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The Cost of Not Believing

Monika and I have been selling real estate for over 23 years and we pride ourselves at how well we present or CMA's (comparable market analysis). We were contacted by someone back in Sept. of '06 who wanted to sell quickly so they could relocate to Florida and not spend another winter in New Hampshire. House

Monika and I did a two step listing presentation. We went and viewed the home and then went back in to present our findings. The house was in ok condition and nothing spectacular. It was dated and needed some minor repairs and a good cleaning. The house sat on over 2.00 acres with over 2700 sq. ft. of living space. The location was excellent a very popular area of town. An area that commands high prices.

The seller had called in a few other agents for comparison and when we presented our CMA she told us we were way off. Monika and I looked at each other with amazement and we asked the seller "how much"? She said we were off about $25K at our HIGH Price. We felt the home was worth between $ 380-400K back in September of '06.

Our competition came in at $425K and of course the seller thought that was great and we feel that is the only reason she listed with our competition.

The home was on the market 189 days with one price reduction to 399,500 on December 8th.

Three months had gone by and it was finally reduced to where we thought their high price should have been originally. The home finally went pending after three more months on March 10th 2007. They closed on April 11th for $ 380,000.

lower values I wonder how the seller now feels, she probably feels she lost $45,000 plus, having to spend another winter in her NH home. I wonder how she feels after paying her mortgage, taxes and insurance for many months longer than she had planned on. Do you think it made any difference in her thought process in the end?

I often wonder how much she would have sold the home for back in Sept. while the market was still somewhat ok if she listed with us for $399,000 and how long it would have taken to sell. I guess we will never know. I really feel she lost more money by trying to get more money by pricing her home that high to begin with.

It's frustrating but I guess people will believe what they want to believe. We thought we had excellent rapport with her and she seemed impressed with our credentials...in the end money talks. And in the end she lost...What was her cost in not believing?

Jay and Monika

Jay and Monika McGillicuddy

Serving Southern New Hampshire and Rockingham County

New Hampshire Real Estate with Jay McGillicuddy

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Hampstead NH Real Estate

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Posted by Jay McGillicuddy~Real Estate Broker on 04/29/2007 01:13 PM

Comments (47)

new hampshire real estate, nh real estate blogs, hampstead nh real estate, southern new hampshire, rockingham county, prudential verani realty

47 Comments on The Cost of Not Believing

APR

2007

I believe we will be seeing more and more stories like this in the next coming months

If only we could have convinced her! I know when she listed at 425,000 we felt it would not sell any where near that price.

I'm convinced that there is a seminar somewhere that tells agents to come in way high at your listing appointment and them beat them down. I've seen what you're saying a thousand times. It appeals to the seller's natural greed instinct. Sadly though I have seen the other way around too. Where the listing agent comes in at a really low price just to sell it quickly so that they can get a check. Either way, it's not carrying out our fiduciary responsibilities.

R.B. "Bob" Mitchell

ValueList Real Estate Services, Inc.

Thesa, I agree with you, this is not the first time this has happened to us. It also happened a year ago February and we saw the seller of that house and they never did sell but they said "we wished we had listened to you". That made us feel better.

Monika, Money talks...

Bob very true, it is sad if both scenarios are played out.

Oh My ... It has happened to us. In fact, one house wound up selling for $50k LESS than we originally told them it would sell for... AND it took 2 years to sell! We told them it was worth somewhere between A and B. They decided to list with an agent who listed it at Q- $150k MORE than what we suggested???!!! Of course it sat ... and sat ... and sat through one price reduction after another and a slower market. It wound up selling for $50k less than it could have 2 years prior had they listened to us. Oh well. Unfortunately, Money DOES talk - too bad it sometimes blinds us.

Jay, This is happening quite often lately. The fact that you did a preview ,before you gave her a price, she should have trusted your opinion. But in the end, she's the one who lost.

Jay, your great post rings true for so many sellers and can be a lesson to agents too. On one hand, I don't blame the seller for going with the higher priced agent. That agent also either used comps or just asked the seller what they wanted for the house. Sometimes they can get nearer the higher price. I once heard Mike Ferry say when asked if he'd take an overpriced listing, "only if I have a chance to". Your seller example, while frustrating to you, happens all the time but hindsight is 20-20. While that seller would have done better going with you, they don't know that at the beginning. Maybe it would have been better to take it at the higher price and agree to periodic reductions. Hard to say. I once comped a house 13k less than the seller wanted. He said he just made up his number. I took it at his price. It sold that same night at his price, cash. I was pretty stunned yet with no appraisal it worked out great. Glad I didn't walk away from that one.

Mariana, WOW that is way off 150K seems way out of wack. I'll bet that seller thought you were the crazy one. The saddest part is the agent that overpriced it still made the commission.

Suzanne, I think as a seller it must be tough to think how two agents could be so far apart in pricing. They then have to decide which is best for them. I believe most people don't realize how over pricing your home can become stale to the market and trying to play catch up can be quite costly.

The home sold for a little under a million - so the $150k was not as large of a % as if it were a lower priced home. The other thing to remember is that the agent spent tons of money on advertising for 2 years... I doubt that they made it back when it closed.

With the way our prices are going, staying on the market from Sept to March would cost someong in that price about $25K in equity.

Honest knowledgeable agents don't stand a chance against competition that overprices just to get the listings.

I don't blame the sellers. They don't know any better.

Hi Jay,

This is an excellent example and so well said. "Her efforts to get more ended up costing her more". Ya' gotta love it. It's so unfortunate when this happens. Thanks so much for sharing your story.

Hi Bob, I think taking an overpriced listing is a disservice to the seller. It serves really no purpose as to only the agent taking the listing.

Lenn, you are absolutely correct. It is very sad.

Hi Lisa, yes it is unfortunate but like so many have said before the sellers really don't know better.

I agree with Jay. It may be intriguing to take an overpriced listing and hope to get it sold, however your integrity with the general public and other Realtors is on the line. Our job as Realtors is to work FOR our sellers and not AGAINST their best interests.

I bet it's hard as a realtor to say out loud what your seller doesn't want to hear.

Mariana, I guess when you are talking close to a million dollars whats a 150K? LOL Oh well live and learn is what i always say.

Jay,

It is amazing, isnt it? Not to long ago, I was rejected by a seller because her "friend" said he would list at 20K more than what we would. He also was willing to drop his commission. Well, 14 months later it is now below where we KNOW we could have sold it at. The owner is beside herself because the agent never did any marketing (not in his budget because of lower commission), and the agent has told her it is unsaleable and to rent the house. Btw, he lives 2 hours from listing, I live 9 blocks! Go figure!

The owner was from NY, a HGtv fan, who thought her house was worth gold. It had many problems, that my hubby, the appraiser pointed out to her. Hmmm, lets see had she listed with us, it would have sold and she would have made about $60,000 on the deal when everything was said and done. Sometimes, its mind blogging.

Oh and the first four weeks of the listing, there was no picture on MLS. The next 8 weeks was a picture of the wrong house.

All I could do was shake my head.

Darned if you do, darned if you don't.

My parents sold a home back in 2003. It was a custom design on property they did about 98% of the prep work, and it needed a whole lot of prep work. When they decided to move they had 4 agents work up proposals for them. They had about 140K into the house, so when the first proposal came back at 225K they were giddy. Two more came in around the same price. The last to come in wast at 339K. They thought the agent was crazy, but after much consideration gave the expensive proposal the listing. The house listed on a Friday morning and within 4 hours had a contract for 335K from a couple living out of state, pending visual inspection of course.

On the other extreme I have an elderly neighbor that listed her home many moons ago with the agent that presented the highest number. She now has a contract, but just like your story, she has been paying every month and the contract is less than what someone offered her cash in the begining.

Darned if you do, darned if you don't.

Keith, very well put, we have an agent around here that over prices a lot of his listings and a lot of home owners know it. They complain to us about his pricing and how they won't call him. That's a shame but we do use it to our advantage as we track his pice reductions.

Sue, that is so true.

Brande, not only did he not put the picture in he put th ewrog one in. That's unelievable. I laugh when I see 3 photos of a listing, our mls takes 12, and they are all outside. Makes you believe the inside is awful.

I called your cell as to your problem with your wordpress blog right about the time you commented here. LOL

Hi Daniel, thanks for reading and you are so correct. Darned if you do darned if you don't. You just never know do you.

Jay..."Been there done that" Many sellers just love hearing what it is they want to hear. One can't blame them but when we have solid data that supports what we are saying it surprises me they don't take us seriously and just look at "The high Number". I also know of an office in our area that purposely takes listings at high prices on purpose to get the listing and then works their sellers down on their prices to get the homes sold. Not my cup of tea...I would rather be honest up front as you were. Thanks for a great post.

Hi Jay - another sad story about the disservice sellers receive when agents go in and buy the listing with an exagerated price in the beginning. You just wonder how an agent can really feel they're serving that seller client by being that out of whack on the price in that kind of market......

Congrats on the gold star! It's a gold star day for both hubby and wife today!
Ann

I have had that happen myself. Its gut wrenching to see the sellers sell for less than they should have as well as the pain of showing for that long. Its also maddening to see some agents continually getting paid, and paid well, because they over price the house, but they get the listing. Ugh!

Jay,

I understand that taking an overpriced listing can be a disservice to the seller, but I have also seen them sell at what some would call overpriced. I'm sure many of us have as well. To me a list price is only an opinion of value. We don't have the crystal ball to see what a buyer will pay until they pay it. I wouldn't want to make a habit of it and I agree that more often than not it's silly to take them. Today's seller has nearly as much info about price as we do and it is their property. Agents buying listings either by price or fees is just something we all have to deal with and always have. It is sad to see a property sit at what someone thought was a good list price, but it's great to get a seller what they want and not stand so firm on what we think it should sell for. We could be wrong every now and then. I've seen it happen alot and I'll bet others have too.

I see it often as I am sure others do as well. People go with the higher comps because in their own minds their home is worth top dollar. Has a seller ever called you and said :Hey, I got a real dog here... can you sell it for it is really worth?" I had one hard headed seller who would never adjust the price until after it was too late. So we kept it on the market................. all the way to foreclosure. Some people!

This happens here too, and its starting to happen a lot. Whenever I loose a listing for this circumstance, I always follow it and its still very amazing to me how right on I always am on the price that it winds up selling. And the sad part is, I would have saved them money, sometimes a lot, for not sitting out there so long. People still want to believe they can get more than they really can, and they are not the winners in that scenario.

Jay I have had the EXACT same experience. It is very frustrating when the sellers fall for someone "buying the listing" - they lose money, ultimately, and the honest agents lose the business because they told the owners what they needed to hear instead of what they wanted to hear.

I know you must be scratching your head but it happens all the time. Sellers sometimes hate to be realistic. I say spend your energies on those listings that WILL sell for you.

Jay, I thought i put a comment here but it went missing. My question is what gives a CMA the creditability that it needs to get the listing?

AMEN! I see this happen again and again! Very good point!

George, thanks for commeting and I agree when you have the data that supports your findings and the seller decides to list with someone else it is frustrating. I know it's their decision but the majority of the time it will probably not sell for the higher amount.

Ann, we have seen it all too often and we just keep plugging on. I loved it when we ran into a seller that mentioned they wished they had listened to us because "their house would have been sold by now." That was sweet.

Ken, I hear you and yes it is gut wrenching,

Bob, thanks for coming back and yes there are exceptions to everything and you are correct. Hindsight is always perfect. Sellers do have a lot more info than years past. The fees don't bother me at all but overpricing does tick me off especially when they sit on the market forever.

Gary, you are right some people can be down right pig headed. They will lose all the time.

Steve, you are absolutely correct, I too follow listings I didn't get and I am usually amazed at their outcome.

Mary, thanks for commenting and yes it is frustrating.

Diane, words to live by. My favorite saying is NEXT. Thanks for stopping by.

Cynthia, Thanks for the kudos.

Dena, I think the market data should speak volumes for what a home should sell for, if done correcty. We usually do a grid sheet in excel that compares the solds.

When presenting the CMA in a down market, we will weigh in what is on the market, When using what is on the market we express the fact that these properties haven't sold yet. So, that tells me if these haven't sold yet then why should I list your house higher than what is currently on the market?

So, based on this type of presentation along with marketing and experience in the marketplace etc... should give the credibility necessary to secure the listing. When I am able to see the CMA that another company gives the seller I can easily pick it apart and show where the flaws are in the CMA.

I think when I see my analysis and I see what the other agent puts it on the market for and it then sells for what we thought it should sell for makes me wonder, that's all. I hope this helps, thanks Jay

Hi Jay, Well you already know my thoughts on pricing. You really did all you could do. Unfortunately some sellers will just not believe us no matter how much proof we provide them with. In a declining market it is imperative that the property is priced right at the outset and sold as quickly as possible. If not..well, read this post again.

One point you made that deserves highlighting is that the seller thought she lost $45,000-because even if they KNOW they're starting high, then when the price does get adjusted, it's a mental slap over and over because folks fall in love with that original list price-it's human nature.

BB, I love your last sentence. So true..

Leigh we had a seller once that couldn't sell his house before he hired us, because he was 100K over priced. He kept telling us that he was losing 100K. I kept asking him what 100K? He said the one that he had when he had his house on the market before us. He didn't understand that he couldn't lose what he never had. No matter what we said it never sank in. We sold the house but he was never happy. We were the 3rd broker in and this was after a year on the market. Go figure.

Jay, you can never go wrong by giving people your honest opinion, and as you can see by what happened your opionion was the best opinion.

That's the story of our lives!! We loose listings all the time over agents that buy their listings. It does feel good to know you are right though and too bad for that customer that didn't listen to you guys. There's a listingin Miami Shores that we turned down because the seller wanted to overprice by $100K - after 8 months on the market, 2 contracts have fallen through and they are now below the price we suggested!

Don't people ever figure the APPRAISAL into the equation??

Ya can't get it if it ain't worth it!

APR

2007

George, that's all we can do is give our honest assessment.

Ines, I hear you, it may be satisfing that we told them so, but it doesn't pay the bills. :-)

Joan, that is one of t efirst things we tell a seller is that it "must appraise out"

Jay - a tale we hear so often. Even if she had sold at your low end she would have come out ahead with the mortgage, etc. over the last 6 months. Some sellers need to find out for themselves. You hate to see this happen, especially when they really need to move along but often reality is the only way for them. The results validated your original proposal - too bad they did not listen. Bet they are wishing they had now!

Jeff

If she would have listed at your high price and it sold right away, the seller would accuse you of pricing it too low.. You can't win... Take an overpriced listing with a guarantee to reduce within a week if there is no activity..

Know how you feel. I probably lost 5 of 7 listings last year due directly to the other agent agreeing or telling them their house is worth more. It does irritate me that some agents take any listing for the exposure or take them in hopes of having them reduce the price later. I do believe that some agent honestly think the home is worth more. In those cases most have not done there research or are unfamiliar with the market. I just take a look at those listings I lost and see the days on the market rack up.

Of those five the DOM are 274, 236, 165, and 117. One actually is under contract after about a $30K reduction.

Recently an appointment I was suppose to go on but the owner cancelled at the last minute has the home listed at $800K. My CMA was about $530K-$550K. I can see this sitting a looooong time.

Jay...

As you know doing the right thing comes with it's own set of rewards. Doing the wrong thing works the same way :)

What comes around eventually goes around :)

TLW...ROAR!

MAY

2007

Jeff, thanks for stopping by and yes I really believe she could have been in a much beter position with us. Time is Money...

Melissa, That can happen but we pride ourselves in explaining to our sellers the ramifications of overpricing and that the first few weeks are crucial in trying to secure a buyer. We just don't win all the time. :-)

Craig, I understand fully where you're coming from. I usually keep a spreadsheet on these agents and I use the days on market and the amount of price reductions to my advantage.

TLW, When it comes to pricing Broker Bryant knows best and I like what Broker Bryant said, "If not..well, read this post again."

MAY

2007

Hi Jay...

Great subject! We all have been there quite a few times and we all know who they are in this area. I am just wondering though about the spreadsheet you use. Do you actually bring that with you to listing presentations? I am just wondering if that is something you can do or not...great idea!

Thanks for the great post!

Hi Lisa and welcome to AR. Yes, I do bring it, if I need it I will pull it out if the sellers mention that firm. I feel it is accurate data from MLS and it paints a pretty accurate picture of their business practices. As long as I do not disparrage I feel I'm with in my rights to show their statistics. I hope this helps.

JUN

2007

Jay, I can relate to your story. I've had similar experiences myself. Even in a buyer's market there are agents willing to "buy" listings by making the seller think they should list their home for considerably more than the market will bear. Then the house sits on the market a long time and the seller pays the consequences.

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The Cost of Not Believing

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