A Pricing Opinion ...Not Always Easy News

By
Real Estate Agent with Diamond Partners Inc 00244377

Most homeowners don't realize that when they interview a real estate agent to list their house for sale, the agent is also interviewing them too.  As Realtors, we don't always take every listing that comes our way.  Well, okay ...maybe some of the most desperate of agents do.  Not me.  The truth is, we CAN be selective about who we do business with.  While I don't normally turn down business, there are a few reasons why I have.  The obvious would be because I felt the homeowner might not abide by fair housing laws.  Another reason I might turn down business is if I felt there was something unethical and/or unlawful.  The last reason would be the homeowner.  Yes, that's right.  Homeowners can scare me when the chemistry is not right.

Every man thinks his home is a castle and it's worth more than it really is.  My job as a Realtor is to dish up reality.  This is not always easy, nor is what I have to say always well received.

I have had to decline taking a listing when a seller appears to be unrealistic about price.  Oh, and sometimes there is an obvious disconnect.  This doesn't happen often, as I am an easy going person who can usually adapt to all personality types.  But, there's not a person on earth who doesn't occasionally feel the wrong chemistry about someone or something. 

It's usually never about the property.  I will list just about any type of property IF it is priced right and I feel the right chemistry with the seller.  It doesn't have to be a showplace home, but it does have to be priced according to the overall condition and appeal.  True, there is a buyer for every home, but every home will eventually sell ONLY when priced right.  A house needs to be priced to compete with other listings and within a reasonable variance of comparable sales.  And, a little staging often helps too.

Pricing is the easy part.  The data is available through my local MLS datebase.  Delivering the news regarding home values ...NOT SO EASY.  This is when I usually find out if the seller has reasonable expectations,  is in denial, or is simply difficult to work with. Remember, chemistry is part of it too.

Here is a sampling of a recent conversation I had with a homeowner: 

  

 

Oh, well that competing property is a short sale.....

     In an effort to get your house sold, I cannot dismiss this listing, nor will a buyer's agent or a bank appraiser.  Sorry.

But, my house was built by (___________fill in the blank) builder.

   I didn't have the heart to tell the proud homeowner that a google search of this national home builder reveals a list of complaints and that some local agents and home inspectors are not saying too many kind things about this builder.  Local custom builders actually have a better reputation for quality. 

That house down the street sits on a corner lot and has no back yard....

     Yeah, but it's 700 square feet BIGGER than yours.  Can you see the trade off?

There was a sale last year at $698,000, I want to list mine in the 700s.....

     That was last year. Home values have fallen 15% since then, and that also happens to be the house which is 700 square feet MORE than yours.  PLUS, you need to be below price point.

Regardless of what you're saying, I still think my house should be listed in the 700s....

     The highest sale in your neighborhood EVER was the house that sold at 698K - before prices fell 15% in the past year.  Houses in your neighborhood have NEVER sold in the 700s - even in a GOOD market, so what makes you think they will NOW?  Sorry, your neighborhood just does not yet command this price - yet.

My house is decorated better than the other homes.

    I didn't get around to telling the seller that we might need somebody to tweak things ...like a professional stager.  There was no sense doing so once I felt strongly that I probably would not list this house. Why go there? 

     Oh, you don't have to tell us all this, my husband is in the real estate business (he confirms that he has been a mortgage broker for the past 20 years).....

   I didn't say what I was thinking at this point because it's become clear that I know nothing and they know everything there is to know about MY job. But, I was silently thinking ..."I don't pretend to  know the mortgage business, please don't pretend to know how to price, market and sell houses".

 

So, I didn't want the listing.  I parted ways on friendly terms that day, after agreeing that they should think things over and CALL ME if they were interested in listing their home as I had suggested.  I didn't hold my breath waiting for them to call either, nor did I follow up with a phone call encouraging them to list with ME.  I simply watched the MLS database for a few days and eventually found their property show up listed by another agent at a different firm - for $53,000 more than I had suggested.  Good luck to them!  I won't lie to get a listing.  I won't waste my time, energy and money advertising a property that is overpriced.  And, I won't work with a seller who won't listen to reason.

Posted by

_____________________________________________________________________________

Carol Culkin - REECENICHOLS REAL ESTATE

Carol Culkin - Licensed Real Estate Salesperson for ReeceNichols Real Estate, is your source for real estate in Overland Park and the bordering cities of Leawood, Olathe, Mission, Miriam, Lenexa and Shawnee, Stillwell and Spring Hill. Carol has been ranked as an award winning agent and offers her clients over 10 years of real estate experience.

PROFESSIONAL AFFILIATIONS, DESIGNATIONS AND COMMUNITY INVOLVEMENT:

Member of National Associations of Realtors®, Member of Kansas Associations of Realtors®, Member of Kansas City Regional Associations of Realtors®, Member of Heartland Multiple Listing Services, Accredited Buyer's Representative (ABR), Seniors Real Estate Specialist (SRES), Red Cross Volunteer - Greater Kansas City Chapter, Supportor of Cross-Lines Community Outreach.

 
 

ReeceNichols Real Estate

8001 College Blvd Suiite 100

Overland Park, KS 66210

Office: (913) 451-4415
Cell: (913) 333-8310
   
 http://www.overlandparkhomelocator.com/  
 

                                 

 

Comments (23)

Lorrie Semler, REALTOR® in the Dallas area. Call/text 972-416-3417
United Real Estate - Addison, TX
Real Service. Real Results. Real Estate

Position yourself to get the listing after it expires.  Maybe they'll be more reasonable then.

Jul 25, 2009 02:14 AM
Jeani Codrey
RE/MAX Corridor - New Braunfels, TX
Director of Opportunity & Agent Development

I was told by my first trainer in the business that you don't need every listing!  Especially the one's with hefty inflated price tags that are ego driven and not market driven.  You did a good thing by not taking the listing and who knows...after sitting on the market for several months, they may just concede and call you back for a reality check!  Have a super weekend!

Jeani Thomas Richie, REALTOR

Jul 25, 2009 02:22 AM
Charles Stallions
Charles Stallions Real Estate Services - Pensacola, FL
850-476-4494 - Pensacola, Pace or Gulf Breeze, Fl.

All good points and I want say that I never would walk away but I very seldom turn one away. I have in my contracts that the seller will reduce the price by 10% a month.

Jul 25, 2009 03:03 AM
Kathleen Daniels, Probate & Trust Specialist
KD Realty - 408.972.1822 - San Jose, CA
Probate Real Estate

Carol, You undoubtedly did the right thing. I would have done the same. The Sellers hired a weak agent - too weak to tell them the truth as you did. Unfortunately, the sellers will get a painful lesson ....and so will the agent.

Jul 25, 2009 03:18 AM
Jim Valentine
RE/MAX Realty Affiliates - Gardnerville, NV

I would rather be the 3rd agent getting it with the right price and circumstances than the first taking an overpriced listing.  We've watched many people follow the market - they are still unsold and have lost hundreds of thousands.  Good for you for holding your ground.  if you can't sell it why list it?

Jul 25, 2009 03:25 AM
Carol Culkin
Diamond Partners Inc - Overland Park, KS
Overland Park Residential Real Estate

Jim - I WAS the THIRD agent ....and it was obvious the ones before me poisoned them into believing.   They bought the listing by flattering the seller into thinking her house and her decorating were worth something more. I could have done that too, but I'm not a snake.

Jul 25, 2009 03:35 AM
Donna Harris
Donna Homes, powered by JPAR - TexasRealEstateMediationServices.com - Austin, TX
Realtor,Mediator,Ombudsman,Property Tax Arbitrator

I think more people need to read the code of ethics where it says under Article 1-3, "REALTORS®, in attempting to secure a listing, shall not deliberately mislead the owner as to market value."

Isn't that what people are doing when they significantly overprice?

Jul 25, 2009 05:27 AM
Bonnie Vaughan
Scranton, PA
CNE SFR - Buyers/Sellers - Lackawanna & Surroundin

Carol - When I begin to talk seriously to a seller the first statement I make is that I may not tell you what you WANT TO HEAR.  I will tell you all the facts that you need to know to make an informed decision and arrive at the right strategy to sell your home.

If the seller is out in La La land and insists on a ridiculous price, I'd rather part friends, wish them well and walk away.

I know another agent will jump through the sellers hoops just to get the listing.  Let them get the sellers irate phone calls when the house does not sell.

 

Jul 25, 2009 07:25 AM
Satar Naghshineh
Satar - Amiri Property and Financial Services Corp. - Irvine, CA

Thank you for the post as I like to deal with real world examples. I have a different take on this than you. I will show them the comps as you have. I would also explain that in a declining market, it is better to list your house below the comps and take a hit now, than to chase the market down and lose more in six months. I would also point out that the buyer might need to qualify for a loan and the buyer's lender will need to appraise at market value. If I couldn't convince them of this, I would still take the listing at their price but with an agreement with scheduled reductions in price to get us to the price point I want. That way they can see they had a chance to list it at their price and it failed and there are no hard feelings and you are in a better position to negotiate your stance. Also, the buyer leads are not bad either. You can shove them to the cheaper properties, thus drying up the competition.

Maybe it's because I deal mostly with short sales that I treat real estate as one big negotiation. My take is your first negotiation is with your sellers. Think about it, they want to list it 50k over?? That's great, then you ask them to help you sell it by making available to buyers without appointments and with a lockbox for easy access. Give and take and at the end, you are still the winner as you disclosed your stance, held them responsible for any negative outcomes and negotiated an easy showing.

Jul 25, 2009 07:53 AM
Steven L. Smith
King of the House Home Inspection, Inc. - Bellingham, WA
Bellingham WA Home Inspector

I know that around here some agents will try to get a listing by shooting high and then the client is likely to end up disappointed when nothing happens.

Jul 25, 2009 08:12 AM
Carol Culkin
Diamond Partners Inc - Overland Park, KS
Overland Park Residential Real Estate

Amin - I've tried it and personally don't care for your strategy, because you can spend a lot of time marketing a property n the wrong price range when you could be working with motivated buyers and sellers who want to take action.  I specifically refer to giving up a weekend hosting an open house at an overpriced listing when I can be out there where the real activity is and negotiating deals. I won't put the time, effort and money into advertising and marketing for a house that I know will not sell while working with sellers who are "testing" the market while prices continue to drop further - as you said, we'll be chasing after the market later and will take an even worse hit.  Taking an overpriced listing is not in any-body's best interest ...and only lacks good business sense - in my opinion. Sellers do want business people to manage and negotiate their transaction, don't they?

Jul 25, 2009 10:06 AM
John Novak
Keller Williams Realty The Marketplace - Las Vegas, NV
Henderson, Las Vegas and Summerlin Real Estate

Sounds like this seller is positioning themselves to be a classic example of chasing the market downward. "Let's start at 700, we can always come down ..." And you will, Mr. Homeowner, probably a lot more than you were expecting.

Jul 25, 2009 10:15 AM
Carol Culkin
Diamond Partners Inc - Overland Park, KS
Overland Park Residential Real Estate

John, problem being ...they are NOT expecting, In fact, very unsuspecting of what's going to happen. And, you know what. I have listings right now in this high-end price range and even the ones which are priced right are not getting much activity or any at all.  I asked them if they want to linger. I told them the competing average listing has been on the market 199 days.  What's that tell us?  

Jul 25, 2009 11:11 AM
Satar Naghshineh
Satar - Amiri Property and Financial Services Corp. - Irvine, CA

I understand the logic behind your decision. However, what if I were to tell you that I personally won't spend a dime or time on marketing until we reach my price point. Open houses can be held by new/other agents (as I don't do those either but have a lot of agents contact me to do open houses). In your example (assuming that 550k to 570k is the FMV and they wanted to list it at 720k) and for my market area, I would have reduced the price 20k a week on a Wednesday while asking agents to submit all offers. After 7 weeks, you should be at FMV and after 9 to 11 weeks, you should be under contract (assuming a $1710/week in market decline based on 15% of 593k purchase price divided by 52).

In the meantime, you are showing your new buyer leads to the other cheaper comparable properties. Your new buyer leads will be motivated as they see your listing being offered at 720k and the same exact model being offered at 560k. So you don't have to worry about them trying to lowball the correctly priced listings. On the listing side, your effort and marketing cost don't kick in until week 7.

You are right, Sellers do want business people to manage and negotiate their transaction. These business people should learn to negotiate with their sellers first (in my opinion).

Also, by the numbers you stated and the decline within the past year, it seems like you are suggesting that their house should be worth 593k (698k - 15%) even without the adjustment for 700 sqft difference. So if it is listed 53k more than market price, it is listed around 646k with another broker, which is well below the low 700's they wanted. Maybe the numbers are not accurate, but to point out an exaggeration? If this is not an exaggeration, could it be this is a potential short sale listing (especially after 3 agents)? Also, see how I made this work even with a 200k spread. 

To each their own and there is really no right answer as we both need one another. Some people find success in their business because they work with only the easiest of clients and some find success because they know how to handle the clients the other agents didn't want.  

Great Blog!

Jul 25, 2009 11:11 AM
Holly Weatherwax
Associate Broker, Momentum Realty - Reston, VA
A Great Real Estate Experience

In this market we spend too much time and money on marketing to waste time on sellers who are not going to price their homes properly. There is always someone who will take the listing. Even great houses that are overpriced are sitting.  Sellers need to understand that there are plenty of options out there, so buyers are not going to come in and begin a painful negotiation with an unrealistic seller.  If I had a dollar for every seller that said, 'Let's start high and they can bring me an offer' I would not need to sell real estate any more. The truth is that starting high can add months to the sales cycle--and cost the seller unnecessary carrying costs.

 

Jul 26, 2009 01:58 AM
Carol Culkin
Diamond Partners Inc - Overland Park, KS
Overland Park Residential Real Estate

Amin - Read what Holly is saying. Also, what about our fudicioary responsibliity?  If we are chasing the market and the seller has to take a worse loss weeks from now, how have we done the best job getting them the highest price in the shortest period of time (before further decline)? Taking overpriced listings just to build our inventory and increase our lead generation is doing a diservice to our sellers, regardless of any price changes they may agree to in advance. Are you saying you know the listing is overpriced but you'll go along for the ride?  Isn't that misleading? I mean, you're still giving the seller hope.  

Holly - SO TRUE...and even "priced right" homes are taking a long time to sell.  I consider turning down the overpriced listings a method of effective time management on my part.  WORK SMART ...and then you don't have to work so hard.  I don't want to be logging hours on the phone with sellers who have unrealistic expectations and be chasing after the market with them. What's that say for a Realtors reputation when their listings are not selling?  I pride myself on statistics, such as MY personal days on the market, or not having withdrawn and expired listings. I don't want sellers resenting ME and whining to their friends and family that the Realtor is not doing enough for them. Even if they don't, others will assume this. I don't need 50 listings that won't sell, just a few good ones I know WILL. And, I certainly don't need the aggravation of having to convince a seller it's time for another price change, I'd rather free up my time to get down to serious business or spend it with my family.

 

 

Jul 26, 2009 06:43 AM
Satar Naghshineh
Satar - Amiri Property and Financial Services Corp. - Irvine, CA

I've read Holly's answer and I have addressed her concerns in my answer with statements like "...while asking agents to submit all offers" and "After 7 weeks, you should be at FMV and after 9 to 11 weeks, you should be under contract...". The key point is that she states that there will always be someone that will take the listing, and that is Me! I will also get it eventually sold. ;)

To address your comments:

1. "Also, what about our fudicioary responsibliity? If we are chasing the market and the seller has to take a worse loss weeks from now, how have we done the best job getting them the highest price in the shortest period of time (before further decline)?" 

By disclosing to them what we think the home will sell for and what they should list it for. By doing that, we did our job. If they want to do something else, then they become responsible for the outcome. In this case, it will be the 9-11 extra weeks of being on the market.

2. "Are you saying you know the listing is overpriced but you'll go along for the ride? Isn't that misleading? I mean, you're still giving the seller hope."

Yes, I will go for the ride. It's not misleading and I am not giving the seller hope as I already told and disclosed to them my professional opinion as to the value of the property. At this point, I just negotiated with them. I agree to list the property on their terms as long as they agree to make showing the property easy and agree to a systematic automatic price reduction. It's not like I am stating that I think their property is worth over 700k and that we'll get an offer. Also, I don't waste my time as we won't get any activity until it is priced to sell. I don't waste any money either till I get to my price point. In the meanwhile, I'll take the free buyer leads. Maybe my listing becomes a future short sale. 

I understand your stance and logic. Like I stated, there is no real right answer. For example, you stated that you want your days on market to be less than other agents. That is a very good example where your personal beliefs are valid and apply to your decision. I would love to be in your marketing area and pay you a referral fee for any listings you don't want.

Jul 26, 2009 08:52 AM
Carol Culkin
Diamond Partners Inc - Overland Park, KS
Overland Park Residential Real Estate

Amin- Well, it also comes down to chemistry too.  So, the one thing that we've both NOT touched on in this dialogis how a pricing opinion that is too low can feel like an insult to the seller and then the agent is off on the wrong foot. I have worked your strategy and yes I understand all about holding the seller accountable. I have also dealt with seller anxiety in these cases, as if we can't do enough to market their house.  That's when you turn the conversation back to price going hand in hand with marketing and reminding them of your initial conversation. Yes, I know all this. And, under these circumstances I always keep a copy of my original CMA. But, if that CMA is lower than the seller's expectations at the time of the listing appointment sometimes they can get a little bent out of shape and they will list with the agent with the inflated pricing opinion. Some sellers are actually smart enough to know when they are being bought and have told me.  I have landed some great listings and worked with great clients who appreciated MY honesty over another agents fluff. But, we can't deny that some sellers think that the agent with the highest pricing opinion displays more confidence and if that was the first agent in and you were the third, well then you don't stand a chance. In the example I give in this post, I DID offer to list at THEIR price, with the suggestion that we may have to lower the price eventually. But, I think these sellers felt it would be a matter of "I told you so".  Bottom line, the chemistry was not there. And, if they were going to feel insulted because Igave them an honest opinion then so be it - list with somebody else. They had pie in the sky hopes and I think I burst their bubble by being too honest.  Some sellers want honesty, while others don't know how to handle the truth.  I truly have more respect for my clients who want honesty and can even handle brutal honesty if need be. There is a little more to this story, and I do intend to write a follow-up post in the next few days (time permitting). But, long story short - I hardly felt greeted by these people from the moment I walked in the door. SO, it's not just price in this case. Oh, and yes - I do understand your strategy, it's just not my preferred way of working.

Jul 26, 2009 03:54 PM
Satar Naghshineh
Satar - Amiri Property and Financial Services Corp. - Irvine, CA

Well, there is nothing you can do about chemistry as sometimes it is not based on personality or logic. I consider myself a well round individual and can relate to different people and different backgrounds. However, I did walk into a listing appointment where the lady said I looked like her ex-husband. I mean what can you do at that point? I jokingly responded "Ex as he was a good man and he passed away or Ex as he was a pain you finally had enough?". It turns out that I wasn't the good Ex. No matter how I tried to diffuse the situation, whether with compliments or small talk, I knew I lost as I have this sixth sense on understanding women and it was the elephant in the room during my entire time there. It was confirmed when I received an e-mail thanking me for my time but she decided to use someone else.

"Oh, and yes - I do understand your strategy, it's just not my preferred way of working."

Understood. I don't expect everyone to be just like me. The purpose wasn't to state what you were doing was wrong, but to give another viewpoint into this situation. I am a problem solver and I saw this as an opportunity to chime in but maybe you weren't looking for solutions as there are no solutions when chemistry is involved and you were just looking for a place to vent and get support. Men from Mars type of thing...My apologies.

Jul 26, 2009 04:45 PM
Barbara S. Duncan
RE/MAX Advantage - Searcy, AR
GRI, e-PRO, Executive Broker, Searcy AR

Carol, sometimes they'll come back to you after it doesn't sell because you told them the truth. 

Jul 27, 2009 02:32 PM