Over priced listings. Should we consider them?

By
Real Estate Agent with CoastalVa Realty Inc

Over priced listings.  Should we consider them?

There are a lot of blogs on over priced listings,  we all (real estate agents) agree that we should never take them, but I would like to share another point of view.  I know that many agents are going to disagree with house on wheel pushed by man.  house for sale Virginia Beachthis point of view, but this is very much on my mind, so I am going to share it.


A while back, I had a navy pilot be specific on what he wanted for his house, and although it was way over priced, we came to an agreement that we would list his house for $10,000 more than what I thought is should list even on the higher end of the CMA.  The agreement was that at the end of 3 weeks, after getting feed back from the showings we would reduce the price. I mention what he did for a living because his personality was very strong and very methodical.  During the third week, we had our third showing in the time of the listing, and I had the feeling that this last couple had really liked the place from the feedback of the buyer's agent. I decided to hold on one more week before lowering the price, just in case of they wrote an offer.  So it happened that we did get a full price offer with high closing cost assistance request.
I had to explain to my client that an offer in hand is worth more than..... anything else, and after thinking it over for a couple of days, he accepted the offer.  It has to be mentioned that this house was in mint condition with all the bells and whistles and showed better than anything else in that price range in a desirable area.  Back then appraisers were not yet under such scrutiny.  The sale went through without a hitch.

Over priced listings.  Should we consider them?

This past winter, I had a listing appointment with a seller whose listing had expired.  After talking with the seller, I realized that the previous agent had done a pretty good job advertising the listing, holding open houses, flyers etc...  The Internet marketing could have been stronger, but during the 6 months that the house was listed there had been 3 offers.  One of them was $5.000 short of his asking price.  Eventually, he reduced the price and the listing expired.  The seller interviewed 3 new agents, and I was one of them. After the initial in person interview, I spoke with him several times over the next couple of months, and I decided he was not someone I wanted to work with.   Recently  I was looking at this neighborhood and saw that he had sold the home for the price I had suggested plus $10,000.   He had done all the repairs and improvements that I had suggested, so the house showed much better, but I still could not believe that an appraiser would agree to that selling price because the numbers weren't there.house sold
Did he make the right decision?  I don't know.  He sold for his initial price from the year before.  In the mean time he made substantial improvements to get the house up to par in that neighborhood.  It took him a year plus a few months after he initially put it on the market, and he could afford to hold on that long.  I assume he was happy that he got the price he wanted.  I know that he was taking money out of saving to cover all expenses, so by the time he was done, he probably broke even with that earlier offer short of $5,000.
My point is.... that some times in those desirable neighborhoods and when the home is in better than mint condition, we should consider taking the listing.

 

To SELL or BUY  Real Estate in Virginia Beach, or Hampton Roads visit my website. http://www.tererottink.com/  visit my Blog at HamptonRoadsrealEstateVoice.com 

Call me at: 757-502-5324

Over priced listings.  Should we consider them?   was first published on Hampton Roads Real Estate VoiceCopyright © 2010 By Tere Rottink, All Rights Reserved. 

Over priced listings.  Should we consider them?

 

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Re-Blogged 3 times:

Re-Blogged By Re-Blogged At
  1. Linda Graves Arnold 09/05/2010 03:58 PM
  2. Ellen Kippel 09/06/2010 05:30 AM
  3. Mike Wong 09/06/2010 05:40 AM
  4. Tony and Suzanne Marriott, Associate Brokers 09/07/2010 03:50 AM
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Rainmaker
284,666
Tere Rottink
CoastalVa Realty Inc - Virginia Beach, VA

I was afraid for the controversy that I might have created with subject, but I see that several people agree with me, and the comments against it are very reasonable.  Thanks for all your comments.   I am not a controversy person.

Both listings in question are on the $300,000 range, and the over pricing was more than $10,000.  I would say about 20-30.
I think that something that has to be over emphasized is that both listings were in very desirable locations, and that within reason the neighborhoods continue to sell.  I have recently had another listing that was overpriced in that same price range, but the location was not the best.  Poor school system.  The house showed great, but no bites.  I took the listing because I have worked with these clients in two ocassions previously. They are wonderful people.   It is now a short sale and priced accordingly.  We have received a contract withing 30 days of listing it as a short sale.

I have not taken many overpriced listings, but after reading all your comments, I wil consider them.  I did not take the second listing because the seller was very difficult, and I could see a difficult road ahead.  After seeing that it sold in 45 days, I question my decision.

Sep 06, 2010 02:05 AM #25
Rainer
264,127
Bill Travis
Captain Bill Realty, LLC - Gilbert, AZ
Broker/Owner

What constitutes "over priced"?

Is it 5-10-15-20-25% over the similar condition recently sold listings in the community?

And if the listing agent convinces the seller to list a home at the "actual market value", leaving no room for negotiation, what do you tell them when an offer comes in at 10% below "market value"?

You've convinced the seller that the home is worth $xx so that's what the seller is expecting in an offer? Now there is no room for negotiation and if the seller holds tight, they may lose a sale simply because the buyer expects to negotiate.

If a $200,000 market value home is prices at $220,000, then why would a buyers agent not have their seller make an offer based on the comps, and make the offer so that there is room for negotiation.

 

Sep 06, 2010 02:13 AM #26
Rainmaker
2,189,919
Elizabeth Weintraub Sacramento Realtor Top 1%
RE/MAX Gold - Sacramento, CA
Put 40 years of experience to work for you

I'm with Margaret Woods. Take that overpriced listing. Either some screwball buyer will pay it or the seller will reduce it. Whatever happens, the agent does not own that house and is no position to demand that a seller list at any price. It's the agent's job to market the home and sell it. I remember a home in Land Park that I sold many years ago. The seller wanted to price it $100,000 over market. He had an agent, too, and his agent refused to take the listing, so the seller called me. I listed it. Few months later, we lowered the price and it sold for a price I could not believe. I don't make judgment calls, and that's what an agent is doing when an agent refuses to take a listing based on the agent's opinion of value.

If you want to list a home in Land Park for a price no other agent will touch, call me. I'll list it and move it. Because that's my job.

Sep 06, 2010 02:33 AM #27
Rainmaker
1,379,317
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Tere, we have a fiduciary responsibility to our clients to give them the facts. Choosing to take an overpriced listing is a business decision. Some may sell, but in the long run I think more will stay on the market and expire. Properties get the most exposure during the first couple of weeks it is listed. Lowering the price a month or so down the road may not help. Good topic for discussion.

Sep 06, 2010 02:51 AM #28
Rainer
36,033
Ken Gramley
Cary, NC

Tere,

I get frustrated with agents who "buy" listings as opposed to an agent who simply takes an overpriced listing, and there is a difference.  Michael is right that we have a responsibility to tell our prospective clients what their house is actually worth.  After that, it's a business decision on whether you want an overpriced listing.  Telling a client the home is worth more than it is in order to secure the listing, only to walk the price down later is extremely unethical.  While it may be easier to tell the client what he/she wants to hear, a professional will show them evidence of what it's actually worth. 

Sep 06, 2010 03:27 AM #29
Rainmaker
233,247
Susan Thompson-Solomons
Berkshire Hathaway Home Services McNelis Group Properties - Solomons, MD
Southern MD Real Estate-Solomons Specialist

Tere, you mention a couple points that generally are not made with this discussion that I think are nuances in the scenario. Very often this topic is discussed in generalities and probably for the most part it's not a good idea to take an overpriced listing. However, you throw out the possibility that comps may not really be the best comps but are the only available and that there are variables that could mean that a listing might sell higher. I think we have to really look at the specifics for a property very closely when making the decision as to whether or not to take the listing. It is very important, though, to make sure our sellers understand the situation with appraisals and the implications of getting mid-transaction only to have the contract opened up.

Sep 06, 2010 03:31 AM #31
Rainmaker
656,967
Joetta Fort
The DiGiorgio Group - Arvada, CO
Independent Broker, Homes Denver to Boulder

I think it depends on the motivation of the seller. If they're only going to sell if they can get this price, and you have some kind of relationship with them so don't want to send them on to someone else, I say take it on a short time frame. Market the heck out of it and see if you can pick up other clients. Probably no one will call you from that neighborhood though, when they see the listing come back off the market unsold.

 

Sep 06, 2010 04:21 AM #32
Rainer
393,282
John Souerbry
Cordon Real Estate - Fairfield, CA
Homes, Land & Investments

No agent, appraiser, broker, or Buddhist monk has the ability to see what any buyer might be willing to pay for any particular property.  My girlfriend buys a nice pair of dress shoes for 5 to 6 times what I would pay for an equivalent pair of guy's shoes, and mine will last longer.  If a property is unique, in a prime location, and in good condition, there is probably a buyer out there who will look at it like a pair of shoes and say, "Honey, it's simply devine and I MUST have it!"  Poor sap pulls out his checkbook and comps are shot to hell...

Sep 06, 2010 04:28 AM #33
Rainer
72,760
Steve Roake
Steve Roake Homes - Keller Williams Realty Infinity - Plainfield, IL
Get Moving With Steve

Taking an over-priced listing is ok with an agreement from the seller that there will be price adjustments after 3-4 weeks if there is little or no activity.  I sold a home I thought was worth $400,000 in July that I listed at $420,000 and was under contract for $410,000 in a week.  I am not so arrogant to think that I'm 100% accurate at estimating value every time.  Sometimes you just need to give sellers the chance to sell at their terms before allowing reality to settle in and adjusting the price.  Sellers are very hesitant to leave money on the table by pricing too low.

Sep 06, 2010 04:45 AM #34
Rainmaker
516,963
John Elwell
CENTURY 21 Bill Nye Realty, Inc. - Zephyrhills, FL
You Deserve a Full-Time Agent, Not Reduced Results

It is a tricky prospect to base one's behavior on a one-time occurance. Sounds like the health care debate where everyone knows someone who died waiting for that heart transplant, but no one seems to be able to give the details.

Will some people overpay? Certainly. Are home prices rising in some parts of the country? Yes. But those are anecdotal observations and not statistical facts. In the long run if you continually take over priced listings you will end up sitting on a large inventory of homes that have to be advertised, visited, and otherwised managed by you, while the owner gets more and more annoyed WITH YOU. Believe me, they will not say that they set the price wrong but that you did not do enough to force buyers to overpay.

So take them if you like, and I will be there to pick up the pieces when the listing expires and they come looking for  a new agent. At that point it is very common for them to then drop the price to a range where it can attract buyers.

Sep 06, 2010 05:27 AM #36
Rainmaker
239,537
Ellen Kippel
Weichert Realtors - Suffern, NY
Licensed NY and NJ realtor 914-588-2365

This is a very interesting point of view.  I usually feel it is useless to take an overpriced listing, but your experience points to the fact that sometimes such a home will sell, if in a desirable neighborhood.  I will have to reconsider my thinking on this matter.  Thanks!

Sep 06, 2010 05:32 AM #37
Rainmaker
309,538
Mike Wong
Keller Williams Realty Southwest - Sugar Land, TX
Realtor: Commercial, Residential, Leasing, Invest

Tere thanks for sharing your experience with us. Im pretty suprised and Im glad they worked out. I like how you have a strategy. When I accept an overpriced listing and they sign the agreement they also sign 2 price reduction amendments at the same time.

The first price reduction becomes automatically effective after 2 weeks if there are no showings. THe second price reduction comes based on feedback and showings in another 2 weeks. So basically it takes about 30 days to get the home reduced to market value or slightly under depending on how agressive I am about the price reductions.

Sep 06, 2010 05:36 AM #38
Rainmaker
528,812
Karen Feltman
Cedar Rapids/Iowa City, IA KW Legacy Group - Cedar Rapids, IA
Relocation Specialist in Cedar Rapids, Iowa

I think that it is a business decision and it is based on the motivations of the seller.  If you have a good relationship with them, there is nothing wrong with taking what you consider to be an overpriced listing when the property is in mint condition.  Good luck to you!

Sep 06, 2010 06:24 AM #39
Rainmaker
2,464,949
Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

I am open to discussion...but it has to be fruitful and go somewhere. I was told to acquire properties in certain areas and pay whatever it took to get them. I did this for two years. I would offer some people near double of what their property was worth. There response? Not high enough. When I asked them to substantiate that statement, the response was always, we know your client wants this property and if he does, he will pay our price. My clients, who are developers, would pass or build around them. What arrogance. One lady did a Jessie James (hold-up) and just kept nickel and diming. We walked. 4 years later, the house was foreclosed on. She lost 250k for being stubborn......If people become unreasonable and emotionally demanding, you lose me right off.......thank you

Sep 06, 2010 08:35 AM #40
Rainmaker
223,195
Dennis Herman
Crossroads Real Estate LLC - Waldo, WI
Dennis Herman

One advantage of a listing is, it is a good way of bringing in new buyers.  If the listing is out of their price range, you have the oportunity to show them other properties. 

Sep 06, 2010 08:52 AM #41
Rainer
36,101
Virginia OnullConnor
Realtor®, Photographer, Artist - Temecula, CA
Realtor - Temecula, Anza, SoCal

Within reason, I'd take it with an agreement to reevaluate the price if no offers are received in the first month. Two reasons - if you don't another agent will, and will benefit when they finally see reason, and second, it gets your sign in front of buyers.

I have told sellers that I would not take a listing, though. One woman wanted to list a very ordinary parcel of raw land for over 200K. It was worth $50,000 or less. I showed her all kinds of comps and even showed her the similar parcels in a gated community WITH HOMES ON THEM were selling for under $150K. She refused to budge and called my broker to complain about what an idiot I was. I showed him the comps and he agreed the woman was way off base. I don't think she ever sold it. Some people refuse to leave their fantasy world. It just isn't 2005 any more.

Sep 06, 2010 09:14 AM #42
Rainer
208,362
Ilona Matteson
Beach Realty & Construction on the Outer Banks of NC - Duck, NC
Ilona Matteson

The danger in taking an overpriced listing in a DECLINING market is loss of equity.  Why would you ever have your client think that overpricing is a good strategy?  Most of the time, they end up chasing the market and literally giving away their precious equity!  If the seller of the home is highly motivated, you can't afford to overprice even $1.  If they are only price motivated, then I suppose it really doesn't matter where it's priced because they don't HAVE to sell and can afford to wait for the ONE buyer who is willing to pay high. 

It's our job to explain with the information and statistics we have what it will reasonably sell for.  This is not an exact science and we can be off sometimes.  Those are rare situations.  Stick to your pricing and have smaller pricing windows.

Sep 06, 2010 10:03 AM #43
Ambassador
1,703,610
Tammie White, Broker
Franklin Homes Realty LLC - Franklin, TN
Franklin TN Homes for Sale

I agree with Erica.  I have a listing right now that is over-priced.  I didn't want to take the listing but it was a previous client who started crying when I told her I couldn't take the listing (her husband is out of the country and insisted on the listing price).  The listing has been on the market 2 months with no showings.  She refuses to drop the price.  I'm just waiting for the listing to expire.  I won't let this happen again. 

Sep 06, 2010 03:21 PM #44
Rainmaker
3,053,541
Tony and Suzanne Marriott, Associate Brokers
Haven Express @ Keller Williams Arizona Realty - Scottsdale, AZ
Serving Scottsdale, Phoenix and Maricopa County AZ

Intentionally over priced listings - only if there is a sound game plan for the future of the listing - or only if the Seller understands the listing is overpriced and is willing to pay an upfront non-refundable retainer fee that will be credited back to them at close of escrow.

Sep 07, 2010 03:51 AM #45
Rainer
52,752
Mario Gattavara
IMPACT California Properties - Oroville, CA
(Lake Oroville Area)

I strongly feel that over pricing a property in today's still slowly falling market (In many locations throughout the USA) can cost a seller greatly in the long run.

Taking a listing that is over priced, with a clause that the price will drop to X amount of dollars at a specified date might be an exception. In a sense attempting for what the client is working towards, with a mutual understanding that the property is in fact over priced.

Sep 07, 2010 08:57 AM #46
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