Buyers KNOW an overpriced listing when they see it (on Realtor.com, ads or elsewhere)....so this agent might as well get ready for a long ride.

The house won't sell and if your new agent doesn't follow-up with the sellers, she won't get the listing either. Obviously, she'll have to watch her step so she doesn't violate agency laws since the sellers are now represented, but make sure you tell her to keep in touch w/ the sellers w/ mailings, etc. until they get sick of the shady agent and want to list with someone who's honest.

An agent that I work with locally keeps in touch with sellers like this all the time (there are a lot of sellers in our market that just can't quite accept that the boom is over!) and she picks up at least a listing a month that she "lost" to an agent that offered to list at an inflated price.

Randy, Unfortunate when that happens. The sellers have been given false hope and their home will now sit on the market. When they finally do get around to pricing it right right it will be an old listing. In my market it would also continue to drop in value. By the time they call back it will not be worth the $529,000 you had suggested. It's a losing situation all the way around and the agent that took the listing should be ashamed of themselves. 

My prediction -  The agent will ultimately lose the listing or beat them up for price reductions and then lose the listing.  The seller will be upset at all Realtors and give us a bad name.  The seller will sell the home for less than market value after a good agent picks up all the pieces.

Wonderful, well written, TIMELY article.  I "flagged" it. 

When I see such an overpriced listing I think (1) the agent violated the COE by misleading the consumer about property value, or (2) the agent is incompetent and shouldn't be let out alone.

I don't know the pricing trend in HI but it's still going DOWN here.

Thanks.  Lenn

There was actually a GREAT article in the Houston Chronicle a few years back about this issue and I made it part of my Expired Listing Packet.  Consumers seem to trust it if it's in writing as opposed to your "word".  At that time our months of inventory was REAL high and this was a major issue at listing appts.  People taking out home equity and then not able sell for enough to cover and went with the highest bid so to speak from agents.  I can't tell you how many listing appts. I walked away from that year.   Don't think I could sleep at night by essentially lying to my sellers.  I did get some calls when they expired though. Good Luck!

Randy, good post! This happens everywhere, even here. Midori has put her foot down, no more overpriced listings! We have way too much inventory, not enough buyers and too many overpriced homes in our area, lets not add to it. Also something else ~ if you really don't need to sell it don't put it on the market.. not just yet.

My prediction: It will sit and be damaged by the market. Hopefully the agent that took it will work their butt off trying to sell the OPT (over priced turkey) to no avail. Then maybe next time, they won't come in and "buy" a listing by overstating market value.

How appropriate... my fruit was Lemon.

I just had a similiar situation.  Went on an appointment...last sales were 425,000, 427,000 & 432,000 within the past 6 months.  Our market in Chicago is saturated, too.  I told the seller to list around 434,000 due to her motivation, as she doesn't want the home to sit.  In the meantime, 2 other homes like hers came on the market for 474,000 & 519,000...where are they getting these prices?  Where are their comparables?  It's not going to appraise.  Try explaining that to a new client.  I think those overpriced homes will help sell mine even quicker!!!!  Maybe when I put my SOLD sign up those sellers will call me too.

better you take the high road and let the other Realtors have it too high.  A couple things I say to listing prospects the first time I can talk with them is

1. Please realize a few agencies will list anything for any amount.  They have a saying, you can't get a price reduction on a listing you didn't get.

2. I am putting a fair amount of time into collecting this data to be certain I am doing a thorough job for you.  Please let me come and speak to you before you sign anything with anyone else.  If you still like what they say the best, you can always go back to them, and perhaps what I have to offer you will be in your best interest. 

Sometimes it pays to put forth a preemptive strike if you can without saying anything negative about any other company or agent by name.

In addition, a good agent in our company lost a listing to someone who used to be in our company.  He had the first interview and after they came in next, they said they had taught him all he knew, which was untrue, but the seller didn't know that.

Its nice if you know who you are competing against.

Kat - If the buyers don't realize it, their bank will be the final decider.

Ian - My recommendation is to not to continue contact with the seller.  They are now represented.

Bryant - I was not real comfortable at $529,000.  It was her first listing and the seller's were made quite aware they may need to price adjust soon.

Don - You are probably right on the money.  Hopefully they will remember that we were honest and professional and they will call us back.

Lenn - I completely agree.  Our prices are stable here.  In some areas we are still climbing and a few like this neighborhood, they are flat to slight declining but of over inventory.

Stephanie - In this case they saw it in writing, they just decided the higher number was more exciting for them.  I gave them a detailed market analysis.  No question that they are in no hurry to sell.

Lysa - I have better things to do than ruin my reputation and waste hard earned money and time marketing a home that will not sell.

Debi - I predict they will go back to the seller's to lower the price below even where I recommended at some point and the seller's will say no.

Laura - I just sold a townhouse and picked up another listing in the neighborhood.  There are 4 others several overpriced and will never appraise in my lifetime.  Fortunately my clients saw the numbers and decided they wanted to sell.

Melissa - We will always lose some.  Some agents will give away their service, others will take them at any price and others may just click with the clients better.  All we can do is be professional, honest and don't sweat those that we lose for the wrong reasons.  many would have been bad listings to have anyway.  Instead of stressing over it, I prefer to spend that time finding good clients.

We call this buying the listing.  It's okay to go after top dollar, but the seller should know that before signing, instead of the promise "you will definately get $xxx amount." Sherry

Kevin and Sherry - Buying the listing is a good name for except the seller will never see any money.  That is why I used the term stealing.

Randy,

Remember the Consumer Reports story on this tactic? They warned sellers of this little trick, and Pat Zaby made it a part of his PREP series of handouts... I use it to this day. Seems to come around when there are too many Realtors. Time to cull the herd.

Be sure to send a copy of these responses to the seller, with a "soft" note explaining it...

Thanks for sharing!

Patrick - Thanks for the the heads up on Pat Zaby.  I have some of his stuff.  I will look into the Prep Series.  I expect to see many leave when our market it cooler.

Well, the current listing I have is a little overpriced (about 15k) but at least the seller was willing to come down to that...she originally wanted about 625k.  But as for this other agent...real slimey.  She knows it's not going to sell and has hopes on hanging on through the duration. 

I see the same thing happen here also.  As long as you are willing to stay in contact with the sellers and stay within an arms length, they will realize the truth, unless a bank appraisal says so sooner!

Sally - I guess the other agent is desperate for listings. 

Bill - I will be surprised if they get an appraisal.  They first have to get a contract.

I have run into this problem with realtors before. I have had clients let me know they were selling because they wanted to get out of their houses and were convinced by a realtor not to sell.

Specifically, one couple's house was listed for $50,000 over what the last house in the area sold for 8 months before when prices were better.

Can we say losing proposition? Now, I don't claim to be a Multiple List guru, but, I know that the longer you have it out for sale, the less attractive it can sometimes be.

In any case, they will not sell that house with that agent any time in the foreseeable future.

But, alas and alack! It's not just agents. I have seen several FSBOs with ridiculous pricing. Evidently, they didn't get the memo that people are no longer forming lines to out bid each other in most markets.

My predicition is that it will go through two more agents and then finally be priced where it will sell.  We just walked from a listing today; after our presentation the seller decided to just wait and do some upgrades.  He had pink, well I guess mauve counters and pink flowered wall paper. 

Johnnie - For Sale by Owners do this consistently.  The other group I see I Realtor owners.  They seem to over price their own properties more than you would expect.

Marchel - You may be right.

Randy, this is great "The seller's response was the other agent offered us more." It does not matter what the other agent offered, he isn't the one buying the house. It is what Buyers are going to offer that is important.

George - Absolutely, that was what I said to our new agent.  In the end the market will be the judge.

We are beginning to see Sellers who are upside down on their home. The reason is they have refinanced and used the money for other things. Now they expect the Realtor to come in and pull them out of the red. I have learned that a potential Seller will eventually find someone who tells them what they hope to hear. Unfortunately there is no vindication in being correct

Hi Randy,

From a Loan Officer's standpoint:  Lenders (that I know of) won't fund a mortgage loan for more than the value it will appraise at...  and an ethical apppraiser will use the last sold comps in the area.  Unless someone wants to pay more than it's worth and come up with the difference out of pocket, good luck finding a buyer at that price!  Bad move for that agent.. looking at his own best interest over the client's.  Hawaii is too small for that.  Props to you and Lielane for having some integrity.

can you say expired listing or huge price reductions to get it sold...

Doug - I will stick with the truth.  That way I will not cause them further harm.

Pete - I am always amazed by sellers who believe their's is worth more than all others.  Unfortunately buyers and lenders do not see it that way.

Thesa - Yes but they got the listing.  I guess to them that is all that matters.

I am getting very tired of these agents who overprice listings and of the sellers that go for it hook line and sinker, even though they have received excellent advice from other Realtors.  I used to feel sorry for the sellers, but I don't anymore.  Greed is ugly folks, it has a price.  Pricing your home is a very serious issue, short of an all or mostly cash buyer who is willing to overpay for the property you don't stand a chance.  Where do you think you are going to get a buyer to overpay and a lender and appraiser to join you in your folly?  

Laurie - I am convinced there is a group of people out there that just have to fall flat on the face a couple of times before they get it.

Randy,

The sad thing about this is that the house doesn't sell and unfortunately the seller has lost precious time and buyer's because of the overpricing.   It happens quite often and what we need to point out to these seller's who are thinking of going with the overpricing agent is that the house will not appraise out at that price. 

Thanks for sharing, I'm sure this has probably happened to all of us.

Debbie - We told them, they decided to reach for the rainbow.

Randy,

Good post..I am so tired of that..it is happening all over the place but it was regular thing during the boom..I am starting to see it diminish a little now.

I have walked away from them and have lost some because of over pricing..I have also monitored some I didn't get just to see what happens.

Wouldn't you know it..they end up at the number I told them to list at and some have actually sold exactly for what I thought.

My only exception is if it is a referral I've  have already done a deal with ,I'll take a little higher but suggest in 30-40 days to commit to reducing.

Actually I have one that we reduced by 20K...only one call since the reduction and now after I just placed more ads..they think the market is going to come back and they want me to raise it back.

Ahem---"Offered us more?"  Did they get a written offer from the other agent? 

Amen my friend!  And here I thought our area was the only area with Realtors that overprice listings! LOL  Looks like it is disease that has now spread to Hawaii!

Great great post. Nice work. It would be nice if the overpricing people would never make any money and leave the business, but many of them continue to make enough money to stay in there. I hope you and the new agent get it when the listing expires and you sell it in two weeks! - Ken

A couple of years ago I had a listing (when our market was pretty strong) that I should never have taken.  The seller insisted it be priced $15,000 over the comps.  I agreed to this, but had him sign a pledge that he would do a price reduction of there was inadequate interest at the first 30 day mark.  The 30 days passed and I reminded him of his pledge to a reduction and his reply was, "It's a good house.  If someone wants it they will pay the price."

I hung up the phone in disbelief (naive, I know) and fumed for a while.  Then I called him back and told him that if he was not willing to cooperate with our agreed on marketing plan then I would be sending him a listing release for his signature.  Again he vowed that someone would pay that price.  The release went out in the mail the same day.

I fired a client.  Oh well.  He was fairly demanding and totally uncooperative, so I cut my losses before I spent tons of money on advertising and open houses only to be stuck with a home that wouldn't sell.

Some 9 months later he sold the home for LESS than what I had recommended be the list price to begin with.  Sometimes you just can't predict how people will act. 

I had this happen to me last year. The owner decided to go with another agent because they were offered a higher list price as well as a decrease in commission because it was a discount broker. I told them that when it doesn't work out in six months, to give me a call. Six months later my phone rings and guess who it is? I took the listing, but guess what, the market value was even less now and they ended up listing and selling the home for $20,000  less than I had told them 6 months ago, and $40,000 than the previous agent. Some people just won't listen. If they would have listed at the price I originally told them, they would have walked with $15,000 more than they did at the end of it all.

Sorry to hear, Randy, but it is a song we have all heard too many times. It is amzaing that is this market there are still agents who are willing to take on a listing that is overpriced and play an active role in creating that overpricing as a means to get the listing. a 10% differential is pretty significant.

Buyers these days are too sophisticated and will know it is overpriced. The damage will be done by having it sit there for a long time and become and "old dog" which makes it even harder to sell at a lower price. It is unfortunate that sellers see only $$$$, especially when confronted with facts that indicate a different is appropriate.

I am betting you will have that listing a few months from now.

Jeff

Unfortunately we have an agent in town known for this practice.  You simply have to know who listed the property and go "OK, it's overpriced..." sad, but true.

You almost can't blame the sellers, they want to grab the brass ring....

Randy

Well..that sort of thing happens all of the time, sadly. Sounds like you did your job well, so feel ok about that. You are probably correct, they will have trouble selling it if it is that overpriced. Since you treated them so well, hang around and you can probably eventually get that listing.

Happens all the time. The sellers see the green and are greedy. Many times they realize their mistake and reduce when it does not sell and the agent with the high listing price will get a sale. I have also seen sellers take the middle price and base their selection on this fact.

I never realized how truly greedy people are until I got into this business. The listing will get stale with all the others that haven't sold.Somehow we have to come up with a way to educate people. They don't trust us and think we are trying to price it low to make our commission at their expense.

I had the same thing happen to me in February. They have reduced the price once and are now offering to rent or lease to own.

Lost a listing a couple of weeks ago to another agent who listed the houes for 30,000 more. After 30 days they reduced it by 30,000. That´s all I have to say about that.

Yes, it happens all over.  Some agents just want the count so they bring it in, wait a bit and lower it, and then claim neighbor experience in their marketing. 

It is the exact opposite of when years ago (not in the Real Estate businees) the definse industry  would get government jobs in (at the cheapest cost) and then ECP (Engineering Change Proposal) it to death to make it profitable.

Thanks for sharing this post.  There is an agent in my market who is known for consistently overpricing homes.  It has gotten to the point that even if the home is priced correctly, many agents assume that it is overpriced because of this agent's reputation.  In the long run it will not help you to overprice a property, and it definitely doesn't put the consumer's needs first.

It appeals to the seller's natural instinct of greed.  I've actually talked to a couple of agents that don't see anything wrong in doing this. They view it as a marketing strategy and nothing more.  The tell the seller that THEY can get them higher to get the listing, then almost immediately start beating them up to start lowering the price.  The sellers are like that Johnny Lang song, "Lie To Me"

R.B. "Bob" Mitchell

ValueList Real Estate Services, Inc. 

Randy, as usual, you're right on task here. It's not worth ANYBODY'S time or grief to take on an overpriced listing. Even if you can eventually talk them into lowering the price to sell, are the seller all that thrilled with you in the end? No, they see you as another Realtor who just wants to lower the price until their house sells and don't recognize the other efforts you've made to sell the listing. With an overpriced listing, everyone loses, the seller, you the listing agent, the neighborhood itself even suffers from having that sign sit and sit for so long with no action. In the end, we, the agents, have wasted our time and resources to, at best, gain a frustrated client who will probably not come back to us the next time they need an agent. It's a tough lesson to learn for your partner, but a valuable one at that. It sounds like you'll probably end up picking up this listing in the end, as I'm sure this other agent will have serious resistance getting the price down to where it needs to be, since he/she apparently promised the sellers he could get more. That's my prediction. Good luck!

I concur with your conclusion, Randy.

Russell Shaw, an Arizona Realtor says, "Find something you really love to do, something you can spend 4-5 hours doing.  Rather than taking an overpriced listing, do the thing you really love.  They pay you the same" 

I see it all the time good post. It only works if the price are going up and the listing agent can sit on the listing long enough.

Cheers
Scott

Well, just be proud you aren't like that....which I know you are....

I'm sorry that you, the good guys, lost the listing.  Some of the problem lies in the lack of understanding and knowledge for the public>  Snip >> The seller's response was the other agent offered us more.<< snip.

Somewhere in all of the listing presentations, these people used selective hearing or didn't get it at all that BUYERS offer and agents MARKET. 

The best hope is that when this "higher offer" doesn't come to fruition, the sellers will lay the blame at the proper doorstep and not see it as a statement on professional people in the same field. 

The agent who 'stole' the listing operates on a philospophy of "It's the winning that counts.'.  But then doesn't take into consideration the costs of advertising a property that takes too long to sell.  There are in house reasons to price property where it will sell to be added to the satisfaction of your client.  

Randy - One of my favorite soundbites for overpricing is this. "Mr. and Mrs. Seller, the market is showing that your home should sell at $370-380,000 and at that price we'll net $xxx. So how much will you net it we price it at $400,000? ... Zero. Because in today's challenging market, the home simply won't sell."

Randy in this tight market some agents will do anything to get a listing , knowing full well that the listing price will have to go down in order to attract buyers .

I guess these agents figure might as well go for a higher listing price and then when the sellers are on a rep agreement and can not or will not or dont want to bother with getting another agent they will worrk with the one they have , these type of Agents make me sick and give our Profession a ver bad name .

Easier sad than done.  I walked away from a listing not long ago, only to break down and go back to take it.  Not only was it overpriced, but they insisted on a cut-rate commission.  I caved, with the understanding that they would get what they paid for - i.e., no out of pocket expenses or extensive time commitment on my part.  Of course, the ungrateful and greedy seller is unhappy with my service and the results.  It really is a no-win situation to take an over-priced listing.

Paula- great comment, since that other agent "offered" more, does that mean they are going to pay it?

John- that is a great script to use, I am going to remember it 

Please tell Lielane not to be discouraged. My first listing presentation, I was excited and I took all my comps and brochures and felt good about our meeting. But, in the end the sellers picked another agent who brought a whole staff of agents telling them how wonderful their home was and could sell it for $20K more. Did it sell?  NO! Was I upset about not getting the listing? YES! I felt sorry for the sellers, they were sick and wanted to join their families in Florida. I wanted to help them.

That day I realized I had to be true to myself, and although I didn't get that listing, I worked harder to explain to my future sellers how important it is to price the home correctly. Two years later, I was top listing agent for our company.

Neal - When the market was hot I didn't mind taking a little high.  Seller's were not high they were ahead of their time.  Now they are just high.  This listing we were willing to take it a little high, but they went into a stupid level.

Diane - I am sure the agent will not be buying it at that price.  LOL

George - So it started in your market.  I wondering where it came from.  LOL

Ken - If they do come back later I hope they will have learned the lesson and not try to repeat the mistake.

Carol - I have heard that statement a few times, "If someone wants it they will pay that price" They miss the fact that no one wants to pay more than it is worth.

Jennifer - I believe that some people have to fail, there is nothing you can say or do to save them.

Jeff - I tell the sellers that buyers, their agents and the banks are all looking at the same numbers we are.

Chris - There are agents who I know do not pull comps.  They couldn't.

Wally - Time will tell who is correct.  I do not think I am reading the market wrong.

Eric - They may lower and sell it.  That is what the agents are banking on.

George - I showed them the numbers.  I wonder what the other agent showed them?

Christy - They may lower the rent next.

Axel - Makes you sick thinking about it.

Robert - They are definitely the opposite of government contractors.

Jen - If you get that type of reputation, how can that help your clients?

Bob - That is not my idea of a quality marketing plan.  You never walk away with happy clients.

Ryan - I think you are right.  How do you convince the client you can sell it for more than go back and tell them they are too high?

Brian - I do not take enough time each week doing things enjoyable unless you count that I enjoy working.  I would rather spend time looking for good clients than wasting it with bad ones.

Scott - When properties are not moving, high listings are death to the seller.

Sally - Thank you, I do not see me ever being like that.

Paula - While they are playing with this one, we list and sell several others.

Kelly - I am sure they can only do so many before their broker has to get on them.

John - I like that.

Joe - If someone actually offers what the home is worth the sellers will be insulted.  This kind of stuff hurts all of us.

Margaret - That is the saddest part.  You hurt your reputation, you probably busted your tail for a lot less money and in the end they will never even give you a referral.  That is a good reason to hold your standards.

Wally - I agree completely

Marcia - Great lesson for new agents.

Randy,

Of course the listing won't sell for the over inflated price, but the real kick in the pants for the rest of us will be the sales that agent WILL get from callers who are switched into less expensive properties.  That ruthless agent still 'wins'...for now.

Theresa - In the long run they will not win by over pricing listings.  Everyone gets lucky once in awhile, but you can not consistently win by doing dumb things.

Randy- You are correct about the overall scheme of things.  The agent eventually gets a reputation far from desirable, but in the short term, and I've seen it happen over and over, that agent does get calls, sales and business through his or her less than ideal practices.  We Realtors have a hard enough time with respect for how hard we work in the eyes of the consumer, and the type of practice by the agent you mentioned is a prime example of why.  That client may be calling you up in the not so distant future for 'real service from a professional Realtor' once he or she realizes of what has happened.  Best wishes to you! 

Teresa - There may be some short term gains, but this practice will not gain the type of gains that real professionals look for. 

Try this question: When a perspective buyer sees the home and asks about the pricing, what do you tell them?  If a buyer were to ask them to draw up an offer, what price would they recommend?  Since the last comparable sale happened nearly 6 months ago and this one is priced more than $45,000 higher than that one.  They are supposed to represent the seller and also be honest.

I can't remember who said this, but I LOVED it....  It's always best to be the FIRST born, SECOND wife & the LAST Realtor in!! 

I tell unrealistic & overpriced sellers this... I'd rather say no to you today rather than disappoint you tomorrow!

Randy-Good advice!  I am so sick of seller's dictating when we have the professional license.  Good for her and for you!  2nd agent in, I LOVE IT!  Keep us posted!

Sue - Hopefully we will be the last Realtor in.

Midori - Most people have a dozen friends giving them advice on the side and they all think they are experts