... from REALTOR Magazine.
In the June 2008 issue, on page 42, there is the following statement.
Tip 3: Build in a preset price reduction. While all our practitioners agreed that arriving at the right price the first time is the goal, sometimes you have to be a little more flexible, especially if you are in a marketwhere prices are in decline.
It goes on to name an agent and deliver a quote.
But here is the thing... in a decling market, getting the price right the first time is imperative. If we wait 30 days or 60 days, not only have they lost value because the market is down from when the listing started, but it has already be rejected by most of the buyers.
I would go on to say that it may be a breach of fiduciary duty to take a listing with the knowledge that it is over-priced for the market. It obviously isn't dealing honestly with the seller to know that their home won't sell... and not be willing to market it until it is priced to sell.
And just so that I can deliver an accurate picture of the market, in Gwinnett County, GA last month (April), 5 times as many homes were newly listed as sold. Bringing listings into the market that are over-priced doesn't help anyone.
Unless otherwise noted, all content of this blog is the property of Lane Bailey, ©2012 Lane Bailey.
I'd love to hear from you...
Yep, good point.
I'm always amazed at how many different opinions you can find out there about how to sell Real Estate. I'm with you on this one. Get it right the first time.
I agree with you if prices are declining then the overpriced listing in a month or two is grossly overpriced.
Lane, I completely agree - thus my reason for posting a blog earlier. If the pricing is not what it should be to begin with, he seller may lose a potential buyer. ;-)
Ditto Teri. No comment on NAR!
Lane, I agree they are hurting the market. I agree we need to honest on the price. By the time a consumer has agreed to bring the house down to the market value, it has gone down again. I know some agents who do this, but not me.
Linda - It is terrible that the vast majority of homes on the market have no prayer of selling.
Andrew - You know what opinions are like, right?
Bart - Chasing down the market is a bad strategy.
Teri - And even the shot at a buyer.
Susie - The NAR reflects its membership. Most agent WILL take an overpriced listing... just to have it.
Missy - Think how different the inventory picture would be if the "not-really-serious" sellers were all off the market...
Lane - I agree, get it right the first time. But even that proves a perilous journey in todays market. Especially when there are a lack of comps to use. Often getting the price right can be difficult - and reducing the price is the correct response on an unresponsive market.
Bo - Sometimes we need to take the reduction. I don't have an issue with that, and I don't want to paint every reduction as coming from a terrible agent... but agents that take listings knowing they are just too high are not doing anyone a favor.
A good Realtor understands current price levels within the historical context and within the context of avg price/ avg income and avg price/avg rents. These are called 'fundamentals'. A good Realtor has a knowledge of fundamentals and can not only price the property correctly but also explain and justify the price to the seller. Otherwise you are looking at price levels through the rearview, will follow the market down and have done nothing of value to earn your 3%.
Good luck to all of you.
http://housingpanic.blogspot.com/
Paul - Thank you very much for commenting. I LOVE outside comments. And you are right.
Here in Socal the banks hording thousands of REOs are also chasing the market down. I put offers on two properties recently; both in December. The first REO had a crazy list price of $198k, I offered $100k and we ended negotiations at:
Me $110k
Bank $165k
Yestereday the bank just lowered the asking price to $165k. I would not give more than $80k now. And am so, so happy they did not take my $110k offer. I was basically catching a knife. The market is turning bad/worse very quickly.
The other was an REO listed at $189k. I offered $150k and did not here back from the bank. Two weeks later the bank rep. calls and says its a great time to talk about that $150k offer (he thinks the bank will take it), I remind him of all the bad housing inventory news and REO stats that have surfaced in the two weeks and tell him I will now only pay $130k. He says he'll talk to the bank and call me the next day. Its been another two weeks now and he never called back. What do you want to bet I get a call saying the $130k is doable next week?
Unfortunately for the bank 3 similar properties have since come on the market in the $130k asking price range.
Its a shame that these guys get that TARP money, it just makes them less motivated to get real money from the free market.
Jumbo - I agree that shoring them up makes them less likely to clear inventory on their own... Which means it will take longer for the market to make its own bottom.