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Why you shouldn't take an overpriced listing even if the seller agrees to lower it in two weeks...

By
Real Estate Broker/Owner with Right About Real Estate

A few of the latest blogs are excusing taking overpriced listings if the sellers agree in advance to lower the price in let's say two weeks. This sounds good and fair at first, but if you analyze this deeper, you'll realize that even if you lower the price after two weeks into the listing, the damage is done.

An overpriced listing makes the market look unrealistic. But that is not all; we all know that the first two weeks of a listing being on the market are the most critical. It is when other brokers notice that a new lisitng is on the market, it is when a listing shows up on a hotsheet, it is when a sign pops up in a neighborhood, it is when the listing agent launches a marketing campaing... it is when people notice a new home on the market. And if you overprice a home in this critical time, it doesn't really matter that you drop the price later on, because you've wasted precious resources that you won't get back. And to top this off, when you lower the price of  a home, buyers start thinking "what is wrong with that house?"...

Use CMA's and pricing startegies so you can show the sellers how you arrived at a certain suggested price and they can't refute it.

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Peter Andres - Lic. in FL & NY GRI,SRES,CNE
REALTOR - The Villages, FL
Yes, It's like looking at a loaf of day old bread, on a shelf with newly delivered Wonder Bread.
Dec 05, 2006 05:02 AM
Leigh Brown
Leigh Brown & Associates, RE/MAX Executive - Charlotte, NC
CEO, Dream Maker - Charlotte, NC

I think it depends on your market average DOM and your market conditions.   In our market since we have so much competition from builders for our resale, pricing can be quite a guessing game.  And I've been wrong before and will be wrong again, as will anyone who does real estate long enough.  There are times in a market when the price comps are wide ranging, and you want to try the higher price-going in with the expectation that if it doesn't sell we can reduce before we're on the market long enough to be stale.  I don't use 'price reduced' riders or anything else that indicates a fire sale-and we email the showing agents to notify of the reduction-and most agents don't know how to pull archives anyway-so it's not that much time lost to make sure we're not leaving $$$ on the table.  Especially when we're trying to refute the stuff in Freakonomics which says we agents take longer to sell and net more $$$ when it's said and done...i don't want to cheat my sellers.

Caveat to all of that is that I'm talking a 1-2% differential in the guessing-not huge amounts-and it's based on the comps and research-and it's based on the fact that I know I don't have a crystal ball. If time is more crucial than money to my sellers, we price it aggressively no matter what-and STILL have a price adjustment waiting in the wings-because markets do change and we'd better be able to adjust when they do. =)

Dec 05, 2006 05:30 AM
Keith Jeppson - Salt Lake City Real Estate
Everest Realty Group - Holladay, UT

Yael, I have to differ with ya on this.  Many times sellers just have to try a little higher to feel like they got some say in the matter.  If they will not agree to reduce in 2 weeks, I'll pass on the deal.  But, if after I've explained that 70% of traffic will view in the first 30 days, and they still want 2 weeks to try their price, I say let them.

Remember, sellers set the price, buyers determine value.

Dec 05, 2006 05:45 AM
Sue Melhorn
The Bean Group - Dover, NH
Licensed in NH, ME and FL!
I've been in your situation Leigh.  I took an overpriced listing on the promise from the seller we would try $10k over where I thought we should have started with the promise to reduce in two weeks.  I explained the importance of pricing right from the beginning but they insisted.  Then they never reduced.  I pulled the plug on that one.  Live and learn!
Dec 05, 2006 05:48 AM
Yael Warman
Right About Real Estate - Dania Beach, FL

Keith, I love it that we think differently, that is what makes this network so unique...we can agree to disagree.
How about if your seller must at all cost try for two weeks a higher price, tell them "Mr. Seller, let's then list for a higher price than market price for two weeks, let's just not make it the first two weeks"!!!!! ;)

Dec 05, 2006 07:29 AM