How are YOU Handling Sellers Who Want You To Over-price Their Homes?

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How are YOU Handling Sellers Who Want You To Over-price Their Homes?

How are you handling sellers who want you to over-price their homes? It may seem that the owner who insists on a couple of hundred thousand more in their asking price should be accomodated, especially if you are not the only broker on the hunt. But pricing properties properly should be priority #1

As we all know, if a seller wants to sell their property sooner rather than later, you are really doing them no favor if you are not totally straight with them---things are not like they used to be in real estate. Most sellers have an idea of how the recession has affected real estate prices; most however, still believe their house is the best house in the neighborhood and should get more money than the next guy's. This is not the time to acquiesce just to get the listing.

HOW ARE YOU HANDLING SELLERS WHO WANT YOU T O OVER-PRICE THEIR HOMES???

This is where we come in as professionals; it is first and foremost the priority of all of us to price properties properly. If we don't inform the seller that his price has to be the most sharply priced in order to sell before his competitors, we have not done our job. Here's what I do to educate my sellers:

Always do an in-depth comp search---go as far afield as possible to make sure your final price decision is achievable.
Make an appointment with the seller to take him out and drive past recently sold properties---bring along all printed materials that substantiate your information.
Make it clear that you must be in control of where the price will be--you will listen to them but you need to have the final say on the price or you won't take the listing.
Give him/her a quick tutorial on how an internet search is done by a customer--just in case they have never looked. If a price is just a few thousand dollars over the available comps, they won't come up in searches and they won't get the potential buyers attention.
Give the seller other reasons to choose you to market their property---including testimonials from other clients/customers.

If you have done all of the above, you should have no problem telling them all about the houses you have listed--and sold recently!!!

My last experience with an over-priced property was a disaster--and I lost my customer because he was left with the idea that I was not working on his behalf. I was handling the buy side of a deal that was listed by someone in my office who has established that he "always gets the highest prices for his sellers!" This agent is on the record for over-pricing properties to achieve that---It used to work....in a "hot" market.

Now there is no way that an over-priced property will even get shown, much less get sold!My buyer was reluctant to bid on the property which was priced $2million over the market--but he went ahead and told me to put in his bid. I did and the listing agent presented it--I was not privy to the negotiations with the seller but the best the listor got was a small drop in price---this was last year. The property is still there, and still over-priced! No other offers and no compromise to get the house sold on the part of the seller....My buyer threw up his hands and walked away after coming up significantly in his offer and getting a low ball response.

PROPERLY PRICING A PROPERTY IS CRUCIAL TO GETTING IT SOLD!! This is no secret---there has to be reason to list a property in this market--This is no time to "test" the market, since almost everyone who is buying now is looking for a good price and in most cases that is the only way deals are getting done! Deal is Done

GETTING THE DEAL DONE!

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**ALL INFORMATION AND CONTENT IN THIS BLOG IS ORIGINAL TO PAULA I. HATHAWAY

Paula I. Hathaway, Senior Vice President, Prudential Douglas Elliman

Southamtpon Village Real Estate Specialist since 1995; Also Specializes in North Sea, Noyac, Water Mill and Bridgehampton, New York

Diamond , Gold and Chairman's Circle Awards; Top Producer since 2005

Click here to see my Hampton's website to see all my listings; please email me or call me for all your real estate needs in Southampton, Bridgehampton and Watermill:

http://www.prudentialelliman.com/paulahathaway

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Posted by Paula I Hathaway, Senior Vice President, LBA on 01/30/2010 11:17 PM

Comments (224)

Pricing in the Home Selling Channel

overpricing homes, comps, priceing properties, internet search, professionals, educate sellers

Originally posted at: HAMPTONS REAL ESTATE, SOUTHAMPTON, NY: How are YOU Handling Sellers Who Want You To Over-price Their Homes?

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224 Comments on How are YOU Handling Sellers Who Want You To Over-price Their Homes?

JAN

2010

Hi Paula....no matter where you work and live, price is very important, you must price a home so the market will respond, Buyers are comparative shoppers and know home values.

I say to My Seller if they ask $500,000 and I suggested the market place is indicating $450,000..I say Okay Lets try $600,000, then then reply my home will not sell at $600,000, I reply you are correct and the market place will not accept $500,000 as well" People then understand.

Paula ~ On occasion, I will accept a listing if it is within 5 % above real market value. However, the Seller must be willing to reduce the price if there is no interest within 30 days.

JAN

2010

In the end, it just makes the agent look bad. I still don't know why agents continue to play games with sellers?

Paula, it is very easy if they do not fit into my price point and they do not seem that they will meet my pricepoint i.e.: they are unreasonable, I tell them it is very simple I spend close to two thousand dollars starting up a listing, not counting my time and energy. I pay that upfront if I believe I can sell the listing if not we are still friends and good luck list with someone else and please call me in 3-six months when you are ready to sell it.:))

It defies logic that a real estate agent would sacrifice their ethics, their time and their reputation to accept overpriced listings, unless. . . . .

they just plain don't know what they're doing.

There will be ALWAYS an agent out there accepting an overpriced listing...Always...If it's not you, it's the next one..

It comes down to the psychology of the sale. Buyers percieve that the property is overpriced and sellers believe that it is worth more. To mitigate this perception I insist on the sellers hiring a reputable local appraiser to place a value on the property. I then list the property at the appraised value. The property is then marketed with the appraisal available to all. 99% of the time, the property will sell quickly and within 98% of the appraised value. Well worth the $350 fee for the appraisal.

$200k overpriced?! In a market where the average resell is only $150K, that seems totally crazy to me :)

That's why you'd have to clearly define "overpriced." If we're in the same ballpark on price and the house is in excellent showing conditions, I may list something a bit higher than I recommend. The best approach may be to suggest hiring an appraiser to get you a true market value on the home.

But, if the seller is not realistic on his pricing and doesn't want to see the facts that show it, then you, as an agent, wouldn't be doing your job taking an overpriced listing, and you sure wouldn't be doing anyone, especially yourself, any favors.

I use a dollar method as one example of value. I place a dollar bill on the table and ask them if we can all agree that it's worth about a dollar. Usually we do :) Then I ask, if I were to try to sell this dollar for $1.10-15, do you think I'd get any takers. No. Okay, so if we priced it at, let's say, 85 cents, do you think you'd get any takers. "sure, it's a deal." Chances are, you'd get more than one, right? "probably" And if that's the case, and the buyer knows it's value, too, it's pretty likely that you'd end up with a good offer around 90-97 cents (hey everybody wants a little deal), right? "yeah" Pricing a house is no different.

I like the part about "they won't come up in searches or get the Buyer's attention." That's useful verbiage.

Tim...... excellent idea. Also using a third party professional removes the Realtor from the equation. We are willing to market the property at a price the bank should accept. All the BMA gymnastics we do, all the negotiations we do mean nothing if the appraisal doesn't come in. The appraisers hold the golden key, might as well start with them.

http://erealtr.com/

Paula-great idea, and sellers need to know that they are in a market where they have to be competitive with foreclosures and short sales, too.

Hi Paula,

Amen. I would add to your list ... as you are driving past recent "solds" you should take them to visit current "competition".

I spend a fair amount of time on putting together my CMA and I include expired listings to demonstrate what happens when the price is too high. If a seller absolutely insists on over pricing the home and is not willing to agree to reduce the price to where it should be after 2 weeks, I won't take the listing as it's just a burden. I want to sell houses, not just have listings. I can see that someone might want to overprice the house to avoid a short sale, but I want something in the listing agreement that says that the price will be dropped to a specific $ amount if there is not an offer on the table by a certain date. I do explain that this approach carries the risk of wasting valuable marketing time as the days on the market clock starts ticking from day one. Luckily, I don't run into that problem a lot these days as most of my sellers are sufficiently motivated and many know that they are upside down.

If a seller is clearly not on the same page of reality, I do not take the listing. My time and resources can be better spent elsewhere.

An over priced listing is really not a listing at all. If a poptential seller is adamant about pricing too high I either:

1. Walk away

2, Have them sign a disclosure and collect an upfront fee

Fred: Very good technique for the stubborn seller who does not understand the importance of pricing correctly---especially now--there is no time to waste when it is taking 155 to 167 day on the market to sell a house (that's what our latest statistics tell us; on average of course). I also agree that we are dealing with a well educated buyer in a lot of cases---they know when something is overpriced and they just walk away if it is!!! Thanks for you comment Fred.

Great topic Paula! Yes, I clearly do not take an overpriced listing. It only hurts the seller. And I tell them that. And I tell them that there are agents who will take the listing just to take the listing. Some agents want it at any cost. But that it will hurt them (meaning Mr. & Mrs. Seller) in the long run. I always show the seller good comps and I show them the stats. And I show them the graph that if they overprice, they usually have to under sell to get it sold. And I have a few stories of some past experiences of over priced listings to back that up. And they usually see the light of day! And if they don't, I don't take the listing.

Melinda: I am finding here that even 5% over-priced is too much--the buyer sees that and won't even consider the house. Thanks for your input.

Alix: I know why they continue to do it---they are looking for listings and they are short sighted! Thanks for reading and commenting!

Endre: Very good; I have been known to do that too! I can VERY easily walk away from anything that costs so much to market and then sits!!! If more agents did that we wouldn't be here talking aboiu this, would we? Thanks for y our comment.

I don't take a listing that is not in the realm of reality...sounds sort of iffy, doesn't it. I always make an agreement up front to lower the price at a certain point.

Lenn: Dear, dear Lenn---you always hit it right on the head!!! "cut and dried" comments like yours are what we need more of....Thanks for your valuable input!

Claude: Only if the brokerage community wakes up and realizes the damage done to all of us when a property is over-priced. I am an optimist and I believe that we can be educated to pricing properly. See Lenn's comment above: "they just plain don't knnow what they are doing"! that means to me that they can be educated---or get out of the business. Thanks for commenting.

Tim: Appraisels are valuable bu tin this very unusual market, even appraisers are having difficulty pricing properly---they of course err on the side of caution. Thanks for your suggestion.

Roger--I love, love, love your $1.00 method---if you can get a seller see that you should not have a problem getting them to see your reasoning!....Brilliant!

Cheryl: You better believe that the search is the key--most owners understand that one! Thanks for stooping by and reading....

Bob:Thanks for your comment and I agree with Tom too, IF the comps are there--I always supply comps and in contracts for the appraiser too--that gives up to date, current prices.

Lisa: That's right! Short sales and foreclosures are a fact of life and need to be used as well--this is usually not investigated because those sales show up in another way and I find that here those reported short sales and foreclosurs sales don't show up as quickly as the regular trades. Thank you for your input.

Sue: Current comps are always a part of my routine--thanks for mentioning that. Those sometimes add an even more powerful motivation to the seller! Thanks for your comment.

Ute: You are right.....I like to add that caveat also on my listings that I feel are not priced right; however, now I am apt to just reject the listing if it is overpriced--the seller gets that and then there is no playing around with the price and precious time is saved from just sitting on the market for any period of time! Thanks for reading and commenting.

Ellie: ....And time is money! Thanks for reading and responding!

Bryant: Great idea, your number 2 suggestion: "I take the fee upfront!" Thanks for reading and commenting---Very important to know about all the options to this kind of a "no win" situation.,don't you think?

I have on occasion taken a property at a price that I thought was to high, only to have a price reduction signed on the listing agreement in 30 days. I have made the seller happy trying their price and I have kept a good saleable listing.

I stopped paying to advertise overspriced listings ages ago. I just tell them good luck if they don't accept my price and they move on to another company and the house sits and sits and sits and I keep my advertising dollars.

I'm sure there is a reason that agents still accept overpriced listings but it makes no sense. Every listing we take costs us time & money that we will not recover if the property doesn't sell. If an accurate CMA does not convey the message on pricing to a seller then I'm glad to let another agent waste their time.kumqua

Guilty as charged. I have over the years taken many over-priced listings. And hated it every time. And some I haven't taken were listed high by someone else and sold, or eventually came down and then sold or didn't. As much as we know about comps and neighborhoods and amenities, we never really know what a buyer might pay until they get there and make an offer. I strongly suspect that none of us are right all of the time. I further suspect that someone who gets 100% of their listings sold with short market time is coming in low most of the time.

That said, I have learned to put my recomended listing price in writing and get a committment that if we aren't getting any offers, or even showings at the seller's price we will reduce within 3 weeks or I'll let the listing go. The seller signs that and gets a copy.

Thanks for the post, Paula. I need constant reminders.

Paula,

There is always a range in which a house will sell in a timely manner. I rarely list properties where the seller elects to price their home outside of their range.

Rich

Nyssa: Very good point, "they usually have to under sell" the (overpriced) home to get it sold--this is crucial for them to understand and I thank you for bringing it up!

Gary: I am finding that by not taking listings that are overpriced, I have eliminated the need to get that caveat of dropping the price (if not sold iin 30 days) written into the listing agreement. It never seemed to work anyway--I always had trouble getting the owner to lower a price....they look upon me as the "bad guy" and then give the lisitng to someone else --usually at the same time finally dropping the price!!! ..Very frustrating, so I just avoid the whole mess of overpricing. Thanks for your comment.

Diane: As I mention in the response to Gary's comment (above) I don't do that price lowering technique anymore because it did'nt seem to work any more--it onlymakes me look like the bad guy and then I lose the listing anyway!! THnaks for reading and commenting.

Good Morning, Paula - I just will not list an over-priced home. I hate wasting everyone's time...been there, done that. I show my clients a graph that depicts what happens when the home is over-priced from the start. If it sells, statistically it will sell at a lower price than a comparable home that was listed correctly. It usually gets their attention.

Tammy: Good for you; if more of us take that kind of a stand, we would all benefit! Thanks for your input.

Cindy: Great; as you know, if we all do that we are all further ahead...keep up the good work!..and thanks for reading and commenting.

Glenn: We all need constant reminders; the main reason I wrote this post is because I was reminded about overpricing when I LOST a customer because of an overpriced house, as i mention in my post. Thank you for your observations!

Richard: I applaud you if you are that persuasive---we can all take that clue from your comment...thanks.

That is a great post. I sold a house a few years ago and my agent had to have a heart to heart with me on the price. I am glad she did because we sold the house for a fair market price and sold it quickly.

Kent: Very wise too! I think educating our sellers to this actual result will strengthen our postion whe it comes right down to it---and they will "get" it faster if they see the stats. Thanks for responding

Wayne: See? You are a great example of a seller who NEEDS to hear the facts; you will never be sorry about pricing a property correctly, and that includes the agent too! Thanks for your important input.

Thank you Paula. I will share this with the Realtors in our office. Since we're in a primarily second home market, we run into this problem frequently. Our sellers don't REALLY have to sell, so they insist on overpricing. Then, when it doesn't sell quickly enough for them, they too often jump ship and list with another broker and then they reduce the price. Frustrating.

Jan

Jan: Thank you for your response---I am going to circulate this in my office as well. I didn't realize the importance of educating people until I wrote this post! Now it is evident that if the whole real estate community put in the effort to price properly we can move forward more quickly--the housing market can only benefit by this and can then recover more quickly.

Listing a home at the price the seller desires (if you do not agree) without a game plan for reduction in 14 days (if there is no movement) is a recipe for a bad relationship between the agent and the seller. They will resent you in the long run when things do not go their way. Hard call, I know.

Thanks for the great post Paula! I follow the same school of thought and have had to decline accepting a listing when the sellers are being unreasonable. Why would I take an overpriced listing to only have frustrated sellers blaming me when their house doesn't sell? The best part of these listings is when I see them listed for the seller's dream price only to not sell and then be re-listed with another agent six months down the line at a list price lower than I originally suggested. If they would only have listened to me to begin with they would have ended up with more money and less frustration in less time. Moral of this story; choose your clients wisely.

Thanks for the comments. Even though we still present all the same ideas, the Seller's still "don't get it"!! I was on a 3 hour listing appointment recently where the Seller isisted that they could not sell their house as a "short sale" and could not bring money to the table either. Over and over again, I explained that the house will not sell for $80,000 over market value, nor will it get seen or even offers, since the Buyer will assume the Seller is in-flexible.

Then she shocked me, she wanted me to list her house at what she could come out even with after expenses just to satisfy the bank that she had tried to sell it with a Realtor and then possibly they would consider a "deed in lieu of foreclosure". I could not beleive that she wanted my Broker and myself to take a listing we could not sell, and buy advertising for a house we could not sell! I told her she may get an offer that would throw it into a "short sale" position and she said she just would not accept the offers.

Obviously, I turned down the listing, and also the listing of her other home.

I would say 2010 is off to a rough start in my area. With still so many overpriced homes for sale, lots of low ball offers coming in and not many solds being posted to the MLS, It has been painful to watch and participate. So with this wisdom gained, I plan to take a longer vacation than usual in March. I hope it chills out a little while I am away.

Let's not forget about a very important ingredient in the sale of property, the appraisal. You may well get a cash offer and that woud be great. Most transactions need financing and an appraisal that goes with it.

This is exactly what I needed to read as I will be working next week with a new seller. In my first conversation with the seller he indicated he just wanted to "see if it would sell". We haven't talked price as yet, but I will go in loaded with my price in mind and hold the line.

I used to say if we have not got any offers or traffic in 30 days we lower the price to where I think we should be. But that was in a sellers market. I have posted about the oses you take when chasing a market . So now I do ot take the listing

I took a course with Floyd Wickman a few years ago and one line always stuck with me when dealing with clients who want to overprice their listings. "I'd rather disappoint you now than disappoint you later" or something to that effect. How true, how true--because they will invariably be disappointed with you later when their house doesn't sell.

Melissa: It is a hard call but it is easier than losing the listing in the long run---you don't have to advertise it etc....and then lose it because it doesn't sell. Thanks for your comment.

Being in a buyers mkt.or any if seller wants too much,after you have explained,etc...I tell them,"im going to turn you down now then let you down later" and press on.

Maggie: You are so right! Don't waste your time---you can also wait for the right time for an overpriced listing to expire and catch it as it falls into new hands---yours!!! (and at a better price-one that will move it!!)Thanks for commenting.

Terry: Good comments--and good for you for not falling victim to that manipulation!

Mary: Have a good vacation---when you come back maybe everybody including the sellers will have gained the wisdom that is needed! Thanks for taking the time to read and comment.

John: I agree, however most financial institutions do their own appraisals and with the problems with pricing today---good luck in using that as a lever to get the right price. I suggest you stay involved in the process and give as many comps and "in contracts" that you can supply. Thanks for your comment.

Charlie: good thing you don't take it---30 days is a long time--on top of the normal time(in todays market) that it takes to sell a house. Thanks for your input.

Peggy: That makes a great by-line....thanks for sharing it!...and thanks for reading and commenting.

TJ: thanks to you too...the idea must be on time---you are the 2nd person to come up with that idea and it must be right!

Paul, good straight forward advice. One of the worst parts of it being overpriced is reporting to the buyer each week what has happened the previous week.

You either have nothing to report or you tell them it was shown and no interest. Either way you look bad.

Ted: I am sure you mean seller and I agree; there is nothing worse than the sound in voice of the seller of great dissapointment---unless you count the unhappiness he expresses and that you get to hear when he tells you he is so unhappy with your results he is giving the listing to some one else!!! Thanks for reading and commenting.

First, trust statistics, then trust your gut. I have turned down one request on an expensive home that combined pricing at $100,000 over anything reasonable with a neighborhood with a 43 month absorption rate, and their asking for a discount on commission on top. I turned down a referral for a home that was bought at too high a price, and no problem I would rather spend my time doing the art of the possible. I did take one overpriced listing against my stats and gut. Guess what? it didn't sell or have even a showing. So I fired myself because I deserved to be fired.

Joe: I, too, have taken over-priced listings--- in the past. I have also learned the hard way and I believe that we are not in a learning curve anymore. It should be a standard practice now that a house can not be listed if it is over priced.Thanks for your input.

Thanks for the great post. Over-priced listings aren't good for the seller of the realtor.

I am honest with them but with very limited exceptions i do not take overpriced homes.

J.David: You are so right; nobody wins when the property is over-priced...thanks for commenting.

Andrew:That's good...lets keep em coming! I believe that if we all take that position, we can wipe out OVER-PRICED INVENTORY Thanks for your input...

This is an age old issue at times. I just have one of the "over priced" seller listing and over the three months the sellers wouldn't reduce the price of the home. No matter what I said or did in the way of showing them the market conditions, competition, season or whatever, they still insisted on staying at the same price. At some point you just give up so to speak. There are some, like these sellers, that just don't get it and think it's us just mouth off!! Oh well.......

Patricia/Seacoast NH

Paula: Wrote a post about this recently: Buy the Listing --- Sell Out the Seller. It's such a self-serving practice.

Patricia: Those are the ones I stay away from---and I have had a few in the past. All that I got out of those relationships was a big advertising bill and an insufferable client who ened up takin their home of the market! thanks for your comment.

Kirsten: I read youor post---you are right on and it is not going to get any better to over-price listings. Maybe in a red hot market you can "test" like we did in the early 2000's but those days are long gone!Thanks for your input and good luck with your post.

Can it be that the person that is the listing agent on an over price listing, is doing it so that his/her broker is satisfied that the agent is out doing something?

So, often I find that brokerages do have a performance quota and that can impact an agents decision to take listings that are unsellable.

Paula, I think this is the best post I've read about not taking over priced listings. Losing your client because they thought you weren't doing all that you could is exactly why I don't take them. You pointed out some great ideas on how to handle them. My favorite is driving them by the solds.

I turned down a listing in my own neighborhood 16 months ago. They wanted to list it $50,000 above market. NO WAY was I going to have an expired in my own back yard....Well, 16 months and 3 agents later, it is under contract. Guess what the final price was? The price I originally gave them, lol.

If after educating your sellers and they insist they know the market better, just say no :)

Glenn Roberts posted: "I further suspect that someone who gets 100% of their listings sold with short market time is coming in low most of the time."

Assuming that the agent is marketing the home adequately to the public, there is no such thing as "too low." To save space, I'll go back to my $1 example. If I were to offer up $1 to a room full of people, all of which have time to review the dollar and make an offer, and I chose to offer it up for sale at one cent, I can guarantee you that I'd get top offers in the 90-97 cent range all day.

There is simply no such thing as an "under-priced listing."

Paula,

Agents take listing that are overpriced all the time. If the seller is dictating the price the listing agent will soon learn that when the property doesn't sell they will be looking for another listing agent. You can rest assure that the next agent that gets the listing will get it at a reduced price.

I generally walk away if a seller is wanting to over price. Marketing dollars and time are at a premium and I don't want to waste any on a overpriced listing.

Lorraine: I think that if that is what is motivating the agent to overprice, the broker would go out of business! Thanks for the input.

Elizabeth---you are so right; and thanks for the compliment. Great comments too , don't you think?

Thank you for yours

Roger: Right again!...what is too low??? I know of many a happy seller who sat back and watched multiple bids come in and overtake the asking price; and a good deal was had by all. Thanks again!

Marguarite: Exactly! We all know that feeling of breaking our necks to sell an over-priced listing and then watching as the house sells as soon as the new agent gets it---at the right price! Boo Hooo! Thanks for your comment.

Kim: I have a feeling we all would like to be so smart to do that every time---it is not easy to say "No thank you" and the see someone else get the listing; just know that it WILL be there the next go around and then you, in all your wisdom can take your wise self back to the owner and very nicely tell him/her: "see?, I know what I am talking about---don't you want someone who is this smart to handle your property?"...works every time if you can be patient! Thanks for your comment.

I do not take overpriced listings! I got over this bad habit some years back and funny thing is...I often get the listing when it doesn't sell with the agent who got the overpriced listing and played with it for six months. We are not doing anyone any favors when we cave to the uneducated and unrealistic expectations of sellers who overprice their homes.

Hi Paula, If a potential client and I cannot come to an agreement on a properly priced listing, I don't list their home.

I am willing to price a tad over what I think is "the right price" with this caveat: "We drop the price 2% every 21 days or 11 showings, whichever comes first" and with that we are usually to my price within about a month.

I do think I have my pulse on the market I am in, but have I ever been wrong...yes and because of that I'm willing to list it higher (5-7%) more than my comps say.

Cindy in INdy

Jeani: ..Like your glasses! This is what we all should do: be patient...the listing will be available and if we keep our wits about us and check back in 3 months, 6 months or even a year--then we can get the lisitng! Thanks for your input

Gary: Very wise of you to not take it---patience (see above) and then you will get it...Thanks for your comment.

Cindy: The "tad" may not seem significant but it can keep your listing from getting found when searches are being done---keep that in mind. Thanks for reading and commenting.

I show them the comps and what I can do to get exposure for their homes. But I explain to them that even if I were to rent the Goodyear blimp at the Super Bowl and advertised a $500,000 home for 1 million, it would only be advertising that there was a nutty buyer out there that had mispriced his/her home.

If they insisted that their home was "special" (how many times have we heard that?) or that they did not want to "give their home away" (Again, how many times?) I wish them well and recommend that they list with someone else. But I ask them to call me if they finally come to the conclusion that I was the only one telling them the straight honest truth and not just feeding them what they wanted to hear. I explain that there are agents who will take any listing just to get it on the books and then try to beat them down lower and lower. I am not one of those. Hopefully, they will remember and call me back. If not, at least my competitors are losing money and their reps on a home they knew would never sell for that high of a price.

The home is only worth what buyers will pay for it, no matter how "special" it is.

Hi Paula,

I've never understood taking an over-priced listing. Some agents I've talked to say they do it because they beleive they get leads from the sign. When I worked on a team this was the reasoning the team leader used. But I never personally saw him get any spin off.

I did see him invest a lot of money in advertising for nothing though. Ultimately the sellers got angry with him and let their contracts expire - go figure :)

Pam.

John: I can see that you are able to dispell the myth of the preciousness of the sellers home! good work. Thanks for reading and commenting.

Pam: I never heard of anyone getting leads from overpriced listings--the customer is too smart in todays market to get hoodwinked by some unethical agent. When it comes down to it, everyone benefits from the properly priced listing. Thanks for your valuable input.

It's just too tough out there these days, and a waste of time even in a good market, to take overpriced listings. If you have enough time and the prospective seller is willing, I'd also suggest showing them the "competition" in their category/community. Yet, if all the stats and comps aren't enough, it IS sometimes better to tell them "Thanks, but no thanks." They might reconsider -- and you will have a more cooperative relationship - AND (let's hope) a Sale

Evelyn: In this market I am finding the sellers AND the buyers to be very well informed about prices, thank goodness; this makes it harder for an agent who is just looking for listings to get away with overpricing....sellers are counting on us more than ever!!! Thanks for stopping by and commenting.

I do not and will not list an overpriced property. It's not worth my marketing efforts to try to sell it. Plus, since it's against the Code of Ethics to lead a seller to believe their property is worth such and such price, I rather not get slapped into a hearing because I listed it overpriced even when the seller told/asked me to.

Donna: Good! You have taken a stand and that is good! Too many agents when confronted but an overpriced property that they have taken say something like: "Well I told the owner that the price is too high but they wouldn't listen to me!"...Nice to know that there is an option and that option must be exercised! Thanks for your comment

I have recently gotten a couple of my sellers to pay for my advertising, etc. if they want to overprice it and waste my time and money. On one, it was on lockbox, so I did not have to show it and I never did any open houses. On another, an agent in my office was ok with showing it, so it took very little of my time.

Thanks so much for a great article, as a relatively new agent this helped me to understand how to deal with a client who says He won't come down on his price.

There are a few here that are famous - well maybe not famous - for taking overpriced listings. For one they pick up so many buyers from the listings - yes, many, many listings = many buyers at least in certain price ranges. In the last few months we have "lost" more listings with our realistic pricing because the seller decided to go with the agent who was going to list for highest price.

David: This over-pricing is such a touchy subject because it seems to make sense to do it---just doesn't seem to work for anyone---except maybe an agent who do has another agenda. Even if, and especially if, an owner wants to price it incorrectly it does make a neighbor or a whole neighbor hood re-think their pricing---that can start a whole community over-pricing. Then the houses sit there and in this market when price is such a issue, it delays the improvement of the housing market; those houses are NOT going to move---pity the poor homeowner who has found himself in a bad situation in this neighborhood and needing to sell....too bad! Get the picture, David? It is not very humane.

Nancy: Glad I/we could be of help---even if the comments don't contain good actionable advise---there is certainly enough of the wrong things to NOT do!

Kenna: Please read my comment that I made to David above.....the result of over-pricing is so self serving as to be a choice that I do not understand. It serves NO ONE. So in a hot market, an agent may be able to get away with it---in a bad market when pricing right is the difference between a family being able to sell a house to get out from under financial stresses, and being homeless, it is an indefensible thing to do! Thanks for reading and commenting.

I have been there way too many times. I show them the actual SOLDS and hope they get the pciture.

I took an overpriced listing last Fall and completely regret it.

Beth Ann: That's the best you can do; if they don't like it move on! Very good on your part..Thanks for commenting

I always try to make the seller see the reality of the current market conditions ~ I think communication with them is the key because many of them really don't know what is going on day to day in the world of real estate. Thanks for your article. I agree.

Judd Reynolds Great post and discussion on various techniques to show the sellers the current value. I won't take overpriced listings. It would be a waste of time and there is too much competition. With decreased values, it is even challanging working expired listings. Many owe significantly more than the current value. If they "have to" or really "need to" move, they may consider other options. Otherwise many are just leaving their homes off the market and people are choosing to NOT move for now. Quite a few that must leave their home are turning their homes into rentals until the market changes or their financial situation improves. Our company's property management business has really been growing.

Paula, Great reminder to all on pricing. Practicing real estate marketing for 20 years now I have found the internet has made it alot easier for agents to deliver "the bad news". Most sellers have some idea as to value just based on what they can obtain on the internet. We go in to do the fine tuning, sometimes it leads to a smack down however most "serious" sellers today are much quicker at getting it than in the past. If they still don't listen then you remind them how much money they're paying you, they usually listen than.

Handle it by telling them the truth and showing them the comps. Ask them for the listing at the advisable price based on the market. If they are unwilling, say you understand if they have to list with someone else. But if it doesn't sell, not to hesitate to give you a call. They will learn either now or later. But our reputation is on the line with every listing we take. Over pricing is not the way to go.

It's very important today to ASK SELLERS how much they owe and if there are any LIENS on the property. If we don't know this information upfront it can cause a lot of headaches. If a seller is upside down then things are different. Ask, ask, and ask again. Most sellers go by what they want to net and not the market value.

Paula,

Wow, some great points were made in this post!

These days when sellers are reluctant to "listen" to me I start adding carrying costs into their net sheet. Then they ask "what's that for". My response "it will take me this much time to sell your house and it will cost you X for that time"....usually that's when it starts to sink into their brain that we need to chat again about that initial price!

Paula -I've started taking sellers to other homes in the neighborhood that are comparables. Show them what their competition looks like. If after all of that and educating them on pricing strategy.. You've just gotta walk away as you mentioned. Some people can only learn the hard way.

Great post! I talk to my prospects about price right away== there are many over-priced listings in my area and I am not afraid to tell the owners where they should be. I will re-blog, for sure! Kathy

Paula, there are some situations where we will take a listing that is over-priced, with the understanding that the price will come down if we are not getting any showings.

It's been mention plenty. I make a plan to do price reductions from the start. I like to sell property not list property. Long listings just mean the property is too high priced and I make that clear to the seller.

FEB

2010

You are absolutely preaching to the choir with this post. In fact, I don't think taking an over-priced listing is worth it.

Great post and comments Paula. It just doesn't make any sense at any time to take more than an nomimal over priced listing with a signed reduction in place if no action after several weeks of exposure. It's a disservice to the sellers and a waste of every ones time plus a waste of marking expense, stress and time. Currently in many markets sellers who don't need to sell don't belong in the market to "test it" and add to bloated inventories. Shame, shame on the agents who take these listings.

Sue of Robin and Sue

Very useful dialogue here. Even if an overpriced listing gets action and an offer, it's still going to need to appraise. Then what happens? That's a lot of "leaps" to end up with a seller having to do a price reduction anyway.

Overpriced Listings sell other people's houses ! I also use both Zillow and CyberHomes to sober them up ! I tell them that ALL buyers are looking at these sites in advance of viewing their home anyway !

Judd: that is happening here too---we do a signifiicant amount of rentals every summer and now the inventory has increased significantly--it just is not a great time to sell if you don't have to.

Ross: ....and so are the buyers---both are more educated than the agents in some cases--that's why it is so important to understand the magnitude of over-pricing a property. I does NO ONE ANY GOOD!!! Thanks for your comment.

Wendy: Right on the money! Sounds like you have done your homework and I commend you for that; we all need to make this priority #1 in order to make a difference in the housing market--or we can just go ahead and do the over-pricing thing and watch as the market nosedives again with all the foreclosures that result!

Tamra: I agree but then there are the educated sellers/ buyers who are more anxious to get out from under their underwater home even if it means getting less than they really want. Thanks for reading and commenting.

Sheila: Great idea-do you explain that at the first meeting or is that what you do if they resist the price you suggest? I believe in being up-front with the owner so that I don't end up with an over-priced listing---that's my goal.

Christopher: Good job---I do the same thing; and as I mention in my post--I bring supporting data with me so that they really "get it". I have never had anyone insist after one of those trips! Thanks for commenting.

Kathy: Thanks for commenting and I hope you are able to use this post to help accomplish what is so needed right now!...we must properly price ALL homes right now or we face a devastated housing market---again!!!

Frank and Sharon: That is all well and good---but how often does it happen that you are able to get them to drop their price? The other side of the coin, and please take this in the right vein, when you allow a seller to price their own property, you have turned the "expertise" over to them and that is NOT what they want! Most sellers are looking to you to be the expert! Thanks for reading and commenting.

Frank: It means so much more: "Long listings"=more inventory+less sales+desperate homeowners=a very bad housing market and a longer recession!!! It always matters how you price a property-Thanks for reading and giving your valuable input.

Aaron: Terrific! Glad you have seen the light; hope you can also see the bigger picture of how each of us can control the housing downturn...the sooner we all see it as you do, the faster we will climb out of the recession! Thanks for the comment.

Sue: I like what you said at the end of your comment; just have an issue with EVER over pricing. Even a little over-priced does it's damage to the whole housing market. See my comment to Frank in #98. I give the equation of the way it all breaks down and ultimatley what it means is even 1 overpriced listing can mean the difference between ending the housing market crisis and perpetuating it! Thanks for reading and commenting.

Ray: You are so right! Appraisers are looking at so many things now and most have a goal to be more accurate then ever before...it does not do any one any good even if you ARE able to generate a sale on an over-priced home...thanks for bringing this up--it is crucial to bigger picture also.

Michael: ...and they are more informed than ever! Thanks for mentioning that over-pricing a home will sell your neighbors house faster!

I beg to differ, what do you say to the seller that got $5000. more than the top price because she felt she didn't have to sell and so it took 60 days extra.

I had a seller from France pay $10,000 more than the highest price ever in a subdivision because the street was the same name as the street she lived on in France. I thought that was th edumbest thing I had ever heard from another agent. Till

I had a Pro boxer pay $100,000 more CASH for a high end home that his Mother wanted, because she had never been able to live in a subdivision like that (her words).

I will take a home at any price as long as they

Sign my CMA
Agree to a 10% drop in price every 30 days
Order an appraisal to be used at closing before we start.

I can't tell you how many listings I get and sell because of the so called EXPERTS in this business. I use to think I knew it all too.

What good is having a listing that will not sell. This market is about buyers agent. Anyone can get this listings these days

I know we all probably have stories on this subject, I just turned down a listing myself because of all the reasons you stated, I tried to inform him and provide the data and he still thinks his dated home would sell for almost 500K, it had been on the market for a year and never sold. I refuse to take a listing with this type of seller, and you are so right Paula, they will just blame the Realtor that the home did not sell. He had many excuses why his house did not sell last year, the Realtor did not do this, did not do that, ect. Bad pictures in MLS, and so on. Time to move on!!

You hit the nail on the head. We are the pros and we should act like it. It's impossible to justify an overpriced listing when you have the data available to prove otherwise (and so does every other agent in your market). I think a great amount of respect is lost amongst our peers when we give in to the pressure of an overzealous seller (knowing that we know better).

This is very timely... I have a listing appointment with a woman from my church this morning who already interviewed and decided to pass on another realtor who wouldn't take her listing because she was not realistic in pricing the home. And you know what? When I comped the property, I came to the exact price that this agent did! Hopefully, I can use a better tactic that won't put her off and that will get her to see the light. I actually pulled a record of sales in her neighborhood back to 2006 just to show her how the values have decreased as well as the volume of homes sold each year. Wish me luck!

Paula, I enjoyed your post especially the comment about buyers looking for good deals. If it is overpriced it is wasting everyone's time and helping get another home sold. Yes, the buyers are out and buying now---why not have them buy your home? I heard a great comment in the CDPE course that a REALTOR said (probably an ActiveRainer): We are in a price war and a beauty contest.

Don't look over the services of a professional appraiser! It can help back you up and make the home owner feel more comfortable with your pricing decision. The investment in an appraisal pays off when you consider the extended marketing costs of listing a home that is over priced. In addition, the additional morgtage and interest payments to the home owner.

It is indeed all about PRICE. I have a LICENSED APPRAISER prepare a Desktop Valuation for EVERY listing we take.

Wow, Charles in Charge, you do have a different spin on this problem. I think a lot depends on where and what your market is. My market is in the energy corridor in Houston and mostly petroleum engineers. So I don't have to tell you what engineers are like. They are numbers and detail people and do not buy or sell on emotions like the name of a street. My listings in my market sell in 1-14 days. Sure gives me something to crow about when i go on a listing presentation. And Dave Beson has a good line when you are up against another agent who said it was worth more and above my CMA. "Please don't chose your agent on the basis of who gives you the highest list price. The agent who gives you the highest price may not be the best agent to get your house sold at the highest market price." "You see the same solds as the buyer is going to see. and it has been proven that the longer a property is on the market, the less it ends up selling for than if it was priced properly in the beginning."

Great ideas!!!Thanks,

Lane Mabray

Great timing for me too. I had a buyer to whom I sold a house last year ask me about his neighbor's house, which was almost identical to his, was listed for $124k more than he paid, and went under contract. He was excited that property values had gone up. What actually happened is that the seller had a buyer, but the house didn't appraise, and the listing was withdrawn. So the ole "even if we find a buyer at your list price, the buyer won't be able to get financing" phrase is more than a cliche... it can be a real problem!

Great dialog and ideas. I like the idea of using a dollar bill to explain fair market value. Something everyone should be able to understand. I also liked the idea of driving the seller by the comps used in the CMA. It's easy for sellers to 'justify' their house as being more 'special' when they're looking at pictures. It's another story all together when you drive through the neighborhood and see that the comp is probably just as 'special'.

If I do decide to take a listing that isn't priced where I suggest, I always write in a 30 day clause to automatically get the price reduced to my suggested list price. That seems to work.

All great ideas to tell your seller. Pricing a home $2 mil over market it certainly a unique market, but here just pricing a home $10,000 over market will put it out of the running.

I love Sheila's idea of putting in carrying costs. I'm going to add that to my "net sheet" as well.

Even if you find a buyer qualified for and wanting to offer the list price, if they are buying with a mortgage, then, of course it has to appraise. Then, depending on the type of loan, it has to go through either an FHA appraisal or AMC if it's Conventional. You'll have to deal with jumping through all of the emotions and stress of a low appraisal.

Hi Paula, For me it has become very simple. If I have done everything you have already suggested above, and if the sellers still want a much higher price, I tell them I do not feel good about taking the listing. I am quite clear with my message: only houses that are very well priced will sell in this market!

If they want to ask a little higher, than I will accommodate them for a month.

I think in this market it is extremely important to be very clear about price expectancy.

Setting the listing price is much the same as coming to the contract price--it is best a negotiation, here between the agent and the seller.

While the final decision must be the seller's, the seller needs to be advised when they go hog wild that they hired the agent because of his or her expertise and extra knowledge from following the market daily.

Great Job

This is so true.... I love that dollar bill theory.. good thinking.. I just turned down several listings..isn't it so true too, that seller is the one that will make a low offer on the one they are buying..!!!! dah.....

Marlene Shelton Giles, Lynchburg, Va. RE/MAX 1st Olympic

It was good for me to read this post and the comments, Paula, as tomorrow night, I will be taking a listing and I believe the sellers will want to over-price. I've got my research ready, but it'll help to have some suggested dialogue to use to talk them down too. Thanks. -- Tanya in Montreal

Echoing Carols comment. In our state the home must appraise. I also show the seller a graph of homes sold with percentage of the list price to sold price and days on market. Market absorbation rate is also important in that the homes priced well always sell first and closer to listed price. I discuss how much the seller is continuing to pay each month for the home to sit. The reality is that a home priced high will sell for less in time because of the time it sits. Fewer buyers want to see a home that is priced high, many feeling that the seller will be difficult on negotiating any repairs during the inspection period. Stick to your guns, taking a high priced listing costs you money and creates stress for the seller.

Paula and other agents - great post and great comments!!!

One method I use is that a property will not sell unless it appraises.

I turned down a divorce client where one of the sellers were in "LALA" Land - 2 other properties had recently sold that were short sales. The seller said that he wouldn't compete with distressed sales - still in LALALAND. This only works when a minority of sales are non-distressed. Not in the Phoenix Market...we passed on the listing. He listed with a "Discount Broker," and 130 days later, it's still over priced by 15%.

There's a premium area in my market where one broker is dominant - this is a $1.0 MM+ neighborhood. He (and his team) takes any listing, any price, knowing that he can pressure sellers to drop as time goes on. His goal is to control the market - we see this in luxury areas all the time - one agent takes as many as they can to control the market. In 2009 (the ones that he sold - only 45% of his listings), sold for an average of 22% under initial list price, and 190 days on market. Other agents in this area do the same, because they're in LALALAND.

Good selling!!!

Brian Amster - Keller Williams Arizona Realty

We simply pass. It isn't good for me and it isn't good for them. We go for the win-win situation all of the time.

~Katie

Thanks for the post Paula. It is difficult enought to sell a property priced correctly, the overpriced listings just sit and accure market time.

Great article. I am a little different regarding working with a buyers, especially in a market where there are overpriced listings. I teach my crew to "ask" or "request" the listing agent to permit you the buyer's agent to present the Agreement to Purchase to their sellers. Our MLS specifically permits this. The listing agent does not have to agree. I found it far more successful when the buyer's agent actually "negotiates" on behalf of the buyer, imagine that. The buyer's agent is not normally permited to stay around when the decision is made nor should he or she be but if the listing agent permits it, go ahead and stay. It is far too easy for a seller to say no to a piece of paper, much harder to say no to facts. The buyer's agent should appear with all the same supporting data you mentioned when taking the listing that would most likely support the offered price. We say we are good negotiators but it has been my experience (30 years) that few if any buyer's agents rarely get the opportunity to negotiate with anyone other than the listing agent and that can be fruitless.

There were a lot of really great posts here. I never take an overpriced listing and have lost plenty of lisitngs because of it. In most of these cases, the home ends up on the market for an extended period of time and the seller ultimately ends up selling for what I recommended in the first place or perhaps even LESS.

My question is this. We have an agent in our office who continually lists homes, existing and new construction, for more than most agents in our office feel they are worth. This puts us all in a precarious situation when practicing dual agency. Don't we have a duty to disclose to our buyers when we feel that a home is overpriced? Even when it is a company listing? And when an in house listing appraises short and the seller wants to negotiate to the appraised price but perhaps knock out some of the other concessions they agreed to originally, shouldn't we inform our buyers that they are paying absolute high end for the home if they accept the deal? More than likely the appraiser gave everything he/she could to get it to the appraised value. I struggle with this every time it happens and really feel I'm doing a disservice to the buyer (especially a first time home buyer) if I don't share this information. I would be curious to hear how others are handling this.

I canceled the last overpriced listing I had when the seller refused to lower the price. He is still listed now 6 months later at the same price but with another agent. I used to think that taking an overoriced listing would at least make the phone ring for potential buyers. Haven't found that to be true anymore in this market.

In my area Phoenix, AZ I will not take an over priced listing a waste of time and money marketing a property that will not sell. You get offers at the real price and the owner rejects them. Total waste of time. The homes thatI see that are the most over priced are short sales with owner agents go figure.

Jack

Paula,

This is such a GREAT and TIMELY post for me. As a relatively newer agent, my biggest challenge has been conversations with sellers over price. I think I do a pretty darn good CMA, and the sales prices for these homes have shown me to be right on target. Yet, too many times, I find myself in a defensive posture. A year ago, I didn't have the confidence to be strong on rejecting the listing, because I was afraid I was leaving money on the table for the seller.

NOT ANYMORE!!!! I HAVE SEEN THE LIGHT!!! (I feel like I'm at a revival of some sort!!!) Overpriced listings don't sell, and the seller ALWAYS blames the agent. I now have my sellers SIGN my CMAs, and if they don't agree to a realistic price, I say "I really wish I could sell your home at that price, but I can't, and neither can any other agent. I wish you all the best, but I'm sorry, I can't help you at this time. If you reconsider the comps I have given you and decide to price your home to sell in this market, I would be delighted to partner with you." I am woman, hear me roar!

Excellent idea regarding a drive by for recent sales (with the customer). Thanks for the article!

One other important piece of market analysis that I find extremely helpful: expired listings. If I select Sold comps from the past 90 days, I also present details of the houses in the neighborhood that failed to sell -- i.e., those that expired. It's probably no surprise to this audience why most of those listings expired, but when prospective sellers look at homes down the street in comparable condition and recognize that price was the issue it can be a real eye-opener. "Mr. and Mrs. Seller, which list would you like your house to be on -- Sold, or 'What's wrong with that house?'"

Paula,

I agree 110% on this statement you made: "you are really doing them nofavor if you are not totally straight with them". I went on a listing appointment over the weekend from a FSBO. After talking with them and seeing what their motivation was to move and talk about how they came to the asking price they had listed, I had them show me their home and let me know the things they had done in their time living there. After the tour of their home we sat down and I went over what I had thought and researched on surrounding homes in the area. Showing them the supporting comps I brought helped put the value I was giving them in a more realistic prospective.

When all said and done, I listed their home and have it listed $30K less then they did. They were happy with my value and were grateful I was honest and up front with them about the value. Far to many times do I go into a listing appointment to find out that Realtor ABC was there before and gave the homeowner a much higher value and incorrect information on the surrounding comps. They sometimes feel I am trying to list it to low just to sell it quickly when in fact I am just being honest and giving a true value.

As Realtors we are to work for the client and sale their homes. Sale them at a value that is supporting with the surrounding home. To many Realtors go out on appointments and tell the Seller whatever and everything they want to hear just to get a listing. Its not helping. Just hurting the Realtors that are doing thier jobs and making it more and more difficult when we have to explain to the next listing why we feel the house next door is over priced and we don't feel we should list their home that high as well.

Be honest, straigh forward and show the seller real comps as to why their home should be listed at the value you are giving.

I loved the comment "I am going to turn you down now rather than let you down later". I think when we take an over priced listing we are just setting ourselves up to both let down the seller when we can't sell the property and ourselves for taking the listing when we knew it was over priced to begin with. If you present your CMA and show them the comps, with not only the solds and the currents showing what has sold and the current competition, but also the expired for what didn't sell you are showing them all aspects of the market. Include the inside photos of these comps in your CMA so that they can really see how their house compares to the comps not only in sq.ft. and number of bedrooms and baths but in condition and upgrades. Condition is what makes a house sell and not just size and beds & baths. Taking the seller into some of the competing homes on the market before they set the price is an excellent idea. So they know what the buyers will be looking at when they compare their homes to others out there.

It is hard to convince sellers, especially those who have lived in a house for a long time, that their home isn't worth as much as they thought. But if they are motivated to sell then they will see the light and work with you to allow you to market it for a price that will get it sold. If they insist that it is worth more than the market will bear, then leave it for another broker who is willing to waste their time and money on an overpriced listing. But don't forget to tell them to call you in 6 months if it doesn't sell and if they are ready to go with your pricing.

Charlene Reinauer, BH&G The Masiello Group/Nashua,NH, www.CharleneReinauer.com

Paula, Excelent Post, Thank you for share...Have a Great Day...

Mirian Carlech

charles Rutenberg Realty

You wrote an excellent piece on overpricing. I've re-blogged this. Thanks, Paula.

With April 30 on the horizon, overpricing is sabotage. There will always be some tension between the agent, who wants to sell the house as son as the market will bear, and the seller, who is clearly biased. I give people a timeline for "their way" before we start "my way." That way, there is no misunderstanding as to who promised how much to whom.

I think some people have to learn by experience. So in an addendum, I attach comps and clearly list what I believe the listing price should be. I also state that unless we reach price "A" then any and all marketing material is to be paid, up front, by the seller. When we sell....I will credit this back. So I don't incur any out of pocket, yet take the listing. They learn

Hmm, Charles in #100 gave us something to think about as far as the unique "out of the blue" buyers who may pay over market value. I agree that in these cases the appraisal, acknowledgement of the CMA and the agreement to reduce sharply by 10% monthly is a good strategy.

The rule of thumb for me, in my market, is to be within the bottom 5% in asking price of similar homes. With so few qualified buyers out there, I show my seller in an MLS search and CMA how we need to capture the interest of those few.

There's a house I've been following that started at $425K when the last sale of the exact same home was $380K over a year ago. They reduced it to $420K. Why did they even bother reducing? If a buyer even considered this house at $380K, that reduction tells them to not even bother.

A very simple answer. You say "Mr & Mrs homeowner, if you really want to get your price then you have to sign the contract offered by Greg Shepherd as he buys properties with a full price offer. See if his terms are acceptable to you. "

Greg S

myhousefreeandclear@gmail.com

Paula good points. We have even started talking a lot about 'absorption rate', looking at how many properties are selling each month. If there are 20 homes on the market and historically only 2 are selling per month, they have a 10% chance of selling each month! What needs to be done to increase those odds? Not pricing yourself over the competition!

Good luck.

John

Hey Paula, this may be the most difficult aspect for us agents to deal with in this tough market. There are still agents in our area "buying" listings, becuase they do not have the strength to tell their sellers what the price should really be. The answer to this question is easy, just don't take an over-priced listing. Period.

There is a time and a place for everything. I have an overpriced listing right now. The seller know it and I know it. He gives me a lot of referrals, so I'll put his home on the market where he wants it. It's a business decision.

Your post is right on! Why is it that sellers consistently feel their home is an exception to the current market?

Paula,

Excellent post. Your points are excellent, and really an overpriced listing is not a listing. Congratulations on all the comments you generated.

I agree with all of you. It is all about price. The sellers that insist on overpricingtheir homes are the ones that give you the most aggravation. I address the price from the start. It is amazing that many Sellers can not even acknowledge that we are in a bad economy. We are actually in a good market! The rates are low, prices are low, so the buyers that are qualified are ready to move forward if the price is right! It's all based on motivation! If the seller does not know where they want to go, they are not ready to be real!

iF ANYONE CAN SHARE SOME GOOD PRICING CHARTS, PLEASE SEND THEM TO ME..

Excellent post! I really like the appraisal method, very hard for anybody, Seller or Buyer, to dismiss the current price when it's in writing.

In the past I've just let the listing go with a "told ya so" attitude. They usually sell for alot less than they could have after sitting on the markey for many months.

Paula, Good post. It is all about pricing and exposure. Simply.

I hav a 99% sales-to-listing ratio, and I didn't earn that by taking overpriced listings. I tell people to go to Canadian Tire and buy a For Sale By Owner Sign to put on their lawn if they don't need professional advice. Why people would bring in a realtor for advice then do their own thing doesn't make sense to me. The value of a well-constructed CMA is huge for getting the listing, and you DON'T have to come in with the highest price either. The clients who choose the highest price over other criteria are not the kind of clients you want.

it's just such common sense to me. if there are expired listings, MOST of them were overpriced. On listing appointments, I've always taken comps and details about solds, but now I am adding a focused discussion of the appraisal process. I find that many sellers really don't understand how fair market value is determined. Early in my career I used to be afraid of insulting sellers over the pricing issue; but now, I find that if you ask them to help you justify "their" price with facts, that helps bring them into a conversation of why their price won't be successful. I'm not saying that I always start where I want to, but it's got to be reasonable and pretty close or I really am not interested in taking those "waste of time" listings. There are agents in our market who will list for whatever the seller wants, justifiable or not. I'm not one of them. I think it helps to explain to the seller also that your goal is success - not just to "test" the market.

Good blog post Paula. Twice last week I walked out of a house without listing paperwork signed, because I told the seller the house would NOT sell for what he wanted.

In most cases I agree but we just went through this with a friend of mine. The agents all wanted to list his house for what they say was the going price and they had some comps. My friend called everyone he knows in the area and ask us all what we thought, 99% of us told him to hold his ground the worst that could happen was the house would not sell and then he could lower his asking price. But he can't raise the price if 100 people showed up the first hour!!

Anyway he sold the hose on the third day for the offer $3,000.00 under his asking price losed in 30 days. So each listing will be different, by the way the difference was about 60k on this house.

It has always been interesting to me that as hired professionals, sellers will argue a price with us, when they wouldn't dream of doing the same with an attorney or doctor. If we want to be seen in the same class as those professionals, we must not only do our job and do it well, but we must utilize all our tools to our best abilities, including all those mentioned in all the above posts, and some I didn't see such as absorption rates and supply rates. Knowing your job and doing it better than anyone else, and not being afraid to walk away from the unreasonable client is the best way to "raise" our level of professionalism and reduce our frustration in these areas. Great job Paula!

Looks like you've struck a nerve with this subject Paula! Just recently we went rouge with a backwards CMA tactic. In addition to presenting the 'apples to apples' comps for the sellers property, we printed out the listings which were priced were the seller wanted to be. Then saying to the seller... "Put yourself in the buyers shoes. For $450,000 would you rather buy your house or one of these?"

Finally that drove our point home and we got much closer to the real CMA numbers. Gotta think outside of the box sometimes. ;-)

Hiring me as your REALTOR is not contingent on the list price. PERIOD. In fact, my listing presentation reserves the right to withhold my professional opinion on price for my CLIENTS. I will happily provide a price RANGE, but until the listing agreement is signed I do not divulge my final number. I work on the assumption that I am getting the job based on my marketing plan & work ethic. Not based on how much I think your home is worth.

Over pricing is a problem nationwide. No matter how good or slow a marke tis in 2010, an over priced listing will not sell. The Realtor will always be blamed when their is no or little showing activity. Then the seller will be asking for a termination or will fire you when the listing expires. A short term listing of say 90 days is another kiss of death. Seems that those short term listing sellers alwyas want to over price, too.

I educate seller and if the don't listen I recommend they don't sell it at this time depending on their own personnal situation

This is a complicated issue. Most homes, by definition, will sell withing the middle range of the bell curve.

On the other hand, people by nature, will want to test the upper range to start with.

Generally speaking, I think it is a good idea to approach this with a flexible attitude. Since the market is so slow, you are probably not going to spoil anything by incorporating time for a 'sellers learning curve'.

Little or no traffic tends to soften even the most 'hard core' sellers.

Great post! I too try to educate the seller. I think taking them to listings both active & sold is the biggest eye opener. Thanks again-we are all up against sellers with the best property.

Glenda Merrill

The Lori Bowers Group

760-574-3957

Paula,

Great post. I wish more agents would follow this. Your post should be used as a manual for newbies.

I don't want to step on your toes, Paula, but I'd just like to make two wee comments about #149, if I may:

Quote: "My friend called everyone he knows in the area and ask us all what we thought, 99% of us told him to hold his ground the worst that could happen was the house would not sell and then he could lower his asking price. But he can't raise the price if 100 people showed up the first hour!!"

A house would need to be extremely under-priced for 100 people to show up in the first hour :)

But seriously, if the house is listed reasonably, in a seller's market, the BUYERS can and will most certainly raise the price with competing offers and the seller would have his choice of which offer to accept.

In the recent seller's market that we've experienced around here, most of the homes listed went into competition and many sold for over list. In Toronto, I heard told that some homes sold for $100,000 more than they should have. (It has certainly been a strange market).

And I think "the worst that could happen was the house would not sell" is the whole point of not listing over-priced homes, isn't it?

Saying that about real estate is like a criminal lawyer saying to his client, "And the worst that can happen is we lose and you're sentenced to death by a jury of your peers."

Excellent post. I have passed on clients who have demanded to overprice their listings. Some people seem to think that it is like fishing; just wait long enough and some big fish will come in and snap it up. They fail to realize that theproperty loses value for every week that it sits on the market.

The agents that usually will take these overpriced listings are the agents that are so desperate to get businesss that they'll give in to the seller in the slim hope that they will somehow get a listing and closed transaction. They are living from hand to mouth and have no real concept of the real estate business. The ones who get hurt are the sellers and the real estate agent, of course it makes the rest of us look bad as now theres another example of real estate agents who don't know what their doing and are in it for the money only.

Quote:"But seriously, if the house is listed reasonably, in a seller's market, the BUYERS can and will most certainly raise the price with competing offers and the seller would have his choice of which offer to accept."

They what you are saying is all listings should all start low and hope the competing offers come in?

Your reading to much into what my comment says

My point is be flexable real estate has changed and is going to change a lot more!!

Quote:"Saying that about real estate is like a criminal lawyer saying to his client, "And the worst that can happen is we lose and you're sentenced to death by a jury of your peers."

Your selling a house, not someones Life!!!

Paula - great points.

I explain that people with over priced listings are people that are fishing. Fishing for a sucker. Presumably one that isn't represented by a Realtor (Buyers Agent) that obviously wouldn't allow them to overpay in the first place. The listing agent had better treat the "sucker" buyer as a customer if they find one or could even face ethics charges.

I like to show them the math of the market. Where there house was when they bought it how it appreciated to where it was worth a lot more than it is now and then show how it has fallen down to reality today. They may not like it, but it makes it easier to see and understand. Then of course focus on comps, average days on market and the fact that at least here we are still in a declining market led by foreclosures.

Thanks again Paula. Chris

Hi Paula, Not beating around the bush and taking the seller with you to preview the competition is very helpful.

Quite simple actually...when I do an initial consult to list we discuss seller's anticipated listing price. Once review of market analysis and supporting docs. are completed I make a recommended list price. If the amount is too far apart (from seller's anticipated), and they are adamant about the list price I may have to advise them to seek another agent. Now, depending on location of property, etc. I do give a little...but make sure they understand it will be for a limited time (usually 1 month), and we determine what the list price will be reduced to in advance. This works for me an my business model.

Denice Ulm, Associate Broker, MIKE HILL Real Estate

I have learned the hard way. But what hurts is I see agents "buying" the listing and ultimately getting the sale and commission when the price comes down.

They what you are saying is all listings should all start low and hope the competing offers come in?

Not at all. The key phrases here are "listed reasonably" and "in a sellers market".

I have learned the hard way that taking an over priced listing is a bad idea. When I first started my real estate business I took 2 listings from friends that I knew were over priced. I did every thing I could to convince the sellers to lower the price. I spent a lot of money and a lot of time marketing the properties. In the end I lost the listings and the friends. Tough lesson to learn. Oh yeah, the first listing was re-listed with another Realtor and sold for the price I recommended.

Have them sign a market/pricing disclosure statement and an agreement to charge sellers marketing costs upfront. We all know it's a waste of time, money and your reputation as a professional real estate salesperson when you way overprice a listing specially when it's by $200K!

At least you'll get "sign" calls.

I disagree that there is no such thing as an underpriced listing... I see them all the time... our office recently closed a deal on a property in Newport RI... comps showed a price point with this property being some $40K under market... it was a foreclosed property, and the listing agent was, get this, out of state based in Boston... they have many foreclosed proeprties in RI, and we keep our eyes pealed for them, since invariably this agent is listing them too low... if we catch them early, we have been able to get them for very cheap... one we just bought, and turned around and sold without any upgrades for $45K more... our investors love these things...

That said, most of the time, sold prices will come up to near market... but not always, especially if the agent listing them either does not know the area or does not care to get the seller the highest price possible.

Here is an inspiration video clip about how to handle this problem! Enjoy-

http://www.xtranormal.com/watch/6035483

Don't take listings that can't work!

"Properly pricing a property is crucial." This market does not respond well to overpriced homes.

It is amazing to see all those reactions about over-pricing properties from all the agents like it is a sudden phenomenem .This has been going on on since I started getting interested in real estate many years ago.

The interesting thing is that many notorius over-pricing realtors were and still are successful with this strategy and were able to build a name and a respectable business in the higher-end market.

There are signs however that in this market things are not going too good for them , but they are still able to keep up their immage with many ( not selling ) listings, understandable at a financial cost.

While many realtors don't even read publications or internet listings ,(except their own) .the general public will not keep up which listings are on the market for a long time and did not sell .

My practise is to show sellers the most likely selling price in a range, with he option to sell it quick, over several month with likely price reductions or probably never,unless the market changes or the inflation starts and blows up the house prices.

I give them a regular update of their competition, the ones succesfully sold and the reason I think why .

Some get it , others don't . I understand their wishful thinking and wish them good luck !

Great dialogue!

I try to educate my sellers, but sometimes they just don't get it. Sometimes you have to let them sit on the market for a few weeks and then revisit the issue.

Paula, I appreciate your post so much. I agree it is our job as professionals to establish the reasonable expectation up front. Our clients deserve no less.

I just got off the phone with a prospective seller - I told her what her property is honestly worth - also told her that she could probably find an agent that would list it higher but that the home would just sit on the market... There is always an agent out there that is willing to take a property at a higher price than what it's worth - I'm just not that agent. I spend alot of money and time and effort marketing my properties and I am not going to spend those on a seller that is not realistic.

I will share that the AZ market, along with CA, FL and many others is not a market to "test" the price or sellers who aren't serious. We share data and go from there on the price....

Charles: Excuse me while I remind you that we all have anomalies in this business--just never count on them to drive our businesses ALL the time. If you read what I said to David in #79, we need to keep in mind the Bigger picture; at least if you want to function in a humane and ethical manner. Over-pricing in this market is not only unethical but it does indicate a certain arrogance toward the rest of the community. "I will take a house at any price as long as they" give you what you want--screw the rest of the world....if you know what I mean.

Tony: I know what you mean--the over-priced lisitngs make no sense at all---sometimes I wonder what the motivation is because I have never seen it work in this kind of a market--once in a while it did in the Hot markets of 2004-2007. Thanks for your comment.

Deborah: Very wise of you to move on...time and money wasted is what you get with over-priced listings. Thanks for you comment.

Charita: Thanks for taking the time to comment--and not only does the listing sit--it affects the sale of other properties as well. We have whole communities that are over-priced simply because an agent decided to go with one sellers request to be way over-priced on their home....they all followed like sheep and nothing is selling...for 1 year now.

Lorraine: Good luck when you go back to the seller and present the facts......Thanks for reading and commenting.

Hi Barbara: That is a great line and I will use it too---"We are in a Price war and a Beauty Contest".....goes to show you that the wise agents have already figured it out and are moving on if the seller is not hearing the news. Thanks for the tidbit and the comment.

Tom and Tony: You both hit it right on the head---appraisals are an important tool and probaly the best one with a difficult seller.Thanks to the both of you for reading and commenting.

Lane: Thank you for pointing out to Charles the issue of using "anomalies" to back up your claims--this business is not about anomalies and never will be--see my response to him above...and thanks fro bringing up the fact that the longer a property sits on the market the less it will sell for. Thanks for your input and valuable comments.

Neal: You are dead on with your comment...most people out there trying to sell their homes look for all the bits of news that will help them get the highest price for their home---how about this news bit: It won't sell if it is over-priced! You can even list the reasons and start with the appraisal that will reveal the problem eventually. Thanks for you r comment.

Catherine: I wouldn't do that for even 30 days! Not in this market---that time period will seem like an eternity to you and to the seller because it probably won't even get shown. Meanwhile you wasted the most valuable time of a listing--when it first comes on the market. Thanks for reading everything and commenting.

I learned a GREAT LESSON FROM MY DR.! He put my weight on a graph. I understand a graph, I can see it. I can see wher it went up and where it went down. Not just consecutive numbers on a page. I export my data to Excel, and to Pivot Charts. They are awesome and easily understood by all. SOLD --> ACTIVE --> DID NOT SELL.

Thanks Doc!

I have some general rules, but the name of the game is to be flexible. If I can't get the price I want, I write in automatic price reductions. If they want an absurdly high price, I'll probably pass. It just depends...

Linda: I didn't mean to sound elistist when I mentioned that price differential--this over-pricing is happening in every end of the real estate market and the result is just as devastating in the high end as the low end--that is what I wanted to convey.. The high end of the market here is dead! houses that are over-priced dot the oecean front areas and sit there looking older and shabbier each day--buyers will buy today but the price on any piece of real estate has to make the buyer feel like he is going to miss the buy of the century if he/she doesn't step up and buy now!

Carol: You bet! and the appraisal will determine the outcome--thanks for your comment.

Diana: ..be very careful under any circumstances in taking an over-priced listing, especially in this market!

Phil: Hopefully if they do recognise that the agent is the expert, they will follow his good direction and price the house for this market. Thanks for reading and commenting.

Marlene and Tanya: Thank you so m uch for reading this post and commenting--You are very smart to heed the wise council of the memebers on AR who are sharing their incredible knowledge and expeertise in the priciing of properties---I am learning so much myself as we go along here!

Jim and Brian: Very good points about the listing sitting and aging as it does...and Brian, that pointyou made about the high end agent--we have a couple of those here and they are really suffering because they are loaded down with inventory and nothing is selling--one of these guys is ready to pull up stakes, I hear. Thanks to you both for you r comments

Katie and Eric: thanks for reading and commnenting--hope this dialoge is helpful and good luck to you..

Paula.. I've come across this frequently as of late. But the market value *IS, WHAT IT IS*. If after doing a CMA, long conversations with these prospective clients, and they still want to WAY over list.. They can go to someone else. Even if it were possible to get this absorbent price, the appraiser wouldn't be able to appraise the property. Complete waste of everyones time.

valerie osterhoudt

Paula,

It can't be overpriced or it will languish and you will get a bad rep. You need to include the REOs as well and substantiate your data.

This is so accurate... I am also finding that agents are actually price accordly a lot more than usually. I just had a client in my car and he was asking about how much can he underbid on a house.... I explained that that depended on how good the agent was... If the agent is good, then they priced it right and it should sell at or close to the asking price.

I also took the time to explain that most of the "bad" agents are no longer in the business because they could not survive... So we now have a much more experienced and educated set of Realtors working out there. BTW- if you are still in Congrats! You did something right!

Thank you for a good post in these tricky appraisal times! Were all aware that most Sellers mind set is that they have gold... well the price has dropped an if they want to SELL it they must let us do our jobs and price it correctly. I to have walked away from a couple listing that Seller were trying to go fishing for that Buyer... who would not know the market! Sorry no time for useless overpriced listings!

Paula, I inhertied a listing that has been on market 5 months in the office that is over priced. I put the home on a caravan and got feedback from the other Realtors. Several Realtors suggested a list price of $99900. The home was listed for $129900. I did a curent CMA and got back with the sellers. I told them " that home values are down due to the foreclosures in the area " and suggested a price reduction of $30000. The seller was offended and said " there not going to give it away ". To make a long story short, they where mad. I told them " I understand but I just want to let them know what some similar homes were selling for and the home probably will not appraise for $129900." The listing will expire soon.

Paula, great post - one of my goals for 2010 is to NOT take overpriced listings. Like some of your other readers, I have done so in years past and have not felt good about it. Now with market conditions still being what they are I would be insane to try and market an overpriced property.

Thanks!

I let the market speak. Bring stats and a market analysis and if they still want to overprice, walk away. It is a very difficult conversation, especially with sellers that bought when house prices were at their peak, but it has to be done. I avoided it for a long time and now feel very comfortable in getting price reductions and not taking overpriced listings. Great blog. Thanks

Great post, I have walked away from listings when sellers wanted to overprice their home. It was not worth a bad reputation that follows such a listing.

Totally agree with you points. I once took a listing knowing it was overpriced, thinking I could "convert" the seller once I proved to her the price was unrealistic. Unfortunately, she only got a few showings and the listing didn't sell. She listed with another agent and the home is still on the market. Its difficult to convince some sellers their home will not sell for the price they want. Trust me, I won't make that mistake again.

I also try and present market data, for the whole market by price band in the given town. and now, with the market decline over the past several years I give this info for the past 3 years, so they can see whats happening over time and in given price band. they are very often remembering the house prices of 2005.This helps put it in perspective and its not just me TELLing them the markets changed, they can see it for themselves!

Hi Paula,

That is one of my New Year Resolutions this year is not to take any overpriced listing. I think you are right on about leading a seller on and it just does not feel good when the home does not sell.

Hard to add anything to such a great post and great comments. But I want to let you know I stopped by.

Why take on a listing when the sellers are not willing to be realistic with their price...seems like a waste of time and marketing dollars...sellers need to listen to the facts of what is happening right NOW if now is when they are selling!

Paula - I agree completely. Taking a listing that is within 5% of market value is reasonable provided there is a price reduction plan in place. Taking an excessively overpriced listing is doing an injustice to the seller, the industry and should be unethical. Thanks for a great post!

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2010

A Realtor should not list a property at a price they know is completely unreasonable. A little high is fine, but unreasonable is not. It hurts you in multiple ways.

1. The house is will not sell, so your time and money is wasted.

2. You will not receive referrals from the homeowners, because you are not able to sell the home.

3. Lost credibility in the market place. Other Realtors, Real Estate Professionals and consumers will assume you do not understand the market place if you list at an unreasonable price.

#3 is probably the most serious consequence. Credibility does not magically happen. It comes from hard, smart, effective work over time. Do not let an unrealistic homeowner ruin your credibility.

Aaron

Great Post! As a stager, I see overpricing as well as poor pictures of the property on the internet. Staging the property in this market will attract more buyers from the improved internet pictures. Of course marketing and correct pricing are two other important factors for a quick and profitable sale.

This article is so refreshing to me. I wish realtors would do what you say. I deal with sellers all the time who are fed up with their realtor. I hear complaints about realtors you wouldn't believe. WHY do realtors continue to tell people they can get more for their house than another realtor who gave them a realistic price. It doesn't help anyone.

I have people call me who have had their homes listed for a year or even 2 years with a realtor. I go over my cost-to-sell worksheet and show them what I can give them for their house and why. I constantly hear "why didn't my realtor tell me that?" And I buy from them for substantially less than their list price because, when I explain it to them, THEY GET IT!

Sellers are not dumb. They expect a realtor to be knowledgeable and to share their knowledge. They are looking for expert advice. Do not be afraid to be honest with a seller.

Thank you for this wonderful article.

Great subject and dialog. I agree with Terry (#156) in that correctly "pricing a listing" is a complcated issue that needs to be approached with a flexible attitude. Most agents, I suspect, do attempt to assist the client in pricing their home appropriately, using all the usual comps and market analyses. However, I would not advocate walking away from a potential listing just because I was not successful (in the short amount of time during a listing presentation) in convincing the client that the price they want is too high.

Selling a home in this market is a huge emotional and financial issue. It may take some time for the client to accept the fact that their home may not be worth what they may think it is (or want it to be). I don't think it benefits you, or the client, to simply walk away from a listing presentation if the listing price is too high, and let the client go on to the next agent that is willing to take the overpriced listing and then just let it sit and collect dust. Far better, in my opinion, to take the listing, market it aggressivly and if there are no showings in the first few weeks or month, sit down with the client and continue helping them better understand the market and pricing issues and what it will take to get potential buyers inside the home to see it. Once you get buyers inside a quality home, you can then talk up the value, but the key is to get them inside the home. If this is not happening (and assuming you are doing your best to market the home) then it has been my experience that most (motivated) sellers will be willing to take a closer look at comps and adjust their price appropriately.

The fastest-selling homes are generally those with the best mix of location, condition, likeable floor plan, and price. Price is still the first thing considered, however most buyers realize that price is not the only consideration. They don't want to end up with a "bargain-priced" home they really don't like, or that is in a community they don't care for, or that does not fit their lifestyle. Fortunately for buyers (and sellers) the current inventory of homes for sale is large enough to find the right home, in the right community at the right price.

We all must admit we take overpriced listings from time to time. I find that if you tell the seller if within the first 2 weeks you don't get anyone or the ones you get give you overpriced feedback to have a price reduction plan in place. If they cannot come down to a realistic number then it's best to walk and spend the 50 plus hours to get it on the market and web sites with a worthy home.

I have been reading all the last few comments and will not be able to address each of you independently so I will do it collectively:

Hello All.

I just want To make something clear here: I do not want you, any of you to think I am pointing you out but there are siglificant numbers of the commenters who are under the assumption that it is somehow acceptable to over-price listings for "just a short period of time".....this is exactly the over-pricing I am talking about when I say ALL OVER-PRICING IS WRONG: IT SERVES NO ONE!!!

You are merely fooling yourselves if you think you can do that in this market and get away with it---it does not work! Not only does it not work in the long run, it ruins that most precious time of the first few weeks on the market! These times are not good for over-priceing properties--period!!

Paula - Good point about having the final say on the price or not taking the listing at all. It's easy to forget that we make money by selling houses, not just listing them.

I also agree with your comment about overpricing for a short period of time being wrong. Sellers who are unrealistic about the value typically try to string out that short two-week "overpricing" period to months, which doesn't help anyone. Let another agent take the listing, then come back to them when the listing expires.

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2010

First - I tell them it is my job to sell their home not decorate their yard with my sign for an eternity. I explain overpricing will eventually reflect badly on their home and on me. The house will become stale and people will assume the home has an "issue" and/or they will think I am a lousy agent.

Second - if they still don't get it. I have a form for them to sign acknowledging the price they chose is higher than recommended. That the home may not appraise for the sale price even if a buyer elects to offer near their asking price; that there may be fewer showings, etc. The form was obtained through FlyersToYou, Inc.

Love this post Paula, Bookmarked to later read all of the comments and points of view. MANY listings in my area are overprices and have been lingering for YEARS. Who benefits from that? Reblogged also to my local market. THANKS.

David, Jamie and Ginger: You guys get it!!! thanks to you I believe the word will get out to enough of us so that we don't face the dire possibilities of just what will happen if we don't wake up collectively and price properties properly.

MY formula that helps to illustrate the propects of what will unfold ie we don't do what we as professionals get paid to do is:

OVER-PRICED HOMES = MORE INVENTORY + LESS SALES + DESPARATE SELLERS = CONTINUED HOUSING CRISIS!!!

I wrote another post by the above title yesterday but it got lost--please take the time to look it up--I do get responses to that too...you know what would be good? If you all take the message and post on this important matter too! Even if they are short posts---they can be very important to the results. Thanks again!

Depends on how overpriced it is. If we can build in a price reduction every two weeks then we know that we can work with the seller. If not we walk away.

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2010

Great post Paula,

Most of us take listings occassionally that are higher than we want them to be, but it is crucial that we properly councel our clients, and learn to walk away from those listings that have no reasonalble chance of selling. I walk away from more than half of the listing opportunities I encounter in this market, I wish more agents would take your great advice, our sellers deserve to see the true picture, then if they choose to find someone who will, as I often say..."Tell them what they want to hear", they are free to do that, but that won't change the facts... a house is worth what a buyer is willing to pay...and it's our job to give them our best opinion of what that value is.

Randy

I am always totally honest and upfront about pricing -- pricing correctly is the key to getting the house sold. I miss out on some listings because of this strategy, but at least I'm not wasting my time and advertising budget on homes that either will not sell, or take several years to do so!

Randy and Nicole:

Keep up the good work--I am making this my number one priority this year: Make sure the sellers I work with are given accurate pricing information--whether I get the listing or not! It is not in my best interest nor the sellers to mislead them and I make sure they know that clearly...it is really remarkable how it works in my favor. You both sound like you are in the same frame of mind--good luck in 2010!!!

Right you are Paula. All the marketing in the world will not sell a home that is over-priced.

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2010

Tigard: You got it! Al lthe time spent on open houses, planning, and creating ads etc.....What a waste! Thank you for your input

You're right, always show the sellers the comps first. This will establish the price that homes are selling for "now" and not a year ago. An overpriced home is a money pit for both the seller and the agent. Price it right first to avoid all the frustration.

Hi Paula, unfortunately there will always be the seller that wants His price, not the price you need to list the property at. Their reasons are many. This is why we need to really Prep them while at the listing table, or before, explaining with statistics and other pertinent information why the asking price is the most important thing you can do to attract buyers and their offers. I also ask other real estate 'Specialists' ( mortgage brokers, attorneys, etc.) to become involved when necessary. Let the sellers check out websites and market info that you provide them with. They may not believe you, but they will believe a 3rd source. You also need to establish control early on and end with it, otherwise you may cave into their demands.

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2010

An over priced listing does no one any good and at the end of the day, usually ends up costing you a lot more than money

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2010

Over priceing a house, even for the 2 or 3 weeks does no one a service, as you mentioned Paula, it's a loss of that invaluable initial offering time. My analogy to this is to a child that wets their pant, for a brief period of time they feel nice and warm and relieved, then they feel bad because they are cold and dissapointed with themselves. A real estate agent that overprices feels warm and relieved when they put the sign in the ground and shortly feels cold (no showings/offers) and dissapointed in themselves.

Sorry for the triple post, my error with my mouse.

Price and a seller's motivation are the two most important factors when selling a home. In my opinion it makes no since in any market to take an overpriced listing. You are not helping the seller, infact you are only hurthing them, and wasting their time. I will explain to any prospective seller that I'm in the business of selling homes, not just taking their listing so that the home will just sit on the market. I find that most of time the seller's are just not being realistic, but if the motivation is there to sell then I have something to focus on to get the price down to what the market will accept. Be prepared to walk away from the listing if the seller refuses to be realistic or lacks real motivation to sell.

FEB

2010

Thank you all for the valuable exchange we have had on this post---it is esstenial to fully understand how broadbased the importance of pricing right is---especially now with the administration poised to begin the biggest onslaught of "short Sales" ever! We had better know what we are doing with pricing so this dialogue has been even more important than most agents ever knew!!!

Thanks to all of you!!!

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Paula I Hathaway, Senior Vice President, LBA

Southampton, NY

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Prudential Douglas Elliman Real Estate

Address: 70 Jobs Lane, P O Box 5003, Southampton, NY, 11969

Office Phone: (631) 204-2712 x Direc

Cell Phone: (516) 319-4223

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