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You can't have it both ways

By
Real Estate Agent

I almost threw the phone out my car window...

I placed a call the other day. It was a social call to another agent. We are friends and I hadn't talked to her in a while. So we're chatting it up and as always our conversation turned to business.

Now this agent has been around for a while. I consider her a mentor. When I first entered real estate I knew I could call with questions because she would have the answers.

She stated that she has been incredibly busy with buyers, but the buyers weren't buying. They are sitting because the buyers don't think the market has reached bottom. She agrees with the buyers.

Now that is all fine and dandy until she starts talking about her sellers. She is frustrated because her listings aren't moving. Common problem when the buyers aren't buying. She tells me her sellers won't lower their asking prices.

She isn't talking about one seller, she is talking about FOUR of her sellers.

So I ask the million dollar question, "Did you agree to list the houses at your recommended price or at the price the sellers wanted?"

I'll give you one guess on the answer.

She justifies listing the price at the seller's price because she gave them a letter at the time of the listing that basically states, "You are over pricing your home for the market." (Oh, and these homes are over priced by $50,000 to $100,000)

I don't think she cared for my response.

I told her my opinion and my opinion is this:

The market has not reached bottom and we as professionals need to turn away business when our clients don't value our opinion enough to follow our advice. We can't complain the buyers aren't buying if we are telling our sellers we will sell their home at their price, even if the market won't sustain it. Why would a buyer consider buying a home if you are basically telling them it won't be worth at least the sale price in a year? 

Comments(60)

JoEllen Stranger-Thorsen
Eustis, FL
Lake County, FL

Richard -- That's proactive work, researching before the presentation.

Anonymous -- I'm not blaming sellers. My point is this agent is complaining yet she set herself up for it by not standing her ground day one. And though I feel for sellers who are upside down, additional time on the market being upside down is not going to help them. So yes, honesty and acting in the client's best interest is what is right.

May 09, 2008 03:45 PM
David M. Childress
Howard Hanna Real Estate Services - Akron, OH
I would love to be your RealtorĀ® in Akron Ohio!

Timely post, JoEllen. That has been our office policy this season and we stress it at every meeting. 95% of our office listings have been reduced since March. Some of our agents have turned down or dropped listings because of resistance from the client to look at the facts we place in front of them. And, ta-da, we have buyers!!!!!!!!

May 09, 2008 03:56 PM
Pam Winterbauer
Pam Winterbauer Real Estate - San Ramon, CA
"Providing Blue Ribbon Service"
JoEllen....I believe it is our job to frame the process and market from the very first time we meet with a client.  We are the educators and traffic controllers and need to be able to walk away from an unwilling and unrealistic client.
May 09, 2008 03:56 PM
Kirk Westervelt
Van West Realty - Greenville, SC Realtor -Short Sale Expert! - Greenville, SC
Kirk Westervelt, Broker In Charge, Van West Realty - CDPE - Short Sale Agent - Home for Sale - Greenville, Simpsonvil...
Yes, I agree. Seems like your friend engages in contradictory business practices which only screws up the market for buyers, sellers and Realtors.
May 09, 2008 04:02 PM
Roland Woodworth
Blue Cord Realty - Clarksville, TN
Blue Cord Realty

JoEllen: Bravo to you.. Way to tell this other agent. Our market is a good market as well. homes listed correctly will sell ASAP. I acually just sold one that was listed 1 day.

May 09, 2008 04:16 PM
Anonymous
Anonymous

Oh you are so right, it's hard we get tired of constantly having to educate, but they NEED us to be firm and not to give in.  They don't realize that the first 10 days to 2 weeks are crucial to the buyers opinion of value.  And you can't take it back once you've blown it.  Keep your integrity and do your best to educate, it's all we can do. 

May 09, 2008 04:41 PM
#47
Anonymous
Terrylynn Fisher, Realtor, Walnut Creek California

oops that was me above. 

May 09, 2008 04:42 PM
#48
Anonymous
Anonymous

Some sellers will overpriced their homes this has happened for decades, its just what some people believe.  It isnt just this market.  Sometimes they listen and other times they dont.  I have my clients agree up front that if thier home is not shown or an offer is not likely in the first 2 weeks we revisit the price and reduce the price.  Often they call before the time is up, especially if they are not getting showings.  If I think they are really way out of line and wont consider any price adjustments then I wont list the home. We always have the flip side and get sellers that are reasonable and price correctly. Building trust with a seller can take more time than a listing appointment provides. Good counsel and trust that you do have thier best interest in mind including their hard earned equity, is the key to a successful relationship and a completed transaction.  This market has placed a lot of people in difficult positions and they want to know that they can get every dime out of the house that they can, cant blame them really.  Just as the market soared at the drop of the hat with no notice a couple of years ago, some sellers think it could happen again. I am sure the agent you spoke with knows that her sellers are overpriced and is working hard to inform them and secure the correct list price.  Sometimes its easier said than done. 

May 09, 2008 05:15 PM
#49
Karen Turney
Homesmart - Phoenix, AZ
Phoenix Real Estate

oops that was me above, looks like more than one of us is so eager to read posts we didnt realize we were logged out!  Good luck to all Realtors with overpriced listings, may the voices of reason assist your sellers.  And may those same voices speak to the buyers who are waiting,waiting,waiting.

May 09, 2008 05:19 PM
Katerina Gasset
The Gasset Group & Get It Done For Me Virtual Services - Provo, UT
Amplify Your Real Estate & Life Dreams!

JoEllen- As i read your story about your conversation with your friend, your words spoke loud and clear on what your friends dilema is. What you focus on expands. If you think it, it will be so. If she is complaining about her sellers being overpriced and not wanting to come down in price, guess what! She is going to get more of the same in her life. If she is complaining about the buyers not wanting to buy right now, she will only get more of the same. There has to be a paradigm shift in her thinking and in her beliefs of what the market is.

While agents all around us are quitting and complaining, we are having one of our busiest years ever. We have to hire new buyers agents, closing coordinators and now looking for a personal assistant. Nestor and I were just talking about this tonight, how blessed we are but more than that, it is all about how we are being proactive in this market. Katerina

May 09, 2008 05:41 PM
Missy Caulk
Missy Caulk TEAM - Ann Arbor, MI
Savvy Realtor - Ann Arbor Real Estate

JoEllen, are you still friends ? What did she say? gulp?  Read most of the comments and lots of ways to go with this post. Basically, your premise is correct, you can't list high and then complain about buyers not buying when you've admitted in writing that the house is over-priced. Congratulations on the feature !

May 10, 2008 12:25 AM
JoEllen Stranger-Thorsen
Eustis, FL
Lake County, FL

Missy Yes, we are still friends. My friends know I'm not the best at hiding my opinion. She meandered off into a different topic, agreeing to disagree.

Katerina I'm glad your business is thriving. A positive outlook will garner positive results. Why beat yourself down?

Karen Thanks for stoppping by (and signing in.) No matter what market there will always be sellers who want to overprice their home. I think it is just more apparent in this market. And yes some sellers "need" the higher price, but unfortunately the market won't sustain it and they are hurting themselves even more. We as professionals need to educate them and stand behind our facts.

Terrylynn Those first few days and weeks on the market are critical. Thanks for stopping by (both times.)

Roland Congratulations on the quick contract, may it lead to a successful closing. Price it right, it will sell.

Kirk She is an intelligent seasoned agent and I was so frustrated with her contradiction. It does confuse the market.

Pam That first encounter is extremely important to set the tone

David The buyers respond to appropriate pricing and they will come to the agents that they see as honest and professional

May 10, 2008 01:10 AM
Marcia Kramarz
Re/Max Executive Realty - Medway, MA
CDPE,LMC,CBR

We have an agent in our neck of the woods that does this as her business model - Trouble is once she gets them overpriced (and wins out over our more truthful realtors) she manages to get the pricing down - I just left your blog for a moment to see one that we lost recently - Low and behold she lowered the price by over 10% once she listed it and now I see she has an offer - List is still too high so it will be interesting to see if 1) this home appraises at offer and 2) what the sale price is - I bet it's another 10% drop or close to it... Frustrating - Bait and Switch if you ask me!

Thanks for your comments and your response to your realtor friend!

May 10, 2008 01:19 AM
Bryan King
Ascent Home Loans - Simpsonville, SC

This is similiar to when I worked for a large lending firm. Where I would review applications taken by loan originators that had a 99.5% chance of failing due to credit, income, etc.

However the L.O. did not want to tell the real news on the odds of the loan funding because they feared losing the customer.

Setting unrealistic expectations for any client is a poor decision. It only results in the client being disappointed and the odd increase that they will not do business with you in the future. Plus you do all the upfront work.

What will most likely happen:

If these properties are overpriced when it comes time to finance them, your friend may also have trouble here. The bank appraiser is going to pull comparisons to get the true value.

That will put the brakes on the transaction unless the owners are willing to adjust their selling price to match what the appraisal says.

 

May 10, 2008 01:22 AM
Bob & Carolin Benjamin
Benjamin Realty LLC - Gold Canyon, AZ
East Phoenix Arizona Homes

There are a lot of listings on the street that are exactly like your friends. These are inflating the market of listings.

May 10, 2008 05:29 AM
Mary Thompson
Lanier Appraisal Service - Flowery Branch, GA
Lake Lanier Appraiser in North Georgia

JoEllen:

I used to sell real estate, now I appraise it and I would like to offer all agents a WAY out of this mess. Have the homeowner get an appraisal of the property upfront and then BLAME us if the value is lower than they think it is worth...we don't mind being the fall guy, really!

Tell them that if they try to list the home well over its appraised value, they lose as they get no contracts on their home and if by some rare chance it does go under contract, when it comes time to get the loan, the deal will fall apart as the appraisal will come in below the sales price, lenders are being very strict with the appraisal reports, so we are calling "them" as we see them.

You can tell them that they need an independent opinion of value from an appraiser who has no vested interest in the property and therefore will tell them the cold hard truth about the value of their home! 

Maybe you can split the cost with them for the report if they list with you or maybe you can tell them that when the home closes you will reimburse them for the appraisal report. Whatever you work out, the fee for the report is WELL worth it as opposed to the consequences, ie: your time and money spent on marketing an overpriced home.  And of course the whole idea is to get the home priced right so you can sell it and make some money.

Have a great day!

Mary Thompson-LakefrontPros.com

 

 

May 10, 2008 05:55 AM
David M. Childress
Howard Hanna Real Estate Services - Akron, OH
I would love to be your RealtorĀ® in Akron Ohio!

That is great advice Mary. We have been doing that very thing this spring and I offer to pay back the appraisal fee at closing. It seems to be working and I am in the clear with price objections!

May 10, 2008 06:10 AM
JoEllen Stranger-Thorsen
Eustis, FL
Lake County, FL

Mary -- This has always been an option I offer when I run across a seller who is skeptical, especially in a situation where there are overpriced listings in their neighborhood or on the street. Once again if they won't take my advice then I feel it is better not to list in the hopes I can talk them into a reduction down the road.

David -- It's definitely good advice to follow.

Bob & Carolin -- Inflated asking prices in the neighborhood make twice the work.

Bryan -- The appraisers and underwriters get a bum rap. They get blamed no matter how the pieces fall.

Marcia -- I can't understand how a business model can call for "oh by the way, I can't do this for you." A waste of time and energy.

May 10, 2008 06:29 AM
Michelle Hall
Century 21 Hecht - Denver, NC

Sellers have to understand that there is a difference between what a house may be worth, and what a buyer will really pay.  Right now it is a buyers market and the seller has to be competetive and make their home stand out - starting with the price.  We have to show our sellers the trends as proof that they can no longer get the same price on their home that they may have been able to get a year ago.  In this market, the buyer is looking for a great deal and with so many homes to choose from they are going to go with the one that will give them more bang for less buck.   

May 12, 2008 03:03 AM
JoEllen Stranger-Thorsen
Eustis, FL
Lake County, FL

Michelle -- No matter what market we are in, the only value is the market value: what a buyer is willing to pay and what a seller is willing to sell at. Both buyers and sellers need to get the best and most accurate information available and make their decision based on those facts. Agents who list for a price over what that information states do their clients (and the market as a whole) a tremendous disservice.

May 12, 2008 04:28 AM