This is the the second attempt of a blog post, the first was a little narrow-focused and upon writing it I got to thinking about a listing practice in Missoula (and probably a lot of the US) that is now DOA. The old trick, "Lets price it up and we'll negotiate down when a buyer comes along." So that said, I'd like to thank you all for reading this eulogy for a dead practice that worked in NINA (no income, no asset) loan-era.
Pricing up to negotiate down had a good run, it was an awesome technique in an age when people could just state they made more income to fill the gap, and were happy to over-pay. Now, almost 3 years after the collapse this strategy and many other practices led to, that technique is dead. It had people questioning REALTOR value at an all-time high (and rightfully so), and diluted the negotiation abilities of new agents as they came about in a market that didn't require agents to be transaction coordinators and facilitators but rather "yes-men" or "yes-women". I'm no hypocrite - I did this too, most all agents did. However I was grounded in the expertise and knowledge of markets from years past with Mom as someone who had worked through multiple down-markets and trends where the financing sector tightened up. This allowed us to work through these tough times and learn lessons from the boom years in what practices need to be put behind us.
That said, we recently fell victim to this old trick with a pair of listings we lose this week, two unique properties that we thoroughly researched on pricing but then proceeded to list the properties at about 20% - 25% higher than we suggested because the sellers thought we could just negotiate down when the right buyer comes along. Well, look where we are, the end of our listing contract and not even a single nibble - hardly even any inquiries. We attempted discuss a reduction to no success.
Days before these contracts expire with us I reflect upon this screw-up, we should have stuck to our guns, we should have told the sellers if they want to list for the prices they did they should find someone else, but we didn't. Now months later we're losing these listings that we never should have taken, considering their list price. Despite our research we fell into the belief that pricing up won't matter with these properties, and the market responded exactly as expected - negatively. It's our own fault, lesson learned, onward and upward.
Upon this blog post I find myself reflecting on agents who came about in the last 3 - 7 years, they learned to strive in a market that didn't require business sense, networking skills, negotiation tactics, or knowledge of the market. Gee, and we wonder why REALTORS in general aren't the most favorable profession in consumers eyes. To move forward we (as an industry) must embrace the new market, a market that requires proficient agents who know much more than how to email and MLS search and open a lock-box. The challenge ahead lies with who will be the catalyst for change in our industry - because surely the individual agent will not do that. The agent as an individual does not care about the profession like an association or the entire trade industry does. That is why I only see three forces that can lead the industry to change, the public, the REALTOR association, or the government. So who is it going to be? More thoughts tomorrow...
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