This week I had an interesting experience when trying to list a home in Big Bear Lake. As you most likely know, their are two types of listing agents. Those who are honest up front and give the client an honest assessment of what their home is worth, and the less ethical among us who will tell the client whatever they want to hear and will take the listing at any price, with the intention of beating them up on the price at a later date. This happened to me this week.
I received a call from a woman who had gotten my name from a neighbor of mine. She has two houses up here and was interested in listing one or both of them. She told me up front that she would be speaking with other Realtors to see what they had to say. I went and looked at the properties and prepared two CMA's for her. She purchased the first house only six months ago. It was a bank owned home and she paid $315,000 for it. In my opinion the house was overpriced to begin with, and she only made a few minor repairs to the home. As we are all aware, home values have not gone up an iota in the last six months. As a matter of fact, they have fallen significantly.
I recommended a price of $289,000 if she wanted any chance of selling the home before property values dropped even more. She was understandably shocked and concerned over how far her property had fallen. I explained to her that real estate is a long term investment, and even though she had gotten a deal when she bought the house, she would need to sit on it for several years at least before it would pay off. She realized this, but had gotten in over her head and needed to cut down her monthly expenses. Sometimes it is hard to face reality. At the end of our conversation, she told me she wanted to mull it over and for me to call her in a few days.
I waited the two days and gave her a call. She told me that she was surprised when an agent from ReMax had quoted her a listing price of $329,000. Keep in mind the fact that the house had not been improved in any significant fashion. She had put new, mid grade, carpet in the living room and fixed the garage door. It looked almost the exact same as when she had purchased it six months ago. Also, there are many more bank owned properties on the market now, in direct competition with her listing. There is no way the house is worth even close to the price the other agent quoted her. He has either been living under a rock, or is so desperate for a listing he will do anything to get one.
I told her exactly what would happen if she listed with him. She would get a call in a month, with him explaining to her that her home had not been getting any showings and they need to reduce the price. He would probably ask for at least a $10,000 price reduction. In that time, all of the agents in our area would have already written the home off as being overpriced and she will have missed the most important first sale to the other agents in Big Bear. Also, even if she reduced the price by 10k, it would still be overpriced and the values would have fallen even further. At 10k a month, it would take her five months to get to the price I originally quoted. In that time, who knows what could happen in these uncertain times. My prediction, her home will probably have fallen at least 10%. So, she will be chasing the market, and it will always be one step ahead. Better to sell it right away and get what you can, than to price it too high and hope for the perfect buyer. One who just won the lottery and doesn't care if he overpays. Good luck.
In the end, she decided to overprice it and do a FSBO to save the 6% in fees. I am happy the other agent wasn't able to lie his way into a listing, but on the other hand I am sad that she now has almost no chance of selling her home. There are at least 100 other homes in her neighborhood that are priced better and have agents actively trying to sell them. She is trying to move an overpriced listing by herself with no help from the folks who actually sell the homes in our valley. She was a really nice person, and I will be ready to help her if she ever needs it.
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