In my 26+ years in real estate, I thought I had seen it all... well, not exactly all, here is a new one for me. I have been very adamant about NOT taking a listing that is not priced properly. Overpriced listings are bad for everybody, for the seller, the home buyer, the appraiser, the Realtors, even the neighborhood! Why is it that sellers want yesterday's prices? haven't they read the real estate news? The market has dropped... a lot!
About 3 months ago, I was called to put a house on the market, I did my usual research, took a good look at the house, reviewed the comparable sales with the owners and help them secure a stagger, and even a carpet outfit to replace a worn out carpet in the hallway. My suggestion, based on comparable sales, and my knowledge of the neighborhood, (I live 4 blocks away from this home) was to price this home at about $650,000. The sellers were not happy at all. They wanted to list it at $775,000! what a big difference!
I looked at my research again, and could not find a justification for their price. I knew that I will never have comparable sales for the appraisal. I offered to list it at $675,000 with a proviso that we reduce the price after 3 open houses, the difference was too big for them to overcome, my standard speech for a situation like this one was given: "... I am sorry, I rather turn you down, than let you down..." I cannot work with your price. They told me, they will think about it...
The very next day, I received a beautiful plant delivered to my house with a note of thanks. They informed me that they were going to go with another Realtor, and thank me for my efforts. 3 days later, the house was listed on the MLS at $775,000. The other Realtor had open houses almost every weekend, after 30 days the price went down to $750,000, another 3 weeks later to $725,000 5 weeks later the price dropped again to $699,950 and then again to $675,000, then it went pending. Last week it closed escrow at $640,000!
Who dropped the ball in this scenario? the other Realtor did get paid. I upheld my high values and did not get paid, the other guy spent time and money, but got the job done. Then, I realized, that the seller does have the right to try and get the best possible price for his home... Even if it is an unrealistic price to begin with.! Sellers, are at a disadvantage when playing real estate, if the seller does not get the best price, he cannot go back and fix it. The buyer can realized he is overpaying and pull out of escrow before is too late, the seller cannot accept a higher offer once is in escrow.
If this would have been an isolated incident, I would have not even writen this post. But earlier this year, I had a similar situation where I was called to sell a house and my price based on comparables told me the house was worth $630,000 tops, I always look at how I will provide the right 3 comparable sales to the appraiser. I did not have them here either, I also refused to list it at their high price. The seller had another agent list it for $675,000 and it sold in ONE day! The kicker? an all cash buyer come and close escrow in 7 days... yes, this seller was lucky, because there are not too many all cash buyers ready to overpay for a house anymore.
As Realtors, we are paid for our knowledge and experience, but overpriced listings and no comparable sales are a bad and very expensive proposition. Appraisers are on the firing line, and we have lost weeks of previewing, showing houses, writing contracts and then after being in escrow for weeks, the appraisal comes and shuts down the entire transaction and sends everyone back to square one. Does anyone out there have the magic formula? I would like to know.
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