Out-of-pocket Listing Expenses and the Over-Priced Listing

By
Real Estate Agent with Coldwell Banker Residential

Having preached, preached, preached about NOT taking over priced listings.....guess what I am going to do on Monday.  You got it.  I am going to take an over-priced listing.   I got a phone call this afternoon from the owner of a condo around the corner from me.  She is a lovely woman in her late 80s.  She told me that she has decided that it may be time for her to move into a "retirement community" and that she wants to explore selling her condo.  I told her what I though I could get for her home.  She told me that she wanted a number that is 20% more than that.  She told me that she can't afford to sell it for less than 14% more than what I think I can sell it for, a number that is $8,000 more than the highest sale in the complex in the last 2 years (I sold that one too).  And, she doesn't want to have the home on the market for more than 90 days.

I know, I know, I shouldn't do it.  But I am going to do it anyway.  Here's why.

Lets start with the fact that I really, really like her on a personal level.  I want to be like her when I get to be her age.  For that matter, I'd like to be her now, at MY age! 

I sold her the condo perhaps 5 years ago.  When she bought it, it had been totally updated.  She paid top dollar for it.  Her condo is beautiful.  Her furnishings are beautiful.  All her furniture is hand-made, made in the style of 19th century Norweigan folk-furniture.  Sitting in her home is an opportunity to be surrounded by serenity and beauty.  The place exudes a sense of calmness.  The natural light in the home is wonderful.  The space is wonderful.  What more can anyone ask?

So few people understand that real estate agents are 100% commission.  The company doesn't pay for any of the listing costs.  I pay for fliers.  I pay for postage.  I pay for photographs.  It costs me money to put a property on the market.  That money is a necessary cost of doing business and I am happy to spend it as long as there is a reasonable probablity of my getting a commission check at the end of the process.  I get resentful and grumpy when I have spent that money and the home doesn't sell and the reason the home doesn't sell is because the property owner wouldn't or didn't take my advice.  The usual problem is that the home isn't worth as much money as the home owner hoped it was worth. I have learned to pretty much not take a listing when I believe it isn't going to sell.

And here we are.  I don't think the condo will sell, not at that price.  But, I want to do what I can for this woman.  So, how can we bridge this difference and move forward?  I believe that I can speak plainly to this homeowner.  She is one of those people whose age has made her not want to waste time.  Speaking directly and frankly is almost always the most efficient use of everyone's time.   If she will pay my out-of-pocket expenses up front, then I won't  develop resentments as we move forward and the home doesn't sell.  If a miracle happens and someone buys her place, I will happily reinburse her those expenses. Happily.  Gleefully. I don't mind investing my time in a semi-hopeless project.  Unhappily, I am not in a position to invest the out-of-pocket costs associated with taking a listing with quite the same sense of wild abandon.

If she will agree to those terms, then I will go on and do it.  I bet she will.  Miracles happen.  Writing her a reinbursement check would delight me.  Stay tuned.

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31 Days of May Challenge 2011
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Rainer
251,980
Karen Hawkins, MBA - Langley & Surrey, BC
Royal Pro Real Estate Network - Langley, BC

So interesting, Judith - I think your approach is creative, but wondering if you think she will agree to a price reduction to reasonable market levels in the near future (after a month or so w no offers...?) - resentment is such a tricky thing to manage once it creeps in..and you obviously very much value your relationship with this vibrant lady.  Good luck to you - would love to know how it all works out!  (BTW, I love your description of the home - I could very easily picture it!)

May 20, 2011 05:38 PM #1
Rainer
192,348
Judith Abbott
Coldwell Banker Residential - Dallas, TX

She and I have already had the price reduction discussion.  She has given me the range she will take.  Her lowest dollar is 14% above where I believe the condo will sell. 

This owner occupies a world where miracles are realities.  She and I both believe that if she is supposed to move into that retirement community, someone will come buy her condo.  We will see what happens.  It could happen.  I have been wrong about price in the past.  Not often, but every now and then.  I am merely good, not omniscient.

May 20, 2011 05:59 PM #2
Rainmaker
64,864
Raine Carraway
Lenoir, NC

Good luck, Judith. I know of a couple agnets who take marketing fees up front, then deduct them from their comission at closing, which sounds similar to what you are doing. It has worked for them, and hopefully it will work for you and keep the client happy as well.

May 20, 2011 10:55 PM #3
Rainmaker
160,728
Retired Notworking
Tallahassee, FL

Judith, you are certain that you won't be able to sell the home, yet will go forward because you like the woman? You aren't helping her by raising her expectations that she will be able to sell it for an unreasonable price - you set those expectations by agreeing to list at that price, regardless of what you told her.  Check your state laws about taking expense money from customers in advance to be sure this is legal. Good luck.

May 21, 2011 02:32 AM #4
Rainer
192,348
Judith Abbott
Coldwell Banker Residential - Dallas, TX

Colleen, Thanks for the heads up.  I will double check.  I know that there isn't a problem getting clients to pay for specific elements of marketing, such as the cost of staging.  I am not talking about a transaction fee but specific costs.  My photographer.  My graphics.  And, this client is by no means the first client I have had where I told them what I thought the home would sell for and they had a different opinion.  I just closed the sale of a home where I told them that I didn't see us getting more than $130,000.  The home went on the market at $170,00.  5 months later, we closed at $120,000...after some extremely delicate negotiations in a multiple offer situation.  I don't set the price.  I make a recommendation and then the owner makes the decision. 

May 21, 2011 02:43 AM #5
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Rainer
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Judith Abbott

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