Norfolk, Virginia Beach, Chesapeake, Portsmouth, Suffolk: Over priced listings. Should we consider them?

Over priced listings. Should we consider them?

Over priced listings.  Should we consider them?

There are a lot of blogs on over priced listings,  we all (real estate agents) agree that we should never take them, but I would like to share another point of view.  I know that many agents are going to disagree with house on wheel pushed by man.  house for sale Virginia Beachthis point of view, but this is very much on my mind, so I am going to share it.


A while back, I had a navy pilot be specific on what he wanted for his house, and although it was way over priced, we came to an agreement that we would list his house for $10,000 more than what I thought is should list even on the higher end of the CMA.  The agreement was that at the end of 3 weeks, after getting feed back from the showings we would reduce the price. I mention what he did for a living because his personality was very strong and very methodical.  During the third week, we had our third showing in the time of the listing, and I had the feeling that this last couple had really liked the place from the feedback of the buyer's agent. I decided to hold on one more week before lowering the price, just in case of they wrote an offer.  So it happened that we did get a full price offer with high closing cost assistance request.
I had to explain to my client that an offer in hand is worth more than..... anything else, and after thinking it over for a couple of days, he accepted the offer.  It has to be mentioned that this house was in mint condition with all the bells and whistles and showed better than anything else in that price range in a desirable area.  Back then appraisers were not yet under such scrutiny.  The sale went through without a hitch.

Over priced listings.  Should we consider them?

This past winter, I had a listing appointment with a seller whose listing had expired.  After talking with the seller, I realized that the previous agent had done a pretty good job advertising the listing, holding open houses, flyers etc...  The Internet marketing could have been stronger, but during the 6 months that the house was listed there had been 3 offers.  One of them was $5.000 short of his asking price.  Eventually, he reduced the price and the listing expired.  The seller interviewed 3 new agents, and I was one of them. After the initial in person interview, I spoke with him several times over the next couple of months, and I decided he was not someone I wanted to work with.   Recently  I was looking at this neighborhood and saw that he had sold the home for the price I had suggested plus $10,000.   He had done all the repairs and improvements that I had suggested, so the house showed much better, but I still could not believe that an appraiser would agree to that selling price because the numbers weren't there.house sold
Did he make the right decision?  I don't know.  He sold for his initial price from the year before.  In the mean time he made substantial improvements to get the house up to par in that neighborhood.  It took him a year plus a few months after he initially put it on the market, and he could afford to hold on that long.  I assume he was happy that he got the price he wanted.  I know that he was taking money out of saving to cover all expenses, so by the time he was done, he probably broke even with that earlier offer short of $5,000.
My point is.... that some times in those desirable neighborhoods and when the home is in better than mint condition, we should consider taking the listing.

 

To SELL or BUY  Real Estate in Virginia Beach, or Hampton Roads visit my website. http://www.tererottink.com/  visit my Blog at HamptonRoadsrealEstateVoice.com 

Call me at: 757-502-5324

Over priced listings.  Should we consider them?   was first published on Hampton Roads Real Estate VoiceCopyright © 2010 By Tere Rottink, All Rights Reserved. 

Over priced listings.  Should we consider them?

 

Comment balloon 45 commentsTere Rottink • September 05 2010 07:42PM

Comments

Yes, I have been guilty of taking homes that were overpriced but there were reasons behind my motivation. Sometimes it's hard to place "the perfect price" on a home because there are not very many comparables to go by, or the home has unusual features, hard to place a price tag on.  I don't believe in under pricing, my goal is to net the most money possible for my seller.

Posted by Carla Harbert, RE/MAX Omega: Lorain-Medina County Area (www.LorainCountyHomeSales.com) about 8 years ago

NO!!!!!!!!!!!

Posted by Anonymous about 8 years ago

I work in an area where each and every house is unique. It is very rare to find one or two comparables very similar to the subject home or property (nevermind more). Our office has also had to battle with sellers who believe their home is worth more then what the market truly indicates. You can only explain to an individual so many times that the market value of their home is only so much. What I have come to do is if "comparables" in the area are moving at a certain price range I will list the property at the price requested by the seller, but I will encourage them that after 30 days if the property has not had a large amount of interest to look at reducing the price and/or doing repairs that warrant that sort of price. It is has worked effectively in most cases.

Posted by Amanda Mora (Royal LePage Realty North Inc. Brokerage) about 8 years ago

Lightning strikes, but that doesn't make it a smart business plan.  How many houses have you thought were over-priced v. how many of those have sold for near that price?  10%?  5%?  2%?  And how many have ended up selling for WAY less than they might have sold for had the sellers come on the market at a more competitive price? 

Posted by Lane Bailey, Realtor & Car Guy (Century 21 Results Realty) about 8 years ago

Bot in this market!  It's not worth doing.

Patricia

Posted by Patricia Aulson, Realtor - Portsmouth NH Homes-Hampton NH Homes (BERKSHIRE HATHAWAY HOME SERVICES Verani Realty NH Real Estate ) about 8 years ago

Even if I get a Full Price Offer on an over-priced listing, will it Appraise under HVCC?

Posted by Fred Griffin, Licensed Florida Real Estate Broker (Fred Griffin Real Estate) about 8 years ago

I think these are exceptions that prove the rule. In the first case, it was a while back when too many appraisers were too willing to allow a purchase contract set the market rather than comparable sales. And even then, that first deal included closing cost concessions. In the second case, the man might've done better had he heeded your initial advice. He got his price, but after making repairs that most sellers would be unwilling or unable to do. And he carried the property for several months after that, something else most sellers are unable to do in today's market.

Posted by Mark Ruda (Mark A Ruda) about 8 years ago

I've taken many overpriced listings during my 40 years in this business and earned many commission checks in the process.  Some of the sellers reduced the prices and others sold/appraised for more than I expected.  If you don't want to take an over-priced listing in Maryland, give me a call and I'll pay you a referral fee when it sells.

Posted by Margaret Woda, Maryland Real Estate & Military Relocation (Long & Foster Real Estate, Inc.) about 8 years ago

I am ten months in the business and have sold most of my listings that I initially thought were overpriced.

Posted by Mark Montross, Listing and Buyer Specialist (Catamount Realty Group) about 8 years ago

If they are within reason, I'm more than happy to take them and IF the sellers are reasonable.  If I know for a fact it won't appraise and I have plenty of comps to uphold my opinion AND the sellers are very difficult and have pie in the sky ideas, I walk.  

I don't mind taking them if the seller will agree upfront to reduce after a few weeks...NOT a few months, lol.

Posted by Elizabeth Cooper-Golden, Huntsville AL MLS (Huntsville Alabama Real Estate, (@ Homes Realty Group)) about 8 years ago

If the home is in VERY GOOD condition, and the Sellers are reasonable, I would take the listing, and work it from there.  But not if it's grossly overpriced and your colleagues are laughing at you!

Posted by Kathy Kenney, Realtor - Princeton & Central NJ Homes for Sale (Keller Williams, Princeton, NJ) about 8 years ago

This market is so hard to judge, and different areas and different price ranges are all different.  A lot depends on the price point and the market area.  That is why we are professionals, we need to weigh all the factors.  Who cares what others think, it is what the buying public believes the house is worth and getting an appraisal that matters.

Posted by Mary Macy, Top Agents Atlanta Metro (Top Agents Atlanta Metro) about 8 years ago

Sometimes overpriced listing can be a total waste of time, there are times that the seller will eventually become realistic. It is all depending on sellers motivation i think.

Posted by Morgan Evans, LICENSED REAL ESTATE SALESPERSON (Douglas Elliman Real Estate) about 8 years ago

It depends on the situation. Last year I took a very overpriced listing because I had done three transactions with the sellers in the past and felt obligated.  They also sprang the new price point after I agreed to the listing. Eventually, they sold it - it was an agonizing transaction, but I did pick up a buyer for a very high end home in another community through that listing.  So I guess it sometimes can work out very, very well. But its risky and you risk your integrity and relationship with the seller - All in all - I say NO to taking an over priced listing.  I got lucky that time.

Posted by Ruthmarie Hicks (Keller Williams NY Realty - 120 Bloomingdale Road #101, White Plains NY 10605) about 8 years ago

Pricing is alot an art and a science. All you need is to find 1 buyer that agrees that it's worth that much, then another appraiser that does also. But what I'm more concerned if you had more experiences such as these , that you may either begin to believe you are underpricing properties or continue to take overpriced listings. Both situations are not good.

Posted by Loreena and Michael Yeo, Real Estate Agents (3:16 team REALTY ~ Locally-owned Frisco TX Real Estate Co.) about 8 years ago

Tere,

Previously, I would have said no. I have since been convinced it's a source of new clients, so I take them.

Posted by Terry Chenier (Homelife Glenayre Realty) about 8 years ago

You said that the house was $10,000 overpriced.  Was this a $50,000 home listed for $60,000? Or a $500,000 home listed for $510,000.  One is 20% overpriced, the other 2%.

Posted by Matt Kofsky (Transaction Realty 500 Reno, Nv.) about 8 years ago

Tere:  I must agree with what Margaret had to say in her comment # 8.  I am not embarrassed at all to take a slightly over-priced listing.  Now, a monstrously over-priced one... not so much.

Also... in the example in the post above, the over-priced listing is said to be $10,000 over priced.  I don't know if it is possible to even CALL a listing that is only $10,000 above our recommendation... overpriced.  Now... if is is an extremely low-priced home to begin with... and we want it at $55,000 and the seller says $65,000... that is another story... but still... how much "over-priced" can a home $10,000 over recommended pricing be ?

Posted by Karen Anne Stone, Fort Worth Real Estate (New Home Hunters of Fort Worth and Tarrant County) about 8 years ago

The point here:  Buyers ARE out there!  Buyers will buy!  There is no shortage of Buyers!  The shortage we have in the marketplace are realistic Sellers!  The above examples prove my point 100%

Sellers:  Please, please, please, listen to your reputable respected Real Estate Broker or Agent!! 

Posted by Janine Boulay-Seibert, NC & GA Real Estate Broker (Remax Town & Country) about 8 years ago

Tere, I think these cases are rare. I think it has to appraise and to invest time in a rare probable result can lead to rare success. I veer off....

Posted by Cheryl Ritchie, Southern Maryland 301-980-7566 (RE/MAX Leading Edge www.GoldenResults.com) about 8 years ago

Every opportunity has its own set of circumstances.  I think we tend to put too much focus on the LISTING and not the CLIENT.  I would move the sun, moon and stars for reasonable folks - and to get their home sold they will follow my guidance.  It's called a partnership, and as agents we all should be settling for nothing less.

Posted by Lisa Moroniak, SFR - Short Sale & Foreclosure Certified (Keller Williams Realty | Northern Virginia | 703.635.0388) about 8 years ago

I will not take an overpriced listing unless they will agree to automatically reduce the price within a specified amount of time.

I have found that I end up having people too mad at me and accusing me of not doing my job.  There are many homeowners who are bitter, hurt and want to place blame in this market.

Glad it worked for you!

Posted by Jennifer Pirkle, Dahlonega, Dawsonville, Cumming, GA (Harvest Realty 678-617-0715) about 8 years ago

I strongly agree with #13, it's all about the sellers motivation! If it's overpriced and there's no motivation, you aren't going to make money. 

Posted by Betsy Schuman Dodek, SearchPotomacHomes.com (Washington Fine Properties - Washington DC Area Real Estate) about 8 years ago

This is a great post.  Pricing is not an exact science as you've shown.  Many agents are so arrogant about their skills on setting prices. I've seen too many examples similar to yours that I am humble about my ability to know exactly what a home will sell for.  The market will do that. 

But, with that being said, I think you need to be proactive in deciding what the plan of action will be when an "overpriced" listing just sits there.  I find that after 3 weeks sellers have had enough time convincing themselves that their home really is worth everey penny they are asking and sometimes even want to raise the price.

Posted by Tim Maitski, Truth, Excellence and a Good Deal (Atlanta Communities Real Estate Brokerage) about 8 years ago

I was afraid for the controversy that I might have created with subject, but I see that several people agree with me, and the comments against it are very reasonable.  Thanks for all your comments.   I am not a controversy person.

Both listings in question are on the $300,000 range, and the over pricing was more than $10,000.  I would say about 20-30.
I think that something that has to be over emphasized is that both listings were in very desirable locations, and that within reason the neighborhoods continue to sell.  I have recently had another listing that was overpriced in that same price range, but the location was not the best.  Poor school system.  The house showed great, but no bites.  I took the listing because I have worked with these clients in two ocassions previously. They are wonderful people.   It is now a short sale and priced accordingly.  We have received a contract withing 30 days of listing it as a short sale.

I have not taken many overpriced listings, but after reading all your comments, I wil consider them.  I did not take the second listing because the seller was very difficult, and I could see a difficult road ahead.  After seeing that it sold in 45 days, I question my decision.

Posted by Tere Rottink (CoastalVa Realty Inc) about 8 years ago

What constitutes "over priced"?

Is it 5-10-15-20-25% over the similar condition recently sold listings in the community?

And if the listing agent convinces the seller to list a home at the "actual market value", leaving no room for negotiation, what do you tell them when an offer comes in at 10% below "market value"?

You've convinced the seller that the home is worth $xx so that's what the seller is expecting in an offer? Now there is no room for negotiation and if the seller holds tight, they may lose a sale simply because the buyer expects to negotiate.

If a $200,000 market value home is prices at $220,000, then why would a buyers agent not have their seller make an offer based on the comps, and make the offer so that there is room for negotiation.

 

Posted by Bill Travis, Broker/Owner (Captain Bill Realty, LLC) about 8 years ago

I'm with Margaret Woods. Take that overpriced listing. Either some screwball buyer will pay it or the seller will reduce it. Whatever happens, the agent does not own that house and is no position to demand that a seller list at any price. It's the agent's job to market the home and sell it. I remember a home in Land Park that I sold many years ago. The seller wanted to price it $100,000 over market. He had an agent, too, and his agent refused to take the listing, so the seller called me. I listed it. Few months later, we lowered the price and it sold for a price I could not believe. I don't make judgment calls, and that's what an agent is doing when an agent refuses to take a listing based on the agent's opinion of value.

If you want to list a home in Land Park for a price no other agent will touch, call me. I'll list it and move it. Because that's my job.

Posted by Elizabeth Weintraub Sacramento Real Estate Agent, Top 1% of Lyon Agents, Put 40 years of experience to work for you (Lyon Real Estate) about 8 years ago

Tere, we have a fiduciary responsibility to our clients to give them the facts. Choosing to take an overpriced listing is a business decision. Some may sell, but in the long run I think more will stay on the market and expire. Properties get the most exposure during the first couple of weeks it is listed. Lowering the price a month or so down the road may not help. Good topic for discussion.

Posted by Michael Setunsky, Your Commercial Real Estate Link to Northern VA about 8 years ago

Tere,

I get frustrated with agents who "buy" listings as opposed to an agent who simply takes an overpriced listing, and there is a difference.  Michael is right that we have a responsibility to tell our prospective clients what their house is actually worth.  After that, it's a business decision on whether you want an overpriced listing.  Telling a client the home is worth more than it is in order to secure the listing, only to walk the price down later is extremely unethical.  While it may be easier to tell the client what he/she wants to hear, a professional will show them evidence of what it's actually worth. 

Posted by Ken Gramley about 8 years ago

Tere, you mention a couple points that generally are not made with this discussion that I think are nuances in the scenario. Very often this topic is discussed in generalities and probably for the most part it's not a good idea to take an overpriced listing. However, you throw out the possibility that comps may not really be the best comps but are the only available and that there are variables that could mean that a listing might sell higher. I think we have to really look at the specifics for a property very closely when making the decision as to whether or not to take the listing. It is very important, though, to make sure our sellers understand the situation with appraisals and the implications of getting mid-transaction only to have the contract opened up.

Posted by Susan Thompson-Solomons, Southern MD Real Estate-Solomons Specialist (Berkshire Hathaway Home Services McNelis Group Properties) about 8 years ago

I think it depends on the motivation of the seller. If they're only going to sell if they can get this price, and you have some kind of relationship with them so don't want to send them on to someone else, I say take it on a short time frame. Market the heck out of it and see if you can pick up other clients. Probably no one will call you from that neighborhood though, when they see the listing come back off the market unsold.

 

Posted by Joetta Fort, Independent Broker, Homes Denver to Boulder (The DiGiorgio Group) about 8 years ago

No agent, appraiser, broker, or Buddhist monk has the ability to see what any buyer might be willing to pay for any particular property.  My girlfriend buys a nice pair of dress shoes for 5 to 6 times what I would pay for an equivalent pair of guy's shoes, and mine will last longer.  If a property is unique, in a prime location, and in good condition, there is probably a buyer out there who will look at it like a pair of shoes and say, "Honey, it's simply devine and I MUST have it!"  Poor sap pulls out his checkbook and comps are shot to hell...

Posted by John Souerbry, Homes, Land & Investments (Cordon Real Estate) about 8 years ago

Taking an over-priced listing is ok with an agreement from the seller that there will be price adjustments after 3-4 weeks if there is little or no activity.  I sold a home I thought was worth $400,000 in July that I listed at $420,000 and was under contract for $410,000 in a week.  I am not so arrogant to think that I'm 100% accurate at estimating value every time.  Sometimes you just need to give sellers the chance to sell at their terms before allowing reality to settle in and adjusting the price.  Sellers are very hesitant to leave money on the table by pricing too low.

Posted by Steve Roake (eXp Realty) about 8 years ago

I walk away from sellers who won't list their properties for reasonable prices. Sometimes I lose (I just posted a blog about a sale that went thru for EXACTLY what I suggested the seller list for. He chose someone who promised significantly more. He got .... EXACTLY what I recommended. I lost).

But who knows if this seller would have accepted that offer? It's a gamble -- your time, marketing money, energy, reputation if you do not end up selling it.

Posted by Erica Ramus, MRE, Schuylkill County PA Real Estate (Erica Ramus - Ramus Realty Group - Pottsville, PA ) about 8 years ago

It is a tricky prospect to base one's behavior on a one-time occurance. Sounds like the health care debate where everyone knows someone who died waiting for that heart transplant, but no one seems to be able to give the details.

Will some people overpay? Certainly. Are home prices rising in some parts of the country? Yes. But those are anecdotal observations and not statistical facts. In the long run if you continually take over priced listings you will end up sitting on a large inventory of homes that have to be advertised, visited, and otherwised managed by you, while the owner gets more and more annoyed WITH YOU. Believe me, they will not say that they set the price wrong but that you did not do enough to force buyers to overpay.

So take them if you like, and I will be there to pick up the pieces when the listing expires and they come looking for  a new agent. At that point it is very common for them to then drop the price to a range where it can attract buyers.

Posted by John Elwell (CENTURY 21 Bill Nye Realty, Inc.) about 8 years ago

This is a very interesting point of view.  I usually feel it is useless to take an overpriced listing, but your experience points to the fact that sometimes such a home will sell, if in a desirable neighborhood.  I will have to reconsider my thinking on this matter.  Thanks!

Posted by Ellen Kippel, Licensed NY and NJ realtor 914-588-2365 (Weichert Realtors) about 8 years ago

Tere thanks for sharing your experience with us. Im pretty suprised and Im glad they worked out. I like how you have a strategy. When I accept an overpriced listing and they sign the agreement they also sign 2 price reduction amendments at the same time.

The first price reduction becomes automatically effective after 2 weeks if there are no showings. THe second price reduction comes based on feedback and showings in another 2 weeks. So basically it takes about 30 days to get the home reduced to market value or slightly under depending on how agressive I am about the price reductions.

Posted by Mike Wong, Realtor: Commercial, Residential, Leasing, Invest (Keller Williams Realty Southwest) about 8 years ago

I think that it is a business decision and it is based on the motivations of the seller.  If you have a good relationship with them, there is nothing wrong with taking what you consider to be an overpriced listing when the property is in mint condition.  Good luck to you!

Posted by Karen Feltman, Relocation Specialist in Cedar Rapids, Iowa (Cedar Rapids/Iowa City, IA KW Legacy Group) about 8 years ago

I am open to discussion...but it has to be fruitful and go somewhere. I was told to acquire properties in certain areas and pay whatever it took to get them. I did this for two years. I would offer some people near double of what their property was worth. There response? Not high enough. When I asked them to substantiate that statement, the response was always, we know your client wants this property and if he does, he will pay our price. My clients, who are developers, would pass or build around them. What arrogance. One lady did a Jessie James (hold-up) and just kept nickel and diming. We walked. 4 years later, the house was foreclosed on. She lost 250k for being stubborn......If people become unreasonable and emotionally demanding, you lose me right off.......thank you

Posted by Richie Alan Naggar, agent & author (people first...then business Ran Right Realty ) about 8 years ago

One advantage of a listing is, it is a good way of bringing in new buyers.  If the listing is out of their price range, you have the oportunity to show them other properties. 

Posted by Dennis Herman, Dennis Herman (Home Town Realty) about 8 years ago

Within reason, I'd take it with an agreement to reevaluate the price if no offers are received in the first month. Two reasons - if you don't another agent will, and will benefit when they finally see reason, and second, it gets your sign in front of buyers.

I have told sellers that I would not take a listing, though. One woman wanted to list a very ordinary parcel of raw land for over 200K. It was worth $50,000 or less. I showed her all kinds of comps and even showed her the similar parcels in a gated community WITH HOMES ON THEM were selling for under $150K. She refused to budge and called my broker to complain about what an idiot I was. I showed him the comps and he agreed the woman was way off base. I don't think she ever sold it. Some people refuse to leave their fantasy world. It just isn't 2005 any more.

Posted by Virginia OnullConnor, Realtor - Temecula, Anza, SoCal (Realtor®, Photographer, Artist) about 8 years ago

The danger in taking an overpriced listing in a DECLINING market is loss of equity.  Why would you ever have your client think that overpricing is a good strategy?  Most of the time, they end up chasing the market and literally giving away their precious equity!  If the seller of the home is highly motivated, you can't afford to overprice even $1.  If they are only price motivated, then I suppose it really doesn't matter where it's priced because they don't HAVE to sell and can afford to wait for the ONE buyer who is willing to pay high. 

It's our job to explain with the information and statistics we have what it will reasonably sell for.  This is not an exact science and we can be off sometimes.  Those are rare situations.  Stick to your pricing and have smaller pricing windows.

Posted by Ilona Matteson, Ilona Matteson (Beach Realty & Construction on the Outer Banks of NC) about 8 years ago

I agree with Erica.  I have a listing right now that is over-priced.  I didn't want to take the listing but it was a previous client who started crying when I told her I couldn't take the listing (her husband is out of the country and insisted on the listing price).  The listing has been on the market 2 months with no showings.  She refuses to drop the price.  I'm just waiting for the listing to expire.  I won't let this happen again. 

Posted by Tammie White, Broker, Franklin TN Homes for Sale (Franklin Homes Realty LLC) about 8 years ago

Intentionally over priced listings - only if there is a sound game plan for the future of the listing - or only if the Seller understands the listing is overpriced and is willing to pay an upfront non-refundable retainer fee that will be credited back to them at close of escrow.

Posted by Tony and Suzanne Marriott, Associate Brokers, Serving Scottsdale, Phoenix and Maricopa County AZ (BVO Luxury Group @ Keller Williams Arizona Realty) about 8 years ago

I strongly feel that over pricing a property in today's still slowly falling market (In many locations throughout the USA) can cost a seller greatly in the long run.

Taking a listing that is over priced, with a clause that the price will drop to X amount of dollars at a specified date might be an exception. In a sense attempting for what the client is working towards, with a mutual understanding that the property is in fact over priced.

Posted by Mario Gattavara, (Lake Oroville Area) (IMPACT California Properties) about 8 years ago

This blog does not allow anonymous comments