Why do Agents Grossly overprice listings?

By
Real Estate Agent with Keller Williams Realty

This would be my first blog post. I certainly hope that it will spark some level of response!  I went on a listing appointment last night and the seller has had his investment home for sale for 10 months. The listing agent grossly overpriced the house by 40k- at least. I want to know , why do our fellow agents do this? It only hurts the seller and the rest of us out there! The seller is finally deciding to let the agent go and to try someone new. I came as a referral to this individual, therefore, I felt I stood a big chance of getting the listing. Let me just say- I DO NOT KNOW! The price has already been reduced by 30k over the course of the past 10 months. Now, I, unfortunately had to give  the seller the bad news that he stills need to drop his price by an additional 15k.  Of course, that didn't go over too well, even with all the black and white figures in front of him. So- what do we do as agents to get these listings when the previous agent has totally overpriced the listing from the get go? This particular investor feels that he already dropped it so much, why should he drop it more.  Any tactic(s) that any of you can think of to overcome this "objection", I would love to hear from you. Let me just say, I DID give him a full CMA, as well as , all other relevent information that I felt would allow him to just say -"fine, let's list." I am still waiting! Thanks in advance for your thoughts- Bonnie Joffe, REMAX of Cherry Hill, New Jersey

Comments (25)

Lori Lincoln And Associates
Top Agent Serving Dighton Taunton, Rehoboth and more! - Taunton, MA
Top Agent Taunton,Dighton Rehoboth &more

It's okay to overprice by  10-15k if the seller agrees ( in writing) that if 2 weeks go by without any showings they will reduce.  For me, It is a total waste of time and money to price it to the point where it won't even get a showing. Agents who do this are fooling themselves and the sellers.

Sep 07, 2007 01:54 PM
David Thomas
HomeSmart Realty, Elite Group Scottsdale, Arizona - Gilbert, AZ
Phoenix,Chandler,Mesa,Gilbert,AZ

Bonnie - Chances are the agent didn't set the price - rather the investor used his "expertise" to try to dictate the prioe - the lesson he seems to still need to learn is that the market dictates the price - not him.

Sep 07, 2007 01:57 PM
Al Maxwell
Keller Williams - Marietta, GA
Real Estate Agent
The market has changed dramatically in the last 10 months. Maybe he was priced right last year...but it's a new world out there...
Sep 07, 2007 02:05 PM
Gary Bolen
McCall Realty - South Lake Tahoe, CA
CRS - Lake Tahoe Real Estate Information

Bonnie, first of all welcome. For courage alone, you get a 5. Read the how'to's in the community section. I didn't, and if I had we would have gotten to the AR goodies much quicker than we did.

We had a goofy answer to your question here, but because you are new, we passed on it because we thought it more meaningful to welcome you, rather than making jokes about our current market.

So keep writing, and comment 10 times a day on other's blogs no matter what. You'll make friends and get the hang of this much, much quicker if you do.

Cheers, and keep on jumping in. The water is fine. 

Sep 07, 2007 02:07 PM
Bill Gillhespy
16 Sunview Blvd - Fort Myers Beach, FL
Fort Myers Beach Realtor, Fort Myers Beach Agent - Homes & Condos
Bonnie,  In this market it is often due to a weak agent not being able to communicate the nature of our market and to reach a price based on the real market.
Sep 07, 2007 02:10 PM
vernon corum
BIZIDY Business Identity Solutions - Fountain City, TN

 

I know in the past, as a newbie in the real estate business. I over priced a house just to get inventory and some place to do open houses to get leads. I believed it was okay at the time, but now I look back it was self serving and ignorant.

:) We all should try to do better in this area. Be stern with sellers and make them understand that they are cheating themselves by overpricin. It is sort of like taking a buyer to a see a house they can't afford and then trying to sell them something they can in their range. It hurts alot worse later than to try to explain why we must reduce the price or showing buyers houses that are lesser priced with less amenities.

Vernon Corum 

 www.knoxvilleleadershipnetwork.com

 

Sep 07, 2007 02:10 PM
Jim Pruett
Watson Realty Corp. - Orlando, FL

I hear you, it is a great misjustice to the customer and the profession.  I would use the approach that we as Realtors do not control the market.  The Realtor that had the listing might have desired to obtain a particular price, but the market is not stagnant, it changes constantly, and sellers and Realtors have to react to these changes.

So I would use the approach that the current market suggest a price of -----.  Of course, the outcome is multi-faceted, is the seller truly motivated, is the property in its best condition/location, etc.

We won't get every listing we interview for, and if all factors are not in line, do we really want all?

Jim Pruett

Broker-Associate

Watson Realty Corp.

Winter Park, Fl

Sep 07, 2007 02:10 PM
Bonnie Joffe
Keller Williams Realty - Cherry Hill, NJ

Gary-

Thanks for your input. I just read the community guidelines as per your recommendation. I  apologize if I insulted anyone, as I had not intended for it to be interpreted that way. My blog was more a matter of how to overcome this challenge and secure more reasonable/viable listings. By the way, give me your goofy answer, as I can totally take it!!!.

Jim- you're right. But wouldn't it be nice?

Sep 07, 2007 02:24 PM
Darrel Quebedeaux
Evergreen Realty & Associates Inc. - Newport Coast, CA

That is the easiest question I could ever answer.  They are weak, desperate and will do anything for a listing even if it is one that will never sell.  There is a time to say no but they haven't realised that yet.  Soon they will be out of money and have to go back to what ever it was they were doing before the figured out that they could make a killing in real estate and not even have to work for it.

Every homeowner thinks their home is worth far more than the last ten sales and the agent doesn't know what else to do so they take the listing and then become religious.

Sep 07, 2007 05:42 PM
Ethan Dozeman
Realty Executives Platinum Group - Grand Rapids, MI
Real Estate in Grand Rapids
you can take most listings in my market and offer 10% below list and usually get the sale.
Sep 07, 2007 06:54 PM
Artur Urbanski
Cimpler Real Estate, Inc. - Burlingame, CA
Helping property owners to maximize property value
Bonnie, great first post. During the "hot market" in the near past many agents in Bay Area learn to price low to induce the multiple.  Of course there are listing priced to high, but I see large percentage priced very well.  If customer insists on high price - it is time to walk off. Especially at this market, it simply costs too much to try to sell the overpriced house.
Sep 07, 2007 09:08 PM
Adam Waldman
Westcott Group Real Estate Company - Hauppauge, NY
Realtor - Long Island
Bonnie - Some agents will just buy listings, but then they end up hurting the client in the end.  As agents, we have the power to tell them anything that they want to hear, but as a good agent, you shouldn't do it.  By good, I mean as a person, because there are top producers in my market that do this regularly.  In fact, I see it more with the top people than with others.  Once you get to a point of carrying over 30 listings at a time, you can put them into your marketing machine, which usually features group ads, and the cost to have these is very low.  They know that the homeowner will eventually have to drop the price, and often times they drop so far that they end up lower than where they could have started and had activity on the home.  If you're dealing with a seller that has now drawn a line in the sand at his current price, I would respectfully decline the listing because it costs money to market a home.
Sep 07, 2007 11:04 PM
Dan Norton
Sand Dollar Realty & Sand Dollar Referrals - Orlando, FL

Hi Bonnie, Welcome to AR.

It's always an interesting topic, and two years ago if you could get a listing you grabbed it no matter WHAT the sellers wanted... but nowadays it's easy to just walk away from a seller and their listing and move onto the next one.  I think that's the thing that many agents need to remember -- if the home isn't priced appropriately, what's the point of even writing it up?  You're just wasting time; your own AND the seller's. 

With that in mind, however... being in the bank-owned property side of things now, I'm all for overpriced listings in my competitive market!  go ahead, list them too high ...I'll work on showing the banks what it will REALLY sell for, and you'll all be showing my appropriately priced homes!!!  :)  :)  (a little tongue-in-cheek, of course -- we don't need any more overpricing -- but I think I can handle it since I'm working with bankers and asset managers)

Sep 08, 2007 09:16 AM
James Downing - Metro DC Houses Team REALTORS®, CRS, GRI, ABR,MRP, MilRes
Real Living | At Home - Washington, DC
When Looking to Buy or Sell - Make the Right Move

Agents that do this are guilty of so many things; one of which is just giving us a bad name and making it harder for the agent who WILL end up selling the home.

Make sure to show them the recent SOLDs not the Actives.  I have had sellers say "well Mrs Jones down the street has her house at X price - mine is nicer - so I want 20k more".  Answer: "Mrs Jones has not sold yet".  Lets look at what HAS sold.

Good Luck!

Sep 08, 2007 09:34 AM
Dan Norton
Sand Dollar Realty & Sand Dollar Referrals - Orlando, FL
Good point James... I was just talking with a friend about that yesterday, and how sometimes I wish we used 3 'Sold' and 3 'Expired' listings to prepare a standard CMA or BPO, so we can compare what DOES and what DOESN'T sell!
Sep 08, 2007 10:53 AM
Karen Anne Stone
New Home Hunters of Fort Worth and Tarrant County - Fort Worth, TX
Fort Worth Real Estate

Bonnie:  Hi, and welcome to Active Rain.  I think your first blog post is just great.  Well thought out, nicely written, and it has obviously stimulated some good comments.

What I would probably suggest for you to do for perhaps the next three weeks or so... is to join some of the ActiveRain groups, look at the titles of the posts, pick out ones that interest you, and then comment on them.

How would you know what "groups" to join?  Well, I just looked at the list of groups you have already joined in the group list to the left of your agent profile on your profile page. 

I see you are a RE/MAX agent (so am I... yayyy), so you might go back to your own profile page, click on the RE/MAX Active Rain group link, then read a bunch of their posts.  If after reading a post and commenting on it, if you like the way the post was written, you might click on the agent's name, go to their profile page, and look at THEIR list of groups they have joined... it's to the left of their profile.  That could kind of give you a head start in having a decent list of blog post groups to choose from.

Also, what you might do on this blog post is start at the top, click on the name of each of the people who commented on your post, and look at their profiles. 

Then click on their blogs, read them, and then make a comment on one of THEIR posts.  This way you reciprocate... trade comments back and forth.  Also, doing that gives you a look at other people's posts, and also lets you scroll their Blogs to see what kind of things THEY are posting.  It will take awhile.

I have only been on Active Rain for less than three weeks myself.  I have read quite a bit, looked at what must be a gazillion blogs, made many, many comments, and then started posting my own stuff... once I had somewhat of a handle on what everyone else was doing. 

If you have any questions, I would suggest you ask anyone who has commented on this post of yours.  Most everyone is very friendly and helpful.   Take care....   Karen Anne

Sep 08, 2007 11:44 AM
Keith Elliott Jr
KEIRE Realty Group - Manassas, VA
Principal Broker/Owner

Hi Bonnie,

I think what happens a lot of times is that some agents are unfortunately in a position whereby they become desperate for listings. And the homeowners are completely unrealistic as to what their property is really worth. It's a combination of both. I'm sure the agents try their best to inform the homeowners that their property is only worth X but instead of walking away without the listing (as I would do in a case like that) they take the listing and then throw much of their hard earned pay to try and sell it for that price. It's a waste of marketing dollars if you ask me.

-Keith

RE/MAX Olympic, Manassas VA

www.MyRealtorKeith.com

 

Sep 08, 2007 03:52 PM
Robert Hammerstein -201-315-8618
Christie's International Real Estate - Hillsdale, NJ
Bergen County NJ Real Estate

Hi Bonnie,

Have you tried showing the Seller the absorption rate for sales?  These are trickey times we're in right now and sometimes we have to be careful what we wish for.  Best of luck in getting the listing and having it work out well for you!

Sep 19, 2007 01:01 AM
Anonymous
Anonymous

To all of you that sent in your comments- THANK YOU!!  I received a phone call from the seller the other day, and I just listed it today- At the price I recommended! Keep your fingers crossed for me. thanks again.

Bonnie

Sep 19, 2007 04:05 AM
#24
Fred Griffin Florida Real Estate
Fred Griffin Real Estate - Tallahassee, FL
Licensed Florida Real Estate Broker

     We invite you back to ActiveRain.  Log in, leave some comments, write a blog post!

Nov 16, 2017 08:04 PM