If you have been in the real estate business for any length of time, the concept of Buying a Listing should not be new to you ~ but it SHOULD be something that you avoid like the plague.
Let's say Mr. Smith has a home to sell. Doing his due diligence, Mr. Smith calls five Realtors to interview about selling his home. The first four present printouts of what has sold in the past six-to-twelve months in his neighborhood (his legitimate comps), along with the printout of homes similar to his that are currently active on the market (his competition).
Armed with the market facts, four Realtors explain to Mr. Smith that his home is worth $200,000 in today's fast-paced market. But Mr. Smith has a daughter getting ready to go to college, and he NEEDS to sell it for $250,000 to cover those upcoming expenses.
Along comes Realtor #5. Now this one has some sense! "Don't pay any attention to them, Mr. Smith. SURE we can list your home for $250,000. No problem." While Realtor #5 has just BOUGHT A LISTING, Mr. Smith has just been shafted.
In my niche market, there are several good Agents. But one of them is seriously hurting our market by continually taking listings at least $40,000 to $50,000 over current market value. What is the result? The listings languish on the market for many, many months, finally being reduced to below what they were worth when the home was first put on the market.
Who benefits from this? Not the Seller, who needed a quick sale and was just going to break even if his home had sold for market value at the beginning. Not the neighborhood, whose values have now been reduced for future appraisal purposes. Not the Buyers or Sellers or Realtors or Market.
It is all around bad business and doesn't help any of us, but on so many levels takes away much of our professionalism. What so many people forget in their race to get more money (or more listings) is that, even IF Mr. Smith found someone unwise enough to purchase his home for $250,000, more than likely he still has to get an appraisal. NO ONE wins in this scenario.
I have read most of the comments on Peter den Boer's recent post on Is overpricing ever a good idea? I am shocked and dismayed that the majority of responses were along the lines of, "Sure, then lower the price in one-to-three months when it hasn't sold." We have a responsibility to our profession to be PROFESSIONALS. Throwing darts at a board and hoping they'll stick does not reflect, in my opinion, our fiduciary responsibilities to our clients.
DON'T DO IT!
Comments (20)Subscribe to CommentsComment