OVER PRICING:....A FORMULA FOR DISASTER IN A FRAGILE MARKET PLACE:

Paula,

you are correct. I see that this is a second one, and I did not read the first one, so i reacted to the post, and I also did not read the comments, which I usually do, but we are moving today, and when I was hurriedly typing, my poor wife that is overwhelmed with the whole packing thing, was standing in the kitchen with a big knife and the look on her face was far from friendly (LOL).

I did not mean to be rude, and I will come back and read and comment, just when I feel a bit safer around our new place.

Good thread indeed as I was looking for properties for my clients and did see the higher price trend happening against short sale and foreclosed properties in the same area. With the market conditions as they are now, sellers are confused and some agents are not being realistic to market conditions. It feels like an artificial market is being created again. I don't agree with the low inventory in my market and I feel that those so called stabilizing prices is just a prelude to the real problem that banks will be facing when they do have to release inventory, when they no longer can afford to sit on these properties. My clients scored a great deal on a lender owned property and not a offer priced home in the same area.

Selling the listing has been the mantra since the beginning of time!  The more compettive the market place is to get listings the higher the listing price.  I don't think a post on active rain is going to change that fact.  As a Exclusive Buyer Agent and Investor, I would also bet that a few (or more) commenting here have listings that are over priced.  Not necessarily because the seller insisted but because the agent didn't list the property to sell. When talking with the Seller-consider the fact that prices peaked in 2006.  Most markets throughout the US at that point (according to my data),  became over valued, say 40%, here in Ca.  If the market fell 30% since 2006, that still leaves a 10% premium over market value today. Bargins are not defined by recent peak value.  Rather, they are defined by how far below CURRENT market value you can buy it.  If you use that pitch, and understand it yourself, Chances are you will never again over price a listing.  That is, of course, unless you just want to play the numbers game and put a sign in the yard, hope for the best.  

Emily - I cannot agree with you more!!  Thanks for your insight and ability to make the problem clear. I am going to share your 'formula' with future sellers. It is difficult for them not to see their home as more valuable than the others in their neighborhood :-)

I agree with you and do not like to take them over priced.  However, I have seen two homes sell recently that I made listing presentations on.  They listed with another agent higher than I suggested and sold much later lower than I suggested.  The seller may have got what they deserved, but the other agent got the commission and I got nothing!  I always give people and honest opinion of the home value.

I agree 110%.  I'm offering to have a NC Licensed Appraiser do an appraisal on a home that the seller feels is right, but I know is overpriced.  For $350, it convinces and I'm off the hook.  Anything that works...

I like Joe Jackson's (response #86) sarcastic take!  At least if you referred the listing to one of the "agents specializing in over-priced listings" you could get a referral commission!

The root of the "illness" is greed!  These agents are greedy for a few more dollars, the sellers are greedy for a few thousand dollars and the market suffers even longer.  We are in real estate to earn a living but the transactions are not about money they are about education and counsel.  With the proper education and counsel the commissions will come on their own.

Paula, unfortunately overpriced sellers will find starving sales people to list their home

Ty

The "good ole days" in real estate is gone - buyers have all the info they need to determine whether or not a property is overpriced and unlike days gone by, it does an agent no good to list overpriced homes.    I feel like the percentage of listing appointments where I get the listing is pretty low at only 50% but I genuinely believe it is in large part because so many agents in our market are willing to indulge the delusional seller in hopes of getting a price reduction.     I just listed one and told the seller that if he had hired me in the first place he would have been out of this house two years ago.   He listed with another agent about $50K higher than I was recommending.

Now, there is no telling how long it will take to sell this really gorgeous home because the only thing selling in volume right now is under $150K.  

You can lead a horse to water, but you can't make him drink.  Same with thick headed realtors who are blindsighted by the thought of a commission rather than what is best for the seller client.  There are many ways to get a seller to "see the light" and still get the listing.  You just have to work a bit harder up front.  And if you find that the seller is stuck on a higher price, it's your reputation on the line, don't sell your sole to the devil.  No commission is worth your reputation.

Good post Paula. You are thinking macro economics and most agents can't get past micro economics.

We had an agent in our office that was going on a listing appointment and when he got back I asked how it went, he said "Great, I didn't take the listing" That confused me until he explained they wanted about $30,000 more than it was worth and he wasn't willing to list a property because it was over priced.

He said he would wait until it expired.

YOU ARE RIGHT. PERIOD.

I've been saying this. I keep saying if every other agent (see i'm not being greedy and saying every agent) go to their overpriced listings and demand a new price that's correct or withdraw the listing the market will be on much more stable grounds.

We study the market and explain why we price a home where we do. If we  are too far from the seller, we don't take it anymore.

PERIOD>

I agree that it's important not to overprice, it's also a very fine line to walk as well. It's not our job to JUST sell the house.  It's also not a race to see how fast we can get our commission in our pocket.  We are trying to get our sellers as much money as possible in the current marketplace.  Any idiot can just get a seller to price it under value and get it to sell.  We need to price it right AND market it effectively.  An extremely aggressive marketing plan creates a lot of exposure for clients, which can in turn reap them more for the home.  If our only consideration is list price, we may not be doing our job.

Paula - I've been on this soapbox for the last year in our market. We still have several agents who will take a listing at any price. This is such a disservice to the sellers. I believe the sellers turn to us for our knowledge and expertise. It is our duty to explain how the market works and recommend the best possible selling price they can expect in the current market. I also know agents who will take the listing with an agreement to reduce the price in 30 days - in most cases that is too late. Overpriced homes end up chasing the market downward and usually sell for less than market value due to the length of time on the market and numerous price reductions. Great post. Congratulations on the feature.