I often get asked by new Realtors and non-Realtors about why listing agents take listings that are so obviously overpriced. There are way too many answers for this, but the most common reason is that they take them out of hope. Hope that in time the market will catch up (not happening today) or hope that the seller will come down on the price before the listing expires, or hope that some buyer will make a poor buying decision without good information. In some instances, with the influx of new Realtors over the last few years, they may not know that their listing is so overpriced.
How do they get overpriced in the first place? First we have to remember that the seller sets the price, the Realtor is only there for counsel. With that said I will share an unusual observation I have seen over the past several years. Listings are more likely to be overpriced when you interview several Realtors than when you just select one. Being an exclusive buyers agent, I no longer list properties, so I need to refer those clients out to other Realtors, when I give my client's one Realtor's name, their homes sell quicker, but if they interview three Realtors as often suggested, they seem to get priced a little higher because the Realtors had three different prices and regardless of which Realtor they selected, they always chose the higher price.
How did that price get selected? The most talented and successful listing agents have a knack for knowing what the sellers want to hear. Very seldom are they going to get the listing if the seller indicates that another Realtor told them $225 and their response is that that will never happen. Nor will they be successful if the seller hints that they expect no less than $240 and the agent then proceeds to tell the seller that they will only list it for $225. It is a finely tuned balancing act to tell the seller what they want to hear. Take it at almost any price, and then work on getting that price reduced as soon as possible, I have seen that happen as soon as the next day. If three agents are being interviewed, most often than not they just coincidentally list with the Realtor that either told them the highest price, or at the very least chose the Realtor they were most comfortable with and then convinced the Realtor to throw out everything they had already suggested with regards to price and list it at the higher suggested price. And the Realtor always does!
What about if only one Realtor is being interviewed because of a strong recommendation? This becomes completely different, all the dynamics change. The seller is not shopping prices and trying to hear the highest possible price, they are only going to get one suggestion. If the Realtor knows this, they do not have that pressure of trying to suggest a price that the seller wants to hear because of what they have had suggested from other Realtors. As a matter of fact, in this instance the price may become a little lower than what it should be. The Realtor wants to get a price that will first and foremost get the home sold in the shortest amount of time so they can get paid. If they feel they have all the trust of the seller, they will come in at least a little, if not a lot less than they would if they knew they were competing with other Realtors.
Is this wrong? I am not suggesting so, sellers have created these scenarios by wanting to be told what they want to hear, not what they should hear. Once they hear what they want to hear, that is the Realtor they select; often time overlooking the more experienced or qualified Realtor because they were being more honest with them. As I stated before, the most successful Realtors out there are those that can best gauge what the seller wants to hear, they will focus on what they feel the seller needs to hear once they have the listing in hand.
How do you avoid it? Interview the Realtors first and foremost on their qualifications. Once you have decided whom to list with because of their qualifications let them give you an opinion on price, and then you decide what to list your own home for based on that information. Remember you need to select the ultimate list price, just as you select the ultimate sales price, not too many Realtors will turn down whatever price you set, so keep that in mind. Their taking the home at your requested list price is not necessarily indicative that they feel that it will sell at that price, unfortunately,
If you are buying a home in the Spokane area over the next 90 days between $100,000 and $400,000 and have excellent credit, you need a Realtor on your side. Call Mike Crowley at 509-951-9710 or e-mail to mike@spokanehomebuyers.com.
Spokane Home Buyers, Buyers Only since 1997!
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