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Know When To Hold 'em...and Know When to Walk Away

Education & Training with The Melanie Group

As the line from the song "The Gambler" says, you have to ‘know when to hold ‘em, know when to fold ‘em, and know when to walk away". That is truer than ever about real estate and listings.  I am primarily a real estate educator, but I also continue to list and sell, working as a team with my husband, so I can keep my hand in the market and know what is going on.  I talk to agents everywhere I teach; in March alone, I taught in Texas, Pennsylvania, Tennessee, South Carolina and Florida. Everywhere, I'm pretty much hearing the same thing: agents are working harder than ever before; buyers are pickier and looking at more houses; financing is an ever-moving target, and getting harder all the time. On the other side of the equation, we have sellers....and we have sellers. My husband and I have encounters with three different sellers since the beginning of the year that we applied the words of the song to-and we walked away. In this market, with the time we are investing in our clients, our deals and the problems, there simply isn't time to invest in the unrealistic seller. 

Seller #1 owns a lot in our beautiful Pine Creek Valley, here in North Central Pennsylvania. It has awesome creek frontage, and gorgeous views. It is also flood way, which (by the way) is way worse than flood plain. Flood plain you can build on; flood way you cannot build on-under any circumstances, due to federal regulations. Seller #1's opening comments to me in our first conversation were: "This isn't a property that Joe-Six-Pack is going to buy. It will take a special person. And, I'm not local, but you are and you know how to get around those regulations so someone could build there."  Well, I am local, but I don't have any formulas for getting around a federal regulation. Seller #1 had his lot listed last summer with another company-which had not indicated on the MLS sheet the status as flood way-they had simply said: "Check with zoning officer". At the beginning of the year, we had made a pledge to ourselves that we would not take seriously overpriced listings. Seller #1 thinks his lot is worth about $130,000 more than we think it is worth. We told him that. He said he had had an offer within $20,000 of his asking price, but had rejected it. We said to him: "You should have taken that!" We said to each other: "Two fools met-one for offering that much and another one for rejecting it!"

Seller #2 came to my husband via a referral. The person making the referral is a close personal friend of the seller, and apparently agreed with her estimate of her market value, based on "it's what I have in it." Well, in Appraisal 101, I teach students that cost does not equal value. In addition to her highly inflated opinion of her value (she wanted $200,000 more than any recent sales in her neighborhood, and her house is not larger or nicer, and neither is her lot), she had lots of friends ‘advising' her on how to sell her property. Despite her agreement that most buyers would not be local (again, she is in our second home market), she demanded weekly insertions of picture ads in both local papers. Newspaper advertising, as we all know, doesn't do anything except keep some sellers happy-which is a poor reason for any agent to do it. Jim had stressed to her the numerous websites we market our properties on and our results from our marketing program. From there, she had opinions about everything from sign placement to what the MLS sheet should say. And, some of her suggestions were not just bizarre, but misleading. We don't mislead when we advertise and market properties.  On top of all that, she was beyond high maintenance-after one short week, it was obvious she thought she was the only client Jim  had and deserved at least two phone calls daily.  I'm all for keeping in touch with clients, but I'm not a babysitter. Jim had felt compelled to take this listing; he turned it over to the broker and said: "I don't know if you can make her happy, but I know I can't." The broker decided he couldn't either-so she's out there-with her price, her ideas, and her needs-and the other agents in our market are welcome to her.

Seller #3 had had an appraisal on a property he inherited which has outstanding curb appeal. We agreed last fall to try it at ‘his price' which was about 30% over appraised value. We had a lot of initial activity, then nothing. We had a wonderful virtual tour slide show with over 30 photos on it.   Interested parties told us they would not make offers, because they didn't want to insult the seller. I ran Google analytics on our websites and showed him the hits, telling him: "7000 hits and no appointments is a reaction to price".  The house although lovely, is simply overpriced. He took it off for the winter. Spring came and I updated him-in the price range his home is in, we have an eighteen month supply. I suggested he get realistic about the price; he had tried it higher, but it hadn't worked. He now says he is ‘going to try another agent' because it just ‘wasn't in the newspaper enough'.  Go, with my blessing. I don't have the time and energy to deal with sellers who won't be realistic. Ads in the newspaper aren't going to sell houses, not in 2009. Aspirational prices are not going to bring offers in a market glutted with so much inventory. A few months ago, I read a survey where property owners were asked two questions: "Have real estate prices declined in your neighborhood/market?" and "Has your house declined in value?" Amazingly, a high percentage said: "Yes" to the first question but "No" to the second one. Folks, this is like attending your 30th high school reunion and deciding that all those other people have aged, but not you!  Tough times call for tough agents. I listed a property yesterday-at a good price. I'm pretty confident I can sell it for the owners. I plan aggressive Internet marketing, and other things which work for this type of property-but not much newspaper advertising-because it isn't working. I have a listing appointment this afternoon. This seller was previously listed with an ‘Aspirational price' with another broker. If she won't be realistic, I'm walking away.  After all, you have to know when to walk away.