I talked with a home owner (potential seller?) not long ago about listing their home. It was a beatiful home. Nice neighborhood. Good schools. Well decorated. I was not talking with them specifically about listing. It wasn't a house I wanted to list... No garage space. But, this particular person wanted me to give them my "honest impression" of what they had been hearing from other agents.
They had talked with a couple of agents, and were about to sign. They thought their home was worth about $300k... and were surprised when the LOWEST listing price that was suggested by any of the interviewed agents was almost $350k. But, all three agents also wanted to have built in reductions. None of the agents tried to push them down on the price.
Keep in mind, the CMAs were sketchy... and the highest price EVER paid in the neighborhood was close to $350k... almost 2 years ago. And the more recent comps were closer to the $275k to $300k range. In talking with the home owner, I would have suggested that the list in the $300k range...
This isn't a hot neighborhood. And it isn't an anomaly.
And these are people that are fairly motivated.
But has it come to this... agents bid up the list price in hopes of getting a listing? Then what? Wait for the automatic price reductions? Refuse to market the property until the price is inline? Or just go broke tilting at windmills?
Be realistic. While there are some sellers that are not realistic, there are others that are. And you aren't doing any favors to the unrealistic ones pumping them full of sunshine while working to cut their legs out from under them later.
Unless otherwise noted, all content of this blog is the property of Lane Bailey, ©2012 Lane Bailey.
I'd love to hear from you...
Lane - Desparate people do desparate things, enough said.
Sure...any price they want is a good price.
Well, if you want to keep the house! I was talking with an agent one time that does business like this and I told him it was a crappy way to do business (you know unethical and dishonest) but his reply was that it was a negotiation strategy to get the listing. He prided himself on being a shrewd negotiator. Very sad really...
Hi Lane, how all three showed up with two year old comps amazes me. No wonder we are hearing of deals falling through because of the appraisal.
lane - it's an every day occurrance here. Want the listing, tell the sellers what they want to hear.
Lane, I make my living off of expired listings. And of course the reason they expire is ALWAYS price. But what never ceases to amaze me is how receptive the sellers are to proper pricing. When I ask them how they arrived at their previous pricing mostly its "That what we said we wanted and the agent just agreed". AND in most cases they have never even seen a CMA!!! It's incredible!!!
Lane, I agree. There are too many agents who are not doing their homework and who will take anything at any price. I'd prefer to be honest with the Sellers in the beginning and if they list with someone else...so be it. It's one less person who will call every week wanting to know why their house isn't being shown or hasn't sold. Besides, why would I want to be known around town as the agent who takes overpriced properties? Honesty is the best policy...and clearly, you're one who believes being that way for your clients.
I just had, this weekend, a discussion with an agent over a home that I did not think was going to appraise, and he pulled comps that were a year old. If he were a rookie that would be one thing, but he has been an agent for 15 years.
What is that?
People too often push the price up to get the listing. I've never been able to successfully pull it off. Guess I'm too honest.
One of the great mysteries of real estate - why agents can't seem to be honest about a market price. We're in a rural area. I hate to go back even six months but sometimes we have to due to limited comps - but TWO years? Wow!
So, have they picked an agent yet?
Pricing is much more complicated these days - it's not just the comps, it's the market trends. My experience is this: Most sellers don't really care - they just know what they want! Tough market!
Most sellers are understanding it means we need to tell them the truth and then figure out a way to get them on to the next home.
I have never understood the 'buying the listing' gig. It never fit into my business plan but I've had a couple of agents in the top 5 in our market tell me it's something they do on a regular basis. Go figure. I would rather get it right the first time and on terms I can sell it... maybe I'm odd that way.
The comment about appraisals is so real right now...you will get burned by over pricing a listing when you are half way through the process. Anymore, if I don't know the price (no real comps in the area), I have the seller get an appraisal.
And when the consumer see's a "$350,000" home selling for $289,000 it encourages them to make lower and lower offers on those home that ARE properly priced and walk away when they don't get their own "great deal".
In this market an overpriced listing is the kiss of death for an agent. Do you want your sign sitting in a yard for months while the neighbors ask why hasn't this house sold. Sometimes even when we price a house correctly the market tells us we were wrong. But when we know its to high then we are just wasting our time, our sellers time and loads of money on a house that won't sell.
At the beginning of this year I actually terminated several listings that were not selling, I asked for a price reduction and explained that the market has changed and either reduce or keep the home. Those that did not reduce were cut loose to list with someone else. None have sold that got re-listed with other brokers. Price it right now or drain your marketing budget.
Lane,
Buying the listing still takes place. What I don't understand is these sellers seemed reasonable at $300K. The agents must be so insecure they had to say $350K to make sure they get the listing.
I find rather than arguing with unrealistic sellers by telling them their price is to high because they are probably thinking - "I don't need some REALTOR telling me what my place is worth" I simply ask "If your home doesn't appraise for your price are you willing to hold a second mortgage?" That usually gets them thinking and makes the bank the bad guy.
Lane - I could not agree more. I have never understood the practice of giving a higher listing price than the market can bear. These agents are not providing decent service to anyone, including themselves.
good post..i agree with you..Sellers need to be realistic and the agents need to be honest!!
WOW!
While on the money end it is a great read. Pricing is so vital with today's market. Realtors have so many good tools to help price but seem not to really see what folks are getting for the money. Know wonder homes are on the market for so long
Good post
Tony
Good post! Appreciated the perspective.
Li
Li Read, RE/MAX Salt Spring, B.C., Canada
liread33@gmail.com
Lane - The barriors to entering our field are way too low. Good agents are constantly up against agents that should not be in the business. It gets worse when the market does because there is more desperation.
There is little point in listing a home for so much more than it will sell for. That serves no one well.
Holy cra... mackerel... That's a lot of response.
Jason - Yes they do. And there are a lot of desperate people with RE licenses right now.
Ron - The sellers knew this was stupid... And that agent is a crack negotiator. He can't even negotiate a reasonable price with his own client.
K&R - Annoying giant space... But, all of the comps weren't old, they just chose to weight them that way... Maybe that is why they have signs everywhere.
Larry - In this case they were telling the sellers what they thought they wanted to hear...
Bryant - Yep. I have had more than one tell me "We didn't really base it on anything... we just guessed."
LaShawn - I don't want to spend the cubic dollars to promote a house that won't sell...
Melina - I have had more than my share of run ins with experienced agents that just seem to be over making sure they are on target with their job.
Barbara - I have taken listings that were over-priced... but never on purpose.
Debbie - The house is not listed. They might rent it out... They are a little miffed at agents in general.
Margaret - There are plenty of pie in the sky sellers... about 2/3 in my estimation... here.
Terry - I think if more agents can be honest with their sellers, we can get the whole housing market moving again.
Jesse - I had an agent tell me that she takes over-priced listings to get sign placement sometimes. Do you think she tells the seller that she is just using them to market.
Cindy - Getting appraisals can be a tough job... those are getting to be based in reality again.
Steve - Yes, but... here the $350k property won't get a look, much less an offer for $289k. There are just too many homes that are priced more attractively for the buyers to look at.
Cindy - Yep.
Mary - It may be something we have to do.
Mitchell - That is an EXCELLENT question to ask.
Jason - No, they aren't.
Michael - Absolutely.
Tony - Days on Market are dropping... for the slice of the market that is selling.
Li - Thanks.
Bill - That is a whole different post... the barrier is either too high or too low. I can make arguments for both.
B&C - That is correct.
What a waste of everyone's time.
The final price decider today is usually the appraiser. They are being so conservative lately. I just use this fact to bring things back to reality.
If they don't listen to reason and also won't get a pre-listing appraisal, then it's probably best to pass on the listing and wait until it expires. There's nothing worse than an overpriced listing. It just sucks the life out of you.
Tim - Good to see you back... And you are absolutely right.
Wow what a nice home and a good price too. Did it ever sell?
Did you actually READ the post?