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New pricing strategy; It will work for you!

It's everywhere you look, this pricing strategy. It's guaranteed to send your homeowner right into the tailspin of foreclosure; List a property and freeze the price.

I see it all the time whether I'm working with Sellers or Buyers. How are Buyers and Sellers affected:

It can be a great thing if I'm looking for Buyers who want to purchase a fabulous new home as this property whose price hasn't been touched is probably overpriced thereby overlooked by most Buyers and allows my Buyer to uncover it. Yet, it hurts the Seller of this property as a Buyer who could be buying the home if it was priced correctly, reduced that is, will never stumble across it
It can be tragic for a distressed Seller who needs to sell their home.

As discussed here before by many who would agree, we have Listing Agents listing properties simply to get a listing and then forgetting about it. Set a price and basically walk away from any chances of success. Why would anyone want a listing just to have a listing? That will get you as the Listing Agent absolutely nowhere; no respect and no livelihood. So why do it then? It befuddles me.

However, Agents lack of concern for these distressed Sellers is truly alarming in today's real estate market when listing a Short Sale property. It is more than simply not getting a home sold because it isn't priced accurately, it's adding to a homeowners stress by forcing them into foreclosure. Not something to ever be taken so casually by so many that do.

I've run across listings for Short Sales that haven't been reduced for months. Who taught these Agents this strategy? It's criminal. That is just a lawsuit waiting to happen. How would you say that this is putting the Sellers interests in mind when you service them?

The pricing on Short Sales cannot sit at one set price. I've seen Agents who even have listed a Short Sale priced at what the Seller needs to cover his mortgage- oh my gosh! That is just ignorance.

If you take on something new, like a Short Sale, either set out to learn what you should do or refer it out to someone who has taken the initiative to learn the right way to conduct an ethical business. After all isn't earning a referral fee better than no closing or better yet the fine or criminal suit you'll be slapped with for negligence? Wake up!

The more you know, the better prepared, the better the outcome.

I serve Coral Springs and the surrounding cities such as Coconut Creek, Parkland, Tamarac and Sunrise in Broward, Dade and Palm Beach Counties of South Florida as your dedicated Realtor, Short Sale Specialist and CDPE Certified Distressed Property Expert ready to work for you.

I'm looking forward to hearing from you soon. Please call me at 954-464-1100 or email me at: lynnp@ImagineYourHouse and it would be my pleasure to help you!

Learn more about me and Coral Springs Real Estate as your Coral Springs Realtor

Posted by Lynn Pineda-Coral Springs REALTOR, Short Sale Specialist on 09/22/2009 06:22 PM

Comments (45)

Short Sale in the ActiveRain Channel

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Originally posted at: Coral Springs Real Estate : New pricing strategy; It will work for you!

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45 Comments on New pricing strategy; It will work for you!

SEP

As always, not every agent has learned from others' experiences...

What do you mean about freezing the price? do you mean that in the system they freeze it? or just in practice they are ignoring it?

Karen, when I refer to "freezing the price" I mean, that they set the listing at the initial list price as if it is frozen because they never adjust the price downward if they don't get any interested Buyers. For example, the listing opens at $200,000 and there it sits "frozen" with no changes.

SEP

Unfortunately we work in an industry that should require better continuing education. Until they do we are stuck with inefficient agents who really don't care.

Like any business, your going to have the top 10% that do care and work at remianing educated to handle current trends.

We just have to be glad that we are part of that group. There just aren't enough of us. Joy

That's truly putting the seller at risk. When we take a short sale listing, we have the homeowner sign a change order authorizing price reductions every two weeks, we get offers and get them on their way to SOLD!

I can't even imagine a price remaining the same because of an agent not trying to get a reduction. I always assume it is the owner not wanting to reduce. I have heard of the idea to get the seller to sign a price reduction scedule at the time of listing. I have only done this once but ended up with an offer without using it. I am still having trouble imagining the agent who is too lazy to request a price reduction at a point when it is needed. That is Common Sense 101.

Lynn - I agree completely. Great post. This should be on the radar of all Brokers in Charge. I can see a mountain of lawsuits coming.

Great post, and an equally great point. It's shameless tfor a realtor to undertake such a responsibility, when one is ignorant of how to handle it. I am of the same mindset as Liz. When I take a short sale listing, I have the sellers sign several price change forms (post-dated), so that I can lower the price regularly if there is little or no interest at the current price.

We have one listing here in town, just a couple of hundred yards from my office. It's clearly over-priced, despite its excellent location, because of its condition. The price has been "frozen" for over four months! I recognize it as an opportunity to find a property without a lot of competition for my buyers. I even reached out to this agent (who is very experienced in conventional sales, but not at all in short sales) and offered my assistance. It was declined. It's only a short matter of time until we see the foreclosure signs posted on the door. It's a shame, and it doesn't have to happen.

I'm curious what your thoughts are on a listing that IS priced properly, even on the low side, gets tons of activity, even gets an offer but is way low, has others interested but they can't buy yet. Now the home is on the market for 45 days, it is priced right. Do you reduced it anyway? Does the price it right strategy always work? I'm not so sure in this market.

I could not agree more with your statement. Great Article. Michelle Cappabianca

Some list and the sellers never hear from the agent again. Some are too busy with family and their 'real job'. Part time agents do not have time. Others just simply do not seem to care. I see most BICs as business people and not boss/supervisors so they never cut their ranks and will bring any warm body on board.

Nice post Lynn. Sometimes it's hard to tell the seller the news but it is our job and price reduction is one of them. If they disagree, it may even be a good idea to have them sign a document that you recommended a reduction to X price and they declined.

As far as the comments on the pre signed priced drops I agree that it is nice to know upfront if the sellers are on board with that strategy. On the other hand if you list a lot of property and other buyer agents realize your strategy, they may advise their clients to make even lower offers as you get near your normal price decrease dates.

Your comment that some agents get a listing just to have a listing is spot on. For some it can be just a numbers game, get the listing and count on it being sold by others in the MLS.

That is a shame and a disservice for the clients that pay their bills.

How often have we driven by a overpirced home with a sign in the yard, newspapers in the driveway and the flyer box empty. We know it is overprice because it has been sitting that way for months.

RE: short sale listings with frozen prices.

More than once I have called an agent whose short sale listing has been on the market for what seems like a long time with no price change to ask for current information about the property and have been told that an offer(s) is being considered by the lender. So why is the property showing as active? "Because we don't have assurance from the lender that the offer is acceptable, so we want to get more offers" is the common answer. It only takes me a second to hit the "complaint" button for our MLS!

John Juarez, REALTOR

Windermere Properties of the East Bay

John@Carlmedford.com

510-673-0686

I think I see your point. When my buyers have seen everything in their price range, I start to check a slightly higher price range for homes that have been on the market more than a couple of months. Then, I look at the listing history. If they've never lowered their price, I take that as a sign that the seller is not motivated. If the seller has made a price adjustment or two, I take that as a sign that my client should take a look and maybe get an offer in before other buyers, who will see it at the next price change. Very frustrating when the home is obviously over-priced, but seller won't budge.

Lynn, There has to be a strategic plan to "find the market" when pricing a property. If we are talking exclusively about short sales, then the lender should be encouraged by seeing what the market will bear via an aggressive pricing strategy. They don't have to take anyone's word for it, they can just look at the results. Property starts at 189,000 with 4,000 reduction in price every 10 days until you get an offer at the 165,000 price, which you always knew would be the price point when you took the listing. 60 days on market, great presentation for your short sale lender to review.

Like chuck, I also get the price reductions signed by the seller in advance.

This has been going on since 1972 when I got into the business. For 27 years I've preached and hoped this industry would get it right. So now I will just focus on you top agents in Active Rain who understand the importance of dynamic pricing. Certainly the best procedure is to price it right initially. Here are some ideas for this market:

1. Use an X-ray as a prop in your pricing presentation. Show it to the sellers and ask; "Would you be mad at the radiologist to see a cracked femur?" Well please accept my CMA in that same spirit because it is simply showing you the reality of the market.

2. Personally preview the four most comparable competing homes for sale so you can accurately present them to the seller.

3. Do a "CMA Field Trip" in which you physically take the sellers on a tour of the competition. Have them guess the asking prices.

4. Send them a constant email drip of the new listings that compete against them.

5. Call them frequently and discuss price.

For those of you who have my "Pricing Your Home to Sell" DVD, be sure they watch it.

While it may be the agent's fault in some cases, we must remember it is the SELLER not the agent that sets the price for the home. I have talked to sellers that need a certain amount of money when they sell thier home and would not listen to me. Just lost a 1 million dollar listing because I said to price it at around or less than 1 mil. The listing showed up about a week later for 1.35 million. This was the same price the previous agent listed it for and it expired. The owner is the owner of a construction company who should understand the housing market. The old saying, "You can lead a horse to water but you can't make him drink" is true not only for horses ( and I have owned horses), but also for some sellers.

Some agents are also using an "overpriced" addendum when taking a listing agreement. In essence, it states that the seller understands and agrees that they have refused to price the property at the agent's recommended range based on current market data. This gives an agent an "out" of the listing agreement if the property does not sell within a specified time, with the seller knowing that up front.

you are so right! we are seeing this in our market and the agents that are producing are getting strong price reductions. Now we are even seeing the terminology in the agent remarks about the price may not be sufficient to cover the balances, etc.

While I do run across the occassional overpriced short sale, what I see more are the short sales that are priced thousands of dollars, sometimes tens of thousands of dollars, below comps. I ran across one the other day that was priced $100,000 below sold comps in the area. Of course, it was under contract and the listing agent was negotiating with the bank. I can't imagine when the BPO comes back, the bank will accept this insane value. However that said, I've seen enough BPOS to know that there are a lot of lazy agents out there doing broker price opinions with no real understanding of what they are doing, so nothing would surprise me.

Lynn--It's true it can be frustrating to see the overpriced listing sitting there for months, but sometimes, as mentioned above, the seller doesn't want to lower the price. There are some good strategies also listed above for an agent not to be in that situation.

Morning Lynn, While I understand that some listings are overpriced due to seller demands it is the job of every one of us to get listings priced to market ! Those who make no attempt are not doing their seller any favors.

On a short sale, you should have an offer in less then 2 weeks if it is priced properly. If not, you better lower it quickly until you get an offer to submit to the bank. It takes long enough as it is without bad pricing. Our job is to get our client out from under their house.

Pricing is key. Most Short Sales around here are priced low and get offers quick.

As Forrest Gump once said "Stupid is as stupid does." Sellers who do not demand results from their Realtors may be victims, but they also have an opportunity every day to cancel their listing contracts and find someone who can truly sell their home.

I always tell homeowners that want to sell that there only two reasons why a home does not sell - a) bad marketing; and/or b) poor pricing. Hiring a new agent usually takes care of both.

I have to agree, all that happens when a property doesn't sell is that the consumer's situation gets worse, not better. A short sale is a short sale, so lower the price and make it happen!

I agree completely wit you. Great post. It's hard to tell the seller the fact sometimes. But I think it's our responsibilities and price reduction is one of them. Those agents who don't do it are not doing their clients any favors.

We build the price reduction into the listing agreement for our short sales, every 2 weeks until sold. Works a high percentage of the time.

Michael Curtis

Exit Realty Professionals

Portland, Oregon

I explain to my short sale sellers at the beginning what are plan is for reducing the price on the property until we get an offer.

I agree 100% on the old theory about why agents insist on selling the listing! As a Exclusive Buyer Agent, it drives me nuts to say the least! However, in today's market, I can understand why old school brokers insist on teaching newbies to go out and get new listings anyway you can. What ever the seller wants-just put a sign in the yard, it's free advertizing. Quote! "We'll get them to lower the price later". One Independent broker in my town who has to compete with a couple big firms (won't mention names), does nothing but play the numbers game, which is really what sales is all about, isn't it? This broker, inspite of what most of us think as being unethical, and his reputation in town, consistently earns a high six figure income. The worst thing is; The Big name Firms hate his, you know what, but in reality they do the same thing. I don't like it, You don't like it, but we all have to live with it-cause-It ain't going to change, anytime, soon!!!!!!

I can't help but think that some of these agents have these listings solely to capture buyer leads.

Joy, you're right as something is needed for those who are lacking in common sense. To me these things are just common sense. Don't these Agents know that we are in a service business and we must service our customers.

Liz, great....you have a plan. A successful business needs to have plans.

Donna, I hear you...common sense.

Wayne. Thanks. Yes, you'd think more oversight would be given by Brokers but then at the same time we're business owners and we should now how we ought to run a business. Perhaps Agents should sign an agreement to agree to use diligence in their business dealings

Chuck. Thank you. Your example you cited is beyond words. I wouldn't be able to sleep at night knowing that I contributed to a homeowner going into foreclosure...and oh, the lawsuits we'll see...just wait and see.

Pam, if it's getting tons of activity something still isn't just right. What kind of feedback are you getting from the Agents; there must be some issues with the home; bedrooms too small, needs updating, etc. If it is a Short Sale, I'd say you don't have the luxury to wait and see, you must reduce to get an offer as 45 days is too long. You have more luxury of time with a non Short Sale but do the sellers really want to wait, reduce it.

John your comment is two fold. First, Agents getting involved in a business that they are clueless about should find a new hobby. Second, you nailed that on the head as some Brokerswill take any warm body; but why? What's in it for them? That's so much a part of the problem. If offices were more selective in those that they bring on board, we wouldn't have so much lackluster performance in our industry.

Brian, Thank you.Yes it is our job, our responsibility. We must take responsibilty for our actions; too many do not. That wouldn't be good for one to figure out our strategy and take a wait and see approach; however that would take risk on their part if another Buyer beats them to the offer.

John, common, oh yes, but harebrained indeed.

Joetta, yes,some instances of no price reductions may mean a Seller is firm at a given price yet quite often it can mean that an Agent isn't servicing their customer properly.

Dean, yes this strategy clearly shows the Lender that you're attempting to get top dollar. A Lender will always want to see this and will be more inclined to an approval that has traveled such a path.

David, great ideas to get your Sellers to understand that pricing is an integral part of selling a home.

Steve, so you'd advise to stay away from the Seller whose like a Horse! You are right! Coudn't resist.

Barb, I don't know why one would take a listing when a Seller wouldn't listen to your advice. Too much time is wasted. I've made that mistake in the past and I refuse to do it again. I try to learn from my mistakes.

I agree the listing should be priced to sell but I hate when listing agents post o ridicules low price that the bank will not take. It makes us look like a bunch of jerks when we have to tell someone. It is listed for $99,000 and the bank will not let it sell for that. It makes me mad when I write a full price offer all cash as is offer close in two weeks and they will not take it. It is a waste of my time, my buyers time and it make us look like a horses butt.

SEP

Very true Lynn. Sometimes it is the Seller who will not budge. However, the Agent should have the guts and the intelligence to walk away.

Alan brings up a valid point. I have seen plenty of agents who list properties at ridiculously low prices so they get their first offer and can submit paperwork to the bank.

On the other hand, many short sale lenders dictate the list price and even if we don't agree with it, we have to list at that price, if that's what the bank will accept and nothing lower. Quite common with FHA short sales.

the market will change drastically if one day every agent will stand up and say, 'i won't take an overpriced listing. i won't buy a listing.' now trying to pricing it right and missing the mark is different. if agents did this, inventory will be cut in half in 24 hours and every one will be better off.

SEP

Great post! If a seller is not willing to listen to my suggestions on lowering the price within weeks, I much prefer to walk. This is a disservice to them.

Well what if the sellers do not want to lower the price because 'they're loosing enough money already'? Playing devils advocate here. It's not always the agent.

OCT

Yes, this is a recurring torn in my side too!! Sellers who are reluctant to adjust their asking price can be real deal killers. I find my sellers fall into two camps. One group is headstrong and resistant to price reductions even though we had the "talk" at listing time explaining the need to constantly review the market comps and adjust the price. Then there are the sellers who understand how to work with a professional providing a service. This group asks questions, weighs the facts and makes decisions that will help sell their property. Now if I could only tell which was which on the day we sign the Agency Agreement!!

Thanks for a great blog topic.

OCT

Lynn,

We have a lot of that going on in our area. However, I think the Sellers are the cause of most of the "frozen" prices! Their attitude is "let's just wait and see!" I'm not sure what they're waiting to see but I don't think the vision is going to arrive!

Kathy Opatka

OCT

Morgan, it's hard to understand why Sellers want to have their homes for sale at prices where Buyers just walk on by; we wonder why do they bother. Thanks.

Kathy, you're right they like to wait and see if just maybe a Buyer will pay above market value for their home! HA.

NOV

Nice post Lynn. This is such an emotional time for sellers and many of them are not listening to their agents. They are resigned to the notion that they will be in foreclosure.

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