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Overpriced Listings: The Debate - To Take or Not To Take...........That is The Question?

By
Real Estate Broker/Owner with Metro Life Homes RS-78439 / BRE #01708344

Overpriced Listings:  The Debate - To Take or Not To Take...........That is The Question? 

I had a very interesting lunch date this week with an agent in my office.  We discussed many things, but a conversation came up that we all have from time to as to whether or not you should take a listing in which you feel the seller is being unrealistic about list price.

As you will tell from this blog, I definitely have my opinion.  But as always for the sake of discussion and sharing good information with each other, I welcome everyone's opinion and input.

Here's how I see the Overpriced Listing World, according to Ralph:

One of the most important things to remember is that a listing is not only a potential real estate transaction for that particular property, but that it is also a marketing piece.

A marketing piece is a very powerful thing.  There is much potential business that stems from just one listing, especially these days due to the massive "spiderweb" exposure from the internet.  Often times, other listings come from a single listing as well as meeting buyers.

And of course, you must realize that some sellers need just a little slower dose of that reality pill than others.  Some seller's are very much in tune with fair market value for their neighborhood, and yet other sellers may have emotional issues that they have to sort through before the "ah-hah" moment comes along.  There is a term that some real estate agents use to describe that conversation about price reduction as the "Come To Jesus" meeting where you need to simply deal with the realities of the market and whether or not the seller's true goals and intentions are in line with what it's going to take to sell their home in the current market.

Often times, I find that it's most effective to have a price reduction plan in place when you take the listing.  If it's the case where there's a difference in opinion between yourself and your client on how much to list the property for, then create a happy medium and a sense of satisfaction by agreeing to list at the price they feel strongly about, but with a pre-planned price reduction plan that you will roll out over specified time periods should the property not sell by then.  This will give the seller the opportunity to see how truly effective their intended price will be in the current market. 

Do you want to spend time and money on something that is not going to sell?  Of course not.  But if you're a good listener and are sensitive enough to what their concerns are, and with a plan in place,  most often you can "massage" the seller into the awareness and reality of the market and can get to the magic number that will get them to their next "happy box".

My opinion:  Take the listing.  Work begets work.

Your opinion?

Comments(14)

Rob Spinosa
US Bank - Larkspur, CA
Mortgage Loan Originator, Marin County

Excellent post and excellent strategy.  I especially like the planned reduction strategy should it be necessary.  What I often find in my line of work is that if things are outlined early, they elicit much less emotion later on, and if employed.  In other words, if I express a best and worst case scenario to a client at the outset, it removes the great uncertainty his/her emotion might otherwise assign.  This way, if and when we must come off of the ideal, the client has already given some thought to other options.  This is WAY better than springing an undesirable on anyone, that is for sure.

Again, great strategy and one I will keep in mind going forward.  Thanks!

Apr 07, 2012 12:10 AM
Thomas McCombs
Century 21 HomeStar - Akron, OH

The only real way to tell if a property is overpriced is to wait and see what the market's reaction is. If there are inquiries but no showings, I would jump to the conclusion that the property is probably overpriced.

In the meantime, you may be getting leads from potential buyers and sellers!

Apr 07, 2012 12:24 AM
Diana Zaccaro Broker Associate
ZOOM Realty Group - Cocoa Beach, FL
"The Accidental Blogger" Cocoa Beach, Florida

I'm not sure there is a hard and fast answer to this question. I agree with your opinion and logic but I think it depends in large part on the motivation, attitude and personality of the Seller. If the individual is receptive and cooperative to your way of thinking, go for it. But if you are dealing with an unreasonable Seller who has set an unrealistic, predetermined price, it might be better to decline the listing. As much as I hate to pass up a listing, if it is overpriced my opinion is that it should be decided on a case-by-case basis.

 

Apr 07, 2012 12:26 AM
Barbara Todaro
RE/MAX Executive Realty - Happily Retired - Franklin, MA
Previously Affiliated with The Todaro Team

Good morning, Ralph.... there's a limit to everything including how overpriced the listing will be..... it's fine to take an overpriced listing if an agent can adjust the price with one slash and then sell it....if it's a one year process of massaging then I think it's a "no go"....we're real estate agents not message therapists.... just my opinion....

Apr 07, 2012 12:38 AM
David Grbich
Realty One Group - www.FindCARealEstate.com - San Juan Capistrano, CA
Orange County Real Estate - 949-500-0484

Ralph - great post. There is certainly marketing value in even the most overpriced listing but hopefully if the listing sits on the market long enough the seller will also come to the realization that it is simply overpriced. Having their agreement to price reductions in advance is great if you can get it. If not crazy overpriced I would take the listing. Thanks

Apr 07, 2012 12:50 AM
Lyn Sims
Schaumburg, IL
Real Estate Broker Retired

No, not a good strategy. Time is literally being wasted on a home that is not being able to be sold.  Buyers reject the idea of the sellers price & ignore the home.  I've done this too many years not to value 'my time, effort' to notice that I could possibly get some business from it.  Time has value - does it for you?

Apr 07, 2012 12:56 AM
Doug Rogers
RE/MAX Coastal Properties - Destin, FL
Your Real Estate Resource!

This is a tough one...

Early one I would take ANY listing at almost any price. This strategy cost money and resulted in few transactions.

Then I went to the other extreme. Don't want to list within my range? Then find another agent. Of course I was not this harsh with the seller but that was my message. Almost all the listings I turned down eventually sold. Most had price reductions, but a few did sell at the higher price.

Now I offer my price recommendation and support with comps. If the still want to list higher because "our home is just better" then we start at the higher number for 30-45 days.

The listing is extended to cover this "test time", and a post-dated price reduction form is signed as well. Sometimes sellers need to try it their way first.

Apr 07, 2012 01:28 AM
Liz Wallace
Century 21 Sherlock Homes - Rockville Centre, NY
Broker C21 Sherlock Homes, Rockville Centre, LI, N

Well thought out and written post.  You give some valid reasons for taking an overpriced listing.  In my area we very rarely sell for asking price so wiggle room is expected.  How far overpriced is a determining factor along with motivation.  I will take them and for all the reasons you stated.  A suggest and re blog for me.

Apr 07, 2012 01:40 AM
Winston Heverly
Coldwell Banker Access Realty - South Macon, GA
GRI, ABR, SFR, CDPE, CIAS, PA

To me it depends where the listing is and what price point. Look at properties that are over million or two, you can't tell me that 100k or two is not inflated in there somehow.

Apr 07, 2012 01:47 AM
Juli Vosmik
Dominion Fine Properties - Scottsdale, AZ
Scottsdale/Cave Creek, AZ real estate 480-710-0739

Ralph, I think it depends on the seller's motivation AND how unrealistic they are in their price.  If they are way out of the market, then I typically take a pass.  If they are just slightly high, I go for it.  Then, I update them monthly with a CMA of everything that is actually selling AND everything that is currently on the market.  I had one listing where we were priced at $625,000 - higher end of the market, not the highest.  Well, the two ABOVE that list price sold and now, we were the HIGHEST.  4 other very comparable houses were priced from $575,000 to $599,000.  The seller made the decision to reduce the asking price to be competitive with the active LISTINGS and BINGO - sold in 3 days with multiple offers.  So, the original list price was high, but not too high.  Now, if she had wanted to put the home on the market at say, $850,000, I probably would've walked away.  So, I think each situation needs to be evaluated - slightly high, no problem, out of line - not happening.  

Apr 07, 2012 02:38 AM
Karen Fiddler, Broker/Owner
Karen Parsons-Fiddler, Broker 949-510-2395 - Mission Viejo, CA
Orange County & Lake Arrowhead, CA (949)510-2395

I tend to agree with you....but I have them pay for marketing up front (if they want paid ads) and we have to have a price reduction schedule in place ahead of time. But you're right...my name is out there, the sign is there and buyers call. 

Apr 07, 2012 08:21 AM
Ralph Gorgoglione
Metro Life Homes - Palm Springs, CA
California and Hawaii Real Estate (310) 497-9407

Karen,

Wow.  You have them pay for the ads up front.

Interesting.

Apr 08, 2012 12:23 AM
Praful Thakkar
LAER Realty Partners - Burlington, MA
Metro Boston Homes For Sale

Ralph, it can be avoided easily if the pipeline is FULL - if not, more lead gemeration...

Jul 07, 2012 03:27 PM
Karen Anne Stone
New Home Hunters of Fort Worth and Tarrant County - Fort Worth, TX
Fort Worth Real Estate

Ralph:  I think this is a great post, and you have some really great ideas.  But... every once in awhile you run into a seller that is so thick-headed that they will not budge off this price they have in their heads.

In cases like that... with the market heating up like it has... I would not take a listing that was grossly over-priced unless I had it listed for a one year term, and also not unless I had taken a non-refundable check (to be cashed immediately)... that would be credited back to the seller if and only if the home ever closed.  (with me being the listing agent at closing, of course)

Jul 07, 2012 03:39 PM