Listing Agents in La-La Land...

By
Real Estate Broker/Owner with Buyers' Choice Realty

*Note:  This was one of my very first blogs, posted on AR in October of last year.  In light of the current market, this advice is right on the money.  By the way, the condo that garnered $ 174K when I wrote this article is no longer worth 174K.  I just sold one last week for a mere $ 125K.  Yes, believe it!

Listing Agents in La-La Land...

Maybe it's because my father had a PhD in Economics, and made statistics and reading patterns rendered by numbers into a game I enjoyed playing as a kid, maybe it's intuitive deduction; whatever the reason, numbers speak to me and always have. 

In 2004 and 2005, I understood that supply and demand created unnaturally high pricing on our oceanfront condos, and I was among the first ones to service a long stream of "flippers", as I called them, investors who bought low and sold high.  I've made them amazing returns.  What a feast that was... 

In 2006 I recognized a new pattern I call "the Paralysis" period.   During this period, you will find lots of listings and few, or no sales.   This paralysis period can last months, or even years, but one thing is certain:  immediately following this paralysis period comes "The Big Plummet", sales consummated at unbelievably low prices, prices well below the established comps. 

Case in point:  take Baywatch for example, a three tower condo project of more than 500 units on the beautiful oceanfront of North Myrtle Beach.  Between January 1, 2004 and December 31, 2005, there were 267 units sold at Baywatch.   During all of 2006, only 20 sales occurred in the entire project of Baywatch (paralysis period).   In 2007 we saw prices on sold one bedroom units plummet from $ 330,000 to $ 174,000.   Two bedroom units sold for as high as $ 540,000 in 2005, transacted this year for a mere $ 315,000.   Three bedroom units garnering $ 600,000 at the height of the boom, originally offered for sale at $ 650,000, sold this year for $ 375,000. 

I see a lot of agents in denial.  They are probably in denial about other faucets of their lives as well...  I just had one this weekend that gave me a speech about how good the market was, and how correct his seller's home was priced, even though it was listed at 20% above two other comparables that transacted recently.   

As agents, we can't create the market, but if we are smart, if we are good agents, we can understand the market and service our clients well by telling them the truth.   The truth is: we have over 22,000 active listings in the Myrtle Beach Market.  Our third quarter statistics are dismal at best: only 9% of available condos have sold in the past quarter, only 18% of the homes and 5% of the lots available have sold in our area during the past three months.  July, August and September are typically red hot months for sales in this Mecca of vacation homes and investment properties.   These disheartening figures may signal a more severe trend yet...

What favors are we doing our sellers by telling them what they want to hear?  What good does it do to price these listings at 2005 prices?  2005 is gone!  2007 is here, and if you are not smart, 2008 will find you with the same listings you've carried for the past two years.  Tell your sellers the truth!  Educate them!  Stop trying to stroke their egos.  They still won't like you if you don't get their properties sold!

Go ahead!  Tell them the truth!  Lower the prices or risk losing them even more money.  2008 prices will be lower yet.   Why wait for the big plummet?   Save your Sellers from bigger losses.  Price your listings correctly! 

I will talk more about my theory on pricing specific properties in future blogs.  For now, just grasp the idea and run with it!  Your career is in the balance, but most importantly your Sellers' welfare is at stake.   Reduce, or Lose!

Myrtle Beach Real Estate by Mirela Monte

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Rainmaker
103,415
Cat Zwicker, CRS
Desert Sky Real Estate, LLC - Redmond, OR
Down to Earth Service; Out of this World Results!

Mirela- Isn't it nice to know you have been on the ball this whole time?! I struggle with knowing what I've told my clients and still they don't listen.  I'm getting a little bit vindicated though in that two clients who chose to list elsewhere have come back and said, wow we should have listened to you. Sadly they can't make now what they could have then!  Great Post, I'm sticking to my guns!

Sep 21, 2008 02:17 PM #33
Rainmaker
160,539
MeLisa Minter, Realtor
Minter Real Estate Services - Taylor Lake Village, TX
Bay Area Houston Real Estate Agent

When I got into the business almost eighteen months ago, things were just starting to get crazy and have not gotten any better.  Luckily I had a broker that educated me on comps that are active, sold and pending and letting that information tell the story to the sellers.

It's interesting to see their reactions when you show it to them in black and white.  I've even started inserting in all my Listing Agreements that if there is no activity or offers on the listing within 45 days of the signed agreement, the seller has to agree to adjust the price to market conditions.  This saves a lot of headaches and blame.

 

Sep 21, 2008 02:34 PM #34
Ambassador
490,877
Kristin Moran
Owner - RE/MAX Access - KristinMoran@Remax.net - San Antonio, TX
San Antonio,TX - Real Estate - 210-313-7397

MM - Oopsie.  It wasn't you.  Seems my eyeballs scanned it & saw "you".  It was actually another blogger's comment.  My apologies!  Her name starts w/M & ends w/A just like you and has 6 letters.  That's what i get for looking at comments with one eye closed.  :).  KM

Sep 21, 2008 02:38 PM #35
Rainmaker
246,006
Michelle DeRepentigny
Success Realty - Athens, GA
Broker Athens, GA

What is there to say other than AMEN?  If an agent isn't comfortable with these kind of conversations, they need to practice and get the skills in place ASAP.  It  has always been critical to understand inventory and absorption rates and know your market well, but it is becoming even more important than ever.

Sep 21, 2008 03:04 PM #36
Rainmaker
368,313
Dean Moss
Dean's Team - Keller Williams Realty Partners Chicago IL - Chicago, IL
Dean's Team Chicago IL Real Estate Team

Mirela -

Interestiing, thought provoking post.  Indeed, this is where the market has come.

However, some agents, desparate for a listing, will agree with uninformed sellers on their too-high list price.  They list, the listing expires, and they make no money, while the client feels the agent is no good, and they paint the entire local RE industry with the same brush.

As usual, a few desparate, bad agents ruin professional respect for the rest of us.  We always have to be vigilant, and work hard, to restore that earned respect.

Make sense?

DEAN & DEAN'S TEAM CHICAGO

Sep 21, 2008 04:47 PM #37
Ambassador
2,011,593
Christine Donovan
Donovan Blatt Realty - Costa Mesa, CA
Broker/Attorney 714-319-9751 DRE01267479 - Costa M

We have to educated our sellers and explain to them the realities of the market.  We don't do them any favors by not doing so and are more likely to lead to frustrated, unhappy sellers by not doing so.

Sep 21, 2008 05:22 PM #38
Rainmaker
1,561,913
Carla Muss-Jacobs, RETIRED
RETIRED / State License is Inactive - Portland, OR

The problem is with the agent who are unrealistic, or tries to "buy the listing."  They will tell the seller what they want to hear . . .  You know, in their "professional opinion" that the home should be priced between $ and $ (pick a price range, for example purposes).  If it's 10% higher then the rest, they might get the listing since they are presenting a much higher price.  People are gullible, and they WANT to have direction and guidance.  And they want their price!  So when you have an agent that is NOT like you are, and from the posts, like the majority of honest agents on here -- they will give the seller a totally unreasonable listing price just to get the listing.  Might be a good idea for listing agents to caution against this type of tactic in their listing presentation!?!? 

Sep 21, 2008 05:54 PM #39
Rainmaker
2,597,517
Charles Stallions
Charles Stallions Real Estate Services - Pensacola, FL
800-309-3414 - Pensacola, Pace or Gulf Breeze, Fl.

Mirela Enlightening post and right on point. I cannot beleive anyone would take listings overpriced right now. You're so right about sellers hating you if you don't sell it.

Sep 22, 2008 12:36 AM #40
Rainer
5,626
John Tuck
Tellico Realty & Auction Co. Inc - Lenoir City, TN

Price it to sell!

Sep 22, 2008 02:02 AM #41
Rainmaker
250,068
Mike Klijanowicz
Cummings & Co. Realtors - Perry Hall, MD
Associate Broker @ Cummings & Co. Realtors

I ABSOLUTELY COULD NOT AGREE WITH YOU MORE ON THIS ONE!  I just get sick and tired of all of the agents out there who tell people what they want to hear.  I tell people that I am going to tell you the way it is, like it or not, and you probably will not, but IT IS WHAT IT IS!

Sep 22, 2008 02:24 AM #42
Rainer
16,178
Dwight Carson
Re/Max United Realty - Lillington, NC

Mirela,

I didn't realize the market in that area was that low.  What is the rental market like.  I have a couple of investors that are looking to move money down here from up north. 

Sep 22, 2008 02:26 AM #43
Rainmaker
74,731
Mary Bowen
Coldwell Banker United, Realtor - The Woodlands, TX
Real Estate At Its Finest!!!

Mirela, Your right. What goes up must come down! Hopefully once it hits bottom it will bounce.

Sep 22, 2008 03:29 AM #44
Rainmaker
516,588
Russell Lewis
Realty Austin, Austin Texas Real Estate - Austin, TX
Broker,CLHMS,GRI

I am so glad you posted this again. Now days "I see a lot of agents in denial." too and it only make sit worse because they pass this denial on to the buyers and sellers that make up our business!

Sep 22, 2008 05:21 AM #45
Rainmaker
489,927
TIM MONCRIEF
Tim Monciref - Austin, TX
Over 2,000 homes sold…..

It is your fiduciary responsibility to tell them the reality of the market. Thus, if a market is going down 1% a month, pricing it at last month or the month's before sales is ridiculous.  Price it at next month's pricing or the next which may be 3-5% off of your comps.  This is one of the biggest reasons why listings in a down market take so long to sell.  They are not priced to the market, they are priced to yesterday's market. 

Sep 22, 2008 09:18 AM #46
Rainmaker
1,082,380
Sharon Alters
Coldwell Banker Vanguard Realty - 904-673-2308 - Fleming Island, FL
Realtor - Homes for Sale Fleming Island FL

Well you're right - the big plummet is still happening, looking like a free fall in some areas. Condo hotels that sold for $229,000 in 2006 now sell for $125,000 in the area near Disney in Orlando (we work in two markets).  Just discovered your blogs and look forward to reading more of them. A recent realtor mag said "Know your numbers." I think that is one of the major values we give to our clients/customers. Thanks for the reminder.

Sep 22, 2008 01:24 PM #47
Ambassador
530,903
Mirela Monte
Buyers' Choice Realty - North Myrtle Beach, SC
Myrtle Beach Real Estate

There are so many extraordinary comments here, that I've actually written a blog about the comments:

http://activerain.com/blogsview/704128/Highlights-of-a-Post

Sep 22, 2008 02:36 PM #48
Rainer
334,630
Tom Davis
Harrington ERA,DE Homes For Sale, $$ Save $$ Buy Today ! - Dover, DE
FREE Delaware Homes Search!, $$ Save $$ - Find Homes! Delaware Realtor

YES you Nailed it right on the spot!!  PRICE IS EVERYTHING RIGHT NOW!!!!

Help your sellers everyone!! Get it priced right the first time!

Thanks

Tom Davis

World Class Delaware Realtor

Sep 22, 2008 04:12 PM #49
Rainmaker
325,921
Esko Kiuru
Bethesda, MD

Mirela,

The marketplace in our economy determines the price levels, not what some sellers or some real estate agents think. That is the best and fairest way to set value to assets, but for some it's hard to understand.

Sep 23, 2008 01:31 AM #50
Rainmaker
2,433,224
Evelyn Johnston
Friends & Neighbors Real Estate - Elkhart, IN
The People You Know, Like and Trust!

If that was your original post from last year, you  read the future!  That is exactly where we are today, below market value.

Can you also tell us what the next phase will be?  And when we can expect it?  Pull out your crystal ball...we need encouragement now, TODAY!

Sep 28, 2008 06:28 AM #52
Rainer
359,770
Patty Luther
RE/MAX Rock-n-Roll Realty - Lewiston, ID
Lewiston ID Real Estate, Idaho-Washington

I always tell my sellers the TRUTH...and then if list higher, I talk to them every WEEK about the price reduction ... getting a PRICE reducation is like getting a NEW LISTING!  If the sellers don't list with me I keep track of it and if it doesn't sell I get a hold of them when expired or if it does sell, it is 95% of the time at what I suggested I send them a quick note to congratulate them and a copy of the CMA...  :-)

But even the REO companies are listing higher than they should ... who has ever heard of a bank owned property being on the market for 180 days or more ... that is CRAZY... PRICE it right from the GATE... you ask us Realtors what a 30 day sales price is... if the Realtor knows their business they will give it to you... then PRICE it there.

Jan 12, 2009 07:14 PM #53
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Mirela Monte

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