To Take Overpriced Listings Or Not to Take Overpriced Listings?

By
Real Estate Agent with RE/MAX Realty Group MD102148

I wanted to list the house for tens of thousands more than they wanted to get because I just loved the way they had decorated their house and the fact that they had raised their kids there. They kept trying to convince me otherwise and they didn't want me to waste my time and their's in an exercise of futility by listing an overpriced property. They tried to convince me that the house was worth less than what I thought it was worth. They spent hours going over an amazingly professional CMA that they had prepared. They showed me the most relevant comparables adjusted perfectly to arrive at the price they suggested. They provided me with an extremely well thought out analysis of the current market in the area. Because they had sold 20 houses in the last year, they let me know the buying public would not react well to an overpriced listing in this market. I thought about it long and hard and decided to find another seller that was willing to price their house for a lot more than quantifiable data would suggest. I had a gut feeling.

So, that's really not what happened at all. It's actually the opposite. As agents, we spend hours upon hours analyzing the data to arrive at suggested market value range. We take into consideration the market conditions, our years of experience with buyers and everything else that goes into it and because they have a gut feeling they ignore the data.

Many of these sellers list with agents and eventually the prices come down. The house sells for less than you or I suggested because after 100 days of being overpriced the sellers have to go quickly and the listing has become stale. Many times, the seller will even choose another agent, not me or you, because they don't want to hear the old "I told you so" .

Do you think that you should take high priced listings hoping that the sellers will eventually come down or do think you are better off telling the truth and letting the chips fall where they will-even if you don't get the listing?

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Rainer
33,109
John Ford
Security National Properties - Eureka, CA

This has been the age old question on the Rain for a long time. What I always do is when a Seller wants to list a property too high, i have them sign a price reduction to come into effect 45 days later.

Jun 18, 2008 03:59 PM #16
Rainmaker
682,187
Ruthmarie Hicks
Keller Williams NY Realty - 120 Bloomingdale Road #101, White Plains NY 10605 - White Plains, NY

I don't do it, but I have to admit that it meets with sucess around here. True, you can't sell a listing that is over priced. BUT you can get a reduction  and pick up buyers along the way. 

This area is a tight area for listings.  It just is.  Inventories aren't that high, but prices are soft.   When I first stated at the crest of the wave in 2005, I was able to get (and sell) a small collection of listings that were overpriced for the market at the time.   One of the reasons I took them was that the market was still going UP at the time they were listed.  Sellers who were patient only had to "wait" to get their price.  I was warned that if I didn't take them, someone else would and would play the "waiting game" and get the their price. Because the market "turned" during the course of the listings, there was some nail biting and close calls about pulling the listings, but in the end, they sold at a slightly reduced price. There was one notable exception, but the unit was not in the greatest condition and a new development had the unanticipated consequence of choking off municipal parking in the immediate area which was a disaster for the price point.  There was literally no place you could put your car without having to move it every 12 hours....7 days a week.  Since this had never happened before, it was something that could not have been anticipated.  The result was a major drop in price.

I changed my mind about doing this because I didn't feel it was in my client's best interest given the market conditions.  In 2006 sellers wanted what they could get in 2005 +20%.  It was not happening and crazy.  The result:  No one chose me to list their property!  I would watch the properties go on the market and the prices go down, down, DOWN.  I was hoping they would pull the listing and after realizing I was "right" come back to me.  That's not what happened.  99% of the time, the listing agent who "bought" the listing jaw boned them down into reality.  We have several major listing agents wo simply do this all the time.  Their marketing plan is that they will sell your house for "more" and then they don't deliver.  It's infuriating because they are doing quite well.  Meanwhile, I  have found myself being "locked out" of listings because I do the "right thing.  Very few listings in this immediate area expire. So once again - in order to survive - I have to rethink my plan.

Being totally honest, it isn't "right" to take an overpriced listing. But depending on your area, it may be the only way to get them.

Jun 18, 2008 04:08 PM #17
Rainmaker
194,622
Sandy McAlpine
McAlpine Properties - Cornelius, NC
Search Lake Norman Homes For Sale - Lake Norman NC

I've recently lost 3 listing presentations to giving the "truth about your house value" speech. I have looked and they aren't listing with anyone else, but I would rather not have the listing and be called every week with questions on what I am doing to market their homes and why aren't they getting any showings. My answer is always the same, it's overpriced in a market with a flood of inventory. Mr. Smith, did you see the active listings in competition report I sent you last week? Of course, they pass right over that comment and just say "i can wait because my house is better than those other ones". It's a waste of my time and the seller's time. You were right with the comment that a lot of sellers ignore the data you provide.

Jun 18, 2008 04:09 PM #18
Rainer
13,403
Nathan Cook
BCR (Brazosland Classic Realty) - College Station, TX

I know of one seller who is on the second Realtor, with a current listing price of 28.57% lower than the orginal list price about 427 days ago.  Likely they will have to lower again to sell...  Pricing is critical...over priced listings tend to sell for much less than they would have if priced properly from the beginning.  Sellers need to know this truism.

Jun 18, 2008 04:43 PM #19
Anonymous
Anonymous
Anonymous

To all who responded thanks. It's interesting to your take on it. I have been passed over for several listings lately because of the price I recommended. The market is chocked full of over-priced listings , so I know there are hundreds of agents that disagree. I sometimes wonder where they get the comps. What is an acceptable percentage to be high if you do go on high?

Meyer

Jun 18, 2008 06:04 PM #20
Rainmaker
633,491
Brian Block
RE/MAX Allegiance, Managing Broker/Branch Vice President - McLean, VA
Northern Virginia & D.C. Real Estate

Meyer, my thoughts are that TRUTH is always the best policy.  If they choose someone else and then fail to sell, they may come back to you in the end.  That happened to me recently and we just went to contract today.

Jun 18, 2008 06:54 PM #21
Rainer
136,319
Terry Lynch
LAR Notary and Closing Services - Saint Clair Shores, MI

I think that's one of the hardest things we have to do as REALTORS. walk away from a listing. But in our market it"s now a survival skill.

Jun 18, 2008 08:47 PM #22
Rainer
6,191
Kerry Constantine
Power Brokers Real Estate - Fort Myers, FL

New listings get the most attention from potential buyers and other Realtors. That's why it is sooo important to price a home right at the very start of the listing. If it is too high at the start of the listing the home will end up on the market longer- cutting into your seller's carrying costs and their piece of mind while erroding your time and your bottom line as well.

Jun 18, 2008 08:48 PM #23
Rainmaker
188,214
Audrey June-Forshey
RE/MAX Realty Services - Darnestown, MD
GRI, Gaithersburg, MD

Meyer, I almost didn't recognize you with your new photo!!  You are hot baby!!  You know, the listings that I have are "better" than all of the others in the neighborhood.  It is so frustrating when the sellers won't listen to the truth because they are blinded by their personal history in the home.

Jun 18, 2008 09:37 PM #24
Ambassador
883,569
Lane Bailey
Century 21 Results Realty - Suwanee, GA
Realtor & Car Guy

Don't do it.  We are not doing sellers any favors if we tell them we can sell the listings.  And even if we say we can't, and take the listings, the message is that we can.  And there are a LOT of homes that need to get sold...

Jun 18, 2008 10:11 PM #25
Rainer
43,056
Roseann Annis
Prudential Homesale Services Group - Camp Hill, PA

Meyer,

Your tongue-and-check approach to the pitfall of taking an overpriced listing despite all the factual data to the contrary serves as a reality check for all of us.

I had to learn the hard way about listing a home that was overpriced due to market conditions, design concerns, and insistence on owners that they had to get a certain level of proceeds from the sale.  The latter, as we know, is fantasy money. 

I shall remember all the sentimental and emotional reasons for sellers setting an artificially high price from this terrific article. 

As my boss says, if you can't persuade sellers to be realistic or to listen to reason about their list price, it is far better to walk away than to sit on a stale listing that goes nowhere and negatively affects your sales data.

Well done!

Jun 18, 2008 10:21 PM #26
Anonymous
Anonymous
Anonymous

I agree totally with this post but my manager says "Hey it's free advertising, take the listing."   In the end it's not free is it? It's just more of my time wasted and extra stress I didn't need.

 

 

Jun 18, 2008 10:24 PM #27
Rainmaker
592,578
Lisa Hill
Florida Property Experts - Daytona Beach, FL
Daytona Beach Real Estate

I've seen it go either way. But in this market, I don't want any overpriced listings. Heck, I don't even want any evenly priced listings that are inline with the competition. The only listings that are selling in our area are the ones that are priced WAY below the competition!

Jun 18, 2008 10:38 PM #28
Rainmaker
253,635
Tina Maraj
RE/MAX North Orange County - Fullerton, CA
Fullerton, California Real Estate 714-403-7901

To me it depends on where the listing is ...in my farm or not, and how long of a listing willl they give me. Lastly if thery agree upfront to reducung the price every month.

Jun 18, 2008 11:39 PM #30
Rainmaker
652,646
Bob & Carolin Benjamin
Benjamin Realty LLC - Gold Canyon, AZ
East Phoenix Arizona Homes

In this market often times even if you get the home priced at what seems good by the time you get the listing and get it posted on the MLS the market is sliding more as more foreclosures appear on the market. All any of us can do is the best we can to price things as competitively as possible.

Jun 19, 2008 12:41 AM #31
Rainmaker
242,400
Mike Wong
Keller Williams Realty Southwest - Sugar Land, TX
Realtor, GRI, Project Manager

Im honest with my sellers. If it is overpriced I tell them.

Sometimes Im the 2nd, 3rd, 4th, or 5th listing agent in some cases, I ask them why they think the property did not sell with the other agents, and they are forced to admit it. I offer to work things thier way the first 30 days, but warn them they are compromising the perception of the property when I demand a significant price reduction or listing termination.

A listing terminated by the agent? That gets their attention and I make sure they understand it is a privilage to work with me. I also explain my reputation is based on results, and I will not let a listing compromise my business reputation that I have built.

I admit I have taken a commercial listing that was slightly overpriced, but I also got them to agree in advance to a reduction after 90 days on the market. Why? It has highway frontage with 40,000 cars passing it daily. My large commercial sign there will give me more leads I can convert, more business, more branding, more exposure.      

Jun 19, 2008 12:46 AM #32
Rainmaker
142,385
Cristal Drake
Prudential California Realty - Fullerton, CA
Realtor - Fullerton Real Estate

I love this post.  I hear so many people taking listings that are over priced and get them to lower later.  They take the sign calls, etc... but I just really think our job is to be honest and sometimes tell the seller things that they just don't want to hear.  It is tough and you are right.  The last thing you want to do is chase the market down and take any ol listing out of desperation.  I am so pleased to read the comments too.  There is so much integrety here, it is so great!

Jun 19, 2008 12:54 AM #33
Ambassador
896,583
Missy Caulk
Missy Caulk TEAM - Ann Arbor, MI
Realtor - Ann Arbor Real Estate

Generally no, I won't take one over priced. I have taken a few to give it a shot, with a price reduction signed at the time I take the listing. Right now I am telling my sellers, 5 showings, no offer the price is coming down. There is too much inventory out there to wait and play catch up with the market.

Jun 19, 2008 06:18 AM #34
Ambassador
1,122,438
Jim Crawford
RE/MAX Paramount Properties - Atlanta, GA
Jim Crawford Atlanta Realtor - Atlanta Real Estate

In this market the answer is no!  Leave them for your competition, and have the sellers drive them out of business asking "Why isn't my home selling?"  Agents that take overpriced listings are not professionals.  Would you respect a doctor that wasn't man / woman enough to tell you have cancer because it makes them feel unconfortable?  What about the patient?  It isn't about the agent getting the listing, it is about serving the clients!

Jun 21, 2008 11:33 AM #35
Rainmaker
98,817
Elaine VonCannon
Coldwell Banker Traditions - Williamsburg, VA

I tell the sellers like it is.  So I tell them they need to get another agent.  90% of the time they call me and want me to take the listing anyway.  So I  make a deal with them and tell them if we have no calls or showings in 3 weeks then we lower the price.  If they agree then I take the listing.

Jun 21, 2008 06:03 PM #36
Anonymous
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Rainmaker
46,736

Meyer Leibovitch

REALTOR Boyds, MD
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