The old truth about listings…

By
Real Estate Sales Representative with for real estate results in the Tri-Cities.

Today, professionally licensed REALTORS® are being taught that accepting an over-priced listing is not in the best interest of the Sellers.

The implication here is that above all else we have an ethical obligation (fiduciary duty) to be working in the best interest of the Sellers.

If the Sellers weren’t prepared to price properly as a part of an overall marketing strategy, why would we engage them in business?

Price Reduction Strategy TrainingI’ve read numerous times on AR posts where REALTORS® have walked away from unrealistic Sellers; normally the Seller who won’t contractually agree to a pre-determined price reduction schedule if their home hasn’t sold after certain periods.

Listings used to be the name of the game because the more listings you had the more successful you would appear to the public. So this would encourage Realtors to practice "buying listings".

There are still holdovers using this model, and with little regard for the legal ramifications. As a matter of fact many would have received in-house training on price reduction strategies.

Once the listing had been bought the price reduction strategies would kick in.

So I’ll pose this question: Is discussing a price reduction that isn’t in the listing contract an open admission of professional failure?

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Tags:
price reduction
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over priced listing
buying listings
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Rainmaker
532,794
Robert May
Robert W May - Lethbridge Real Estate - Lethbridge, AB
Real estate consulting

I believe it is.  I almost NEVER price reduce a listing or have to price reduce a listing.  This is partly due to not accepting listings that are overpriced, and partly from using skill and experience to price them right in the first place.

My duty to the seller is firstly to sell their home, and secondly to do so for the best money and terms possible.  If it is not priced properly, I can't do my job. 

 

We have several agents in my market who spend more time working on price reductions than they do on finding buyers.  It seems to be an effective strategy for them, but for me it just makes them look inept.

Sep 05, 2010 07:21 PM #1
Rainer
133,351
Bryan Watkins
LRA Real Estate Group - Mesa, AZ

Naw, I think we are always open to discuss price at any time. The tough thing is to get the client to listen.

Sep 05, 2010 07:21 PM #2
Rainmaker
143,370
Mike Mayer
Mike Mayer, Broker/Owner - i List For Less Realty, LLC - Lafayette, LA

Your comments seem to indicate price is the sole element for a lack of sale and that not achieving a sale is considered professional failure. While price is certainly one of the more critical components to a successful sale, it is definitely not the ONLY essential aspect. There are many factors and variables that help or hinder success, many which an agent has no control over.

Sep 05, 2010 07:44 PM #3
Rainmaker
179,718
John Grasty
for real estate results in the Tri-Cities. - Port Moody, BC
Your Tri-cities REALTOR, neighbour and volunteer.

Robert: I have been burnt by accepting an over-priced listing with a verbal agreement for a price reduction after 3 weeks. I now understand that a verbal agreement is as good as the paper it is written on. LOL 

I always discuss pricing strategy upfront with the Seller as a part of the marketing plan, and this is on Schedule A (what I'm going to do for the Seller) of the listing contract.  Thanks for your feedback Robert.

Bryan: I really try to position the price sharply from the outset so the listing will make the shortlists of Buyers. There is definitely a need for the Seller to trust our expertise when discussing price. I appreciate your comments Bryan; thanks.

Mike: That's right, I believe failing to sell a listing is failing the client. If the other factors and variables you talk about are significant Mike, then they should be considered when we do our CMA. If however the market is in a state of flux and pricing is difficult to establish for some reason, then I'll fall back on an appraiser for an independent opinion.  Thanks for taking the time to visit and share your thoughts Mike.

Have a great week everyone.

Sep 05, 2010 08:01 PM #4
Rainmaker
791,344
Carol Zingone
Berkshire Hathaway Home Services Florida Network Realty - Jacksonville Beach, FL
Global Realtor in Jax Beach, FL - ABR, CRS, CIPS

I agree that an overpriced listing is essentially a waste of time for everyone involved. I have a situation currently where I just reduced a listing to $699K.

Seller started with another agent over 24 months ago at $1.125M.  We are getting no showings. The community, from absorption rate analysis, essentially has 5 years of inventory, with 13 homes sold this year.

I think there are some cases where the crystal ball is cloudy, and the seller does not want to "give it away", but the market has not seen the value in the property yet.

The best we can do is be the voice of reason, present the facts, and let the seller make the final decision. I do, however, advocate a written price adjustment policy.

Sep 05, 2010 11:25 PM #5
Rainmaker
179,718
John Grasty
for real estate results in the Tri-Cities. - Port Moody, BC
Your Tri-cities REALTOR, neighbour and volunteer.

Carol: Wow; that is some market you're in! It sure gives me an appreciation for our local market, and I hope things improve for you soon.

With only 13 sold last year, where do you think your future Buyers are going to come from Carol? Best wishes.

Valerie: Bingo! In my opinion an unsuccessful Seller will not only denigrate the Realtor but also our entire industry. This is precisely why NAR, CREA, and the powers to be need to be on top of unsold listings.

A declining market in particular is when the written price adjustment (or re-positioning as it is called in some circles) shows your Seller that you anticipated a change and gives them even more confidence in you. Thanks Valerie.

Sep 06, 2010 07:26 AM #7
Rainer
437,789
Terry Chenier
Homelife Glenayre Realty - Mission, BC

John,

This is definately a market that takes some extraordinary effort to get the pricing right.

Sep 08, 2010 04:56 AM #9
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Rainmaker
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John Grasty

Your Tri-cities REALTOR, neighbour and volunteer.
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