have a lot of overpriced homes here in GR but what are we suppose to do?
By the way- I love your writing. You do a great job!
Elayna - You are right, time is a valuable commodity and it is a shame to waste it !
Robert - You are welcome !
Donald - Great point ! It is important to list and sell, not list and sit !
Dan and Amy - Unfortunately, you are right. There always will probably be an agent that will take the listing that others walked away from due to their inexperience or eagerness to have a sign up.
Richard - It is empowering to walk away. It is whacky that someone is making appointments to sell their property yet "does not need to sell"
I say, "no way Jose!". I know many that will do it for the signage but it is just not for me. I want real listings that I can sell!
I've been finding in a couple of neighborhoods, I've been working many homeowners do not really understand the true value of their home in the current market. I've seen many of the homes listed way above the most sales price. The owners have put in so much money in updating their home, and believe they should get all that investment back. However today's market conditions are not going to allow that to happen. So, I agree giving the seller the market price is the way to go, and if they are not truly interested, then move on.
You are soooo right! Pricing is crucial. If a seller is not realistic than walk away. If you do the right thing (telling the seller the truth about the real value of their home) you may emd up with it after the other agent could not sell it.
Great post - our time is valuable as well as our opinion when it comes to pricing - the issue as I see it is the Seller understanding when an agent is being honest about the market and what it takes to sale a home vs. what an agent that does not have a clue tells them. Great post
Fantastic points! I have heard it said that agents do this to make the phone ring and they can direct the inquiries towards other listings. One thing that the agent's taking massively overpriced listings isn't understanding is that it ruins their credibility. They are earning a stigma of "always too high" and other agents will eventually get to the point of not wanting to show their listings because they assume they're all overpriced. Not to mention that the consumer's are more intelligent than given credit and they notice these things too.
Maybe I'm wrong, but I don't see how this practice could help any agent obtain their financial goals either.
Your plan is a good one if anybody will listen. So many junk properties out there its ridiculous.
Good question. If it's a great location and will have lots of open house traffic it may be worth taking it a bit overpriced. If the seller is realistic and will sign an agreement to come down in price at intervals it may be OK to take an overpriced listing. Some other special factors could allow you to take overpriced listings. But, otherwise the answer in NO.
Renee - It would be great to implement this strategy across the board !
Richard - That is a good suggestion to have broker review to make sure that it makes sense and is not too crazy.
Carole - Unfortunately, it still happens. The house just does not sell - it eventually will either expire or will be withdrawn which is Bill's point that can lead to business for agents (like ourselves too) that can get the listing the second or third time around. At that point, you can get the price down to a realistic level.
Guilty as charged. I have one right now and against my own better judgement, I listed it way too high. One of the reasons is that she referred me to a builder who listed with me (after his contract expired with another agent) and I sold it in 30 days! I was very grateful to her for that referral. Also she owns a lot of real estate in town and I want to be the one she asks to list when she decides to sell. My goal is to get her to reduce the price $10,000 every month until it's where it should be. Crazy? Maybe but I'm planning for the future too.
You're plea will probably fall on enough deaf ears so that this will still be a problem. In the meantime, a good professional really doesn't get sidetracked with high listing prices.
If anything, they can be a good tool to use to bring your own listings into line when you can show comps vs listings vs activity.
My 2c.
Matt, I think it depends on the personal goals of the seller. If they need or want a fast sale, a price reduction is on order or a competively priced listing from the beginning.
Missy - that is not too bad. Still the ones that are out there can confuse the public and less experienced agents.
Steve - Once an agent has the ability to say no and walk away, they have reached a milestone !
Tami - Thanks for the compliment ! A bank listing I can chalk up as a little bit different but at least with those listings, price reductions will happen at some point as well.
This is definetely a time to stay realistic. Unfortunately many agents in our market, despite it being in the top 10 most stable market, still overprice their listings and it's really causing many homes to accrue in inventory. We're glad you're making an effort to change the way others look at this market from within. Here's hoping to a better 2009. Keep up the good work associates! :)
Sincerely, Active Castellum ( Castellum Realty llc - Lancaster PA Real Estate )
I recently listed and sold a property in 8 days.I advised the seller to list it at fair market value.it was a cream puff and he could have listed it $10,000 higher but the way the market conditions were it would have sat on the market with all the other listing..His neighbors house has been on the market for over a year.he listened to me listed it at $168400 got his asking price! when we took the sign down his neighbor called me to tell me someone stole the sign;when i informed her the house was sold she said"it was only up for a week...how can that be?? " When i explained it to her she took her home off the market and told me she would call me in the spring.. TELL THE SELLERS TO WATCH THE NEWS! helpfulhannah
Yes lets do away with them - wish it was that easy. Unfortunately there are many agents that jump on to take a listing no matter what the price is. Not good service IMHO. ~Rita
Honestly, as a rookie with no listings, I am seriously tempted to take an overpriced listing or two so I have something to advertise with my name on. I do like the idea of getting a written agreement to have automatic price reductions. Anyone have any other suggestions?
That is a great post! I make it a point to tour homes as much as possible in my town so that I can know the inventory. I really believe that is the best way to help buyers and sellers. I have a listing that just came up in my neighborhood that is probably $200K overpriced. The neighbors all want to believe it is worth it or slightly less and it is hard to convince them otherwise. I just had an appraisal done for a refi on our home and though it might be conservative it is closer to reality. I am just curious as to how the listing agent and the sellers arrived at the price that they did. There is nothing to substantiate it. Did the agent suggest this price to get the listing or did the homeowners come up with it? Sellers need to understand that though a buyer can always make an offer, most of mine don't even want to look when something is overpriced. Buyers are becoming smarter and looking at all aspects. Would I take an overpriced listing? Probably, but with the stipulation that the price would be reduced after 2 weeks and then each week there after until it sells.
Cristal - I appreciate your approach. It is good to say not sometimes.
Scott - Well said - certainly makes sense.
Dorie - Correct ! Also I think sellers are wising up to reality. Some are starting to see the risk of having their property overpriced and losing that marketing time.
John - Right on ! Glad you appreicated the post.
Lissa - Agreed. I think agents will start to realized this (if they have not done so already) that taking overpriced listings may hurt them more than helping them.