Most agents I know will give a seller a price range during a listing presentation. Somewhere on the scale is where the house should sell, based on what is happening in the market now, not 4 or 5 years ago.
Most sellers understand this basic concept. Along with the parameters of Price, Location and Condition, the unspoken but very important parameter is "timeliness." The sale is "now," not some point in the past.
Despite the simplicity of the concept, every once in a while we run into a seller who uses phrases like; "I'm not going to give it away," or "I'm not going to lose money." I ran into one recently during a listing presentation.
His concept of the value of his house was firmly rooted in 2005. Of course, you remember that late 2005 was probably the high in real estate home values, before the multi-year decline.
He had been living in the house for thirty years, so losing money was really not a consideration. For him though, the value of his house stopped when it peaked around 2005 or 2006. He wouldn't acknowledge the fact that the value of his house did decline since then, along with the rest of the market. No, he didn't lose money, but he did lose uncashed equity.
He wasn't listening to my discussion about comps, so I don't think he really heard my message. After all, if his house was worth that much more in 2005, it was darn well still worth that amount. Take a bite out of the "Reality Sandwich," the market will let him know soon enough.
We parted our ways and I'm sure I'll see his house listed for the 2005 price soon. That's just the way the system works. In the end, the seller sets the price, the agent tries their marketing, and both live with the consequences.
It works better though, when the price is set in the present, not the past, and certainly not in the future.
Richard Iarossi, REALTOR®
Long and Foster® Real Estate, Inc.
Crofton, MD 21114
410-451-6255 Office
443-995-9595 Cell
Web: http://www.RichSellsHomes.com
eMail: Rich@RichSellsHomes.com
Annapolis MD Real Estate Specialist
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Rich Iarossi is a full time licensed REALTOR®, working in Crofton, MD. My coverage areas are: Anne Arundel, Prince George’s, Howard, Calvert, Queen Anne, and Baltimore City and County. I specialize in residential real estate, working with both buyers and sellers. Use the registration free search on my website at www.RichSellsHomes.com. If you’re not already working with a REALTOR®...I can help. Call me at 443-995-9595 (Cell) or 410-451-6255 (Office).
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Rich, Sad but true, people do not want to face the reality of today. Like the commercial where the folks do not want to open their 401K statement. Its gone. Will it ever recover? Someday, in my lifetime? doubtful. At least you aren't spending your money on an overpriced listing.
Wow Rich, Kinda like an plopping on an old 45 and taking a trip back in time. Folks need to fast forward. Today, it is iPods, downloads, MP3's and CD's. That is why they call it the past...
Helping you live your American dream...
Let someone else waste their time and money. When a seller says to me "I am not going to give it away" what I hear is "I don't want to sell."
Featured in the Group "Whacked!!!"
Richard, good for you for not taking the listing. Maybe you can get the listing on the rebound when reality sets in.
It is always disheartening to hear stories of homeowners who don't understand where the market is today. We see the listings everyday in the MLS and wonder why an agent would go ahead and list a home at that price knowing it will never sell.
There was an interesting study done here that showed homes priced say at 250k that were where they were supposed to be sold for more than homes that should have priced at 250k and were reduced over time to 250k. Interesting study on why you should price right from the begining
You have to be in the market price to be in the market. Hold your ground and do the right thing.
Shelton
It itn't gonna sell, because it itn't gonna appraise. No need for you to take your marketing dollars and use them to market a home that can't close. Of course, someone will, in hopes for a huge price reduction. Just my opinion
Richard, I've been there and met this guy, and many like him. The sad part is that he will find some agent who will list at the price the seller wants, it will sit there and go through years of frustration.
Hi Rich:
I think we've all run into this, one time or another...
I'm not going to give it away....what part of 1/2 million dollars is giving it away???
I'm not going to lose money....YOU didn't have the money in the first place to lose it....
Just last night I was on a similar appointment, Rich - although I doubt we're competing with each other for the same listing. The owner suggested we list much higher; I explained many other agents would be glad to do that for him but not me. And, yes, I let him know that I can't afford to spend time and money marketing a home I'll never be able to sell.
Am not certain I lost his business...
This is so "right on" Rich. I have lost many a listing just for this reason.
good for you standing your ground on this. It is a waste of everyone's time and resources to have a home listed for way more than the market will bear.
Good morning Richard,
I agree if the home is priced correctly in today's market then it will sell and more than likely sell FAST.
At least you parted ways with the sellers. I wonder what the agent who is listing their home has in mind?
Rich - I am happy to turn down listings under these circumstances any day of the week. You did the right thing, but you know that already.
It will become someone else's "Trophy" listing....you did what you could :)
A house listed too high will sit and be stigmatized. Buyers ask or understandably assume there is something wrong with the house. Then eventually, the house ends up selling for less than what it would have if priced correctly at the onset.
Rich, the truth will always prevail. This seller will come to the realize maybe a day to late that your advise was pertinent to today's market. As the saying goes... you can't teach a dog new tricks. Time is precious and valuable, good move.
~Josie~
Wait -- that guy was in my office last week! Oh, and the week before! The sad part is that around here owners know that their homes haven't lost that much value so they try to overprice thinking they'll be able to drop the list price and still sell at an inflated level. Some do, of course, but....
Some lessons are harder to learn than others!
I turn down listings where the price set is not reasonable or beyond my abilities to sell....
Love it, Rich. I've found that when I walk away from a listing for that exact reason that they call me when it expires. Sometimes it takes them going through two or three other agents until they figure out that it just might not be the agent that is the problem, it might be price.
I hear this on lake property ALL the time. They do not seem to understand prices have declined. But I have learned (the hard way) to decline these clients.
Good for you for not wasting your company's advertising dollars on an over priced home. As we say here in our area in Florence Oregon,"its good to be the third listing Realtor". It will go soon then at a lower than original price and you will look like the hero. The first two agents are perceived as bad guys, they couldn't get the job done.
I think I know who that guy is! I talked to him too!! His response to every FACT I set before him was "I don't care about that!" He listed with one of our local vulture real estate agents (I won;t even call him a Realtor). C'est la vie! or should it be C'est le guerre??
The problem with 'losing money' from 2005 is that it was not real money - just artificially inflated value. If a seller threw good money after Monopoly money it is not the market's fault ~ is theirs. :)
Rich, I've turned down 3 listings in the past two weeks and had another list with someone else due solely to price recommendation. It's always an issue, but more so now than ever. Even homes that are priced well on paper are not selling in many instances now simply because of consumer dead zones. Certain price ranges aren't moving at all, even on properties that comp out well. So when a seller disputes my assessment, I kindly cede that all an opinion of value is is indeed an opinion. The only difference is that mine is based on a decade's worth of experience selling the very product he/she wishes to offload. Inevitably, there is often that one incongruous comp from 8 months ago that is used as the sole rationalization for an above market price. The 35 more recent and directly comparable properties are discarded out of hand. Seeing that this is hardly a market in which I am willing to invest my time, energy and resources into a fishing expedition, I wish this type of seller luck and wait for the likely call 6 months down the line when agent number 1 is unfortunately blamed and scapegoated.
Singin' to the choir Rich! (But you knew that) As long as there is an agent out there willing to "buy" the listing at any price (and then carry it for the rest of their career) there will always be those sellers! More power to them. I've got work to do to help my 2009 sellers!
I find that they frequently understand the whole situation when with me and then somebody somewhere tells them they should just "try" it. If it isn't in the numbers, it isn't in the numbers! As we say, it isn't my job to LIST your house, it is my job to SELL it!
Hi Rich - Maybe the seller can make up his lost equity by betting everything on the Chicago White Sox. Sure, they probably won't even make the playoffs this year, but in 2005 they won it all.
The appraiser won't care what his price was worth 6 mos. ago, much less 4 years!
Several months ago I lost a listing after I insisted the market had dropped since it was first listed and the price needed to be reduced. Spent SOOO much time with these sellers, trying to convince them to get the price down to where the recent sales were. You know the rest. They changed agents, dropped the price, and a buyer who had looked at it before with another agent came in and snapped it up. I will not keep listings that won't listen to me. I will not keep listings that won't listen to me. How many times do I have to say this to myself?
OMG - -this has been making me crazy lately! And the sad part in our area is that 80% of Realtors will take the listing at the high! Argh!
Thank you for the uncommon common sense, Rich. I am reblogging you.
I have a listing that I have had for 2 years, and that is the exact words my seller keeps using. When I listed the home I gave the seller my idea of a listing price which was 154,900. Seller had an appraisal done and it came back at 165,000. Seller decided to list for 168,900. Home is now listed at 128,900 and is at least 15,000 overpriced. We have been chasing the falling market ever since...Seller keeps saying, "I am not going to give it away"....I think at this rate...we are not going to sell it either!!!
I also hate to hear "I don't have to sell. I'm just testing the market."
NEXT
Rich - I like your thinking. I mistakenly took those listings, just hoping to get a buyer to jump at those prices, but with appraisals being how they are it doesn't work anymore. Great post and well worth the feature!
And he'll be sitting there for another 5 years waiting for the market to go back up - in the meantime he'll grow frustrated not at himself but his agent - thinking it's their fault - you wisely avoided that mess.
Rich, That is so often the case and there are other agents who will buy the listing I did a listing presentation once for a couple who wanted me to list their house at about 15% above the market at that time. I told them that my philosophy was that honesty was the best policy and that another agent might list their house at the price they wanted, but would come back to them in a month or so asking for a price reduction. Of course exactly what I had predicted happened. It took about 8 months to sell their house at 7 % less than what I had sugggested. If we had listed originally at the price I suggested, they probably would have gotten more money. Oh well!
Rich, I think this was one of the funniest things I encountered when I first started. Who wants to turn down a listing? Smart people who know it's a waste of time. That's who! Great post!
Thanks for your comments everyone. I've been out all day and haven't had a chance to reply to any comments.
It's always a tough call not to pursue a listing, however, with brokerages pushing almost every marketing dollar down to the agent, it's a decision that has to be looked at closely. Just having another listing, with almost no chance of it selling, doesn't make sense.
Richard - You hit the nail right on the head "No, he didn't lose money, but he did lose uncashed equity." Unfortunately some seller's don't understand the concept of "uncashed equity."
Rich, the guys has made rounds here too. Lately we have faced more of this than ever before, and the seller do not listen - typically. One insisted that they have to get $650K for their house - well nothing has sold anywhere near that for a looooooong time. Another wanted older comps to justify their price - what - even 6 months is pushing it! Sigh. ~Rita
In a declining market even the most recent comps may be too high. In our market there is usually a 3 month lag from accepted offer to closed sale.
Rich your spot on and it is not worth the time and energy to price a home at 2005 values or even 2008.
We must be having a "great minds think alike" kind of day! I just posted on this same line of thinking! Great post!!! I love the title!!!
Jeani
I think someone else mentioned this, but seems they always find the ONE anomaly house that oversold and hold onto that price too. Luckily here we have a very stable market and have yet to have much decline. But they are not getting their dream prices either!
I once took an overpriced listing. The sole reason i took it was because I knew the owner and we were going to be going into a short sale. Citi at that point had insisted I try to sell for payoff price. She was getting to live there for free, so we tried to sell at selloff price and went down 30k from there to eventually sell.
I have certainly occasionally shown an overpriced listing, and noted that they are also the ones who MUST have full price and nothing less, refuse to budge on anything at all, will not make repairs, etc. Sorry, my time's precious - here's a FSBO sign for you, have fun!
Rich -- good and timely post. Need the reminders that it is not worth my time to take those listings. I learned the hard way not to -- and a reminder is always good. It is sad though that so many sellers seem to be in that mind place. Especially since it was all paper money anyway - not real then unless they sold, and certainly not real now.
And when it sells for less than today's market price because he exposes it to the market at an inflated price.....unfortunately he will not remember your words. Agents should be responsible like yourself and not list property's that will not sell. This is just wrong and it hurts all of us.
I've had sellers call me months later after their over-priced listing expires and their house goes unsold. They remember my truthfulness and my thorough presentation. And yes, their properties did get sold, by me.
Oh my there are still some of those folks out there - when will they get this is almost 2010? We don't want these listings or these sellers who get more upset as time goes on because 'we' haven't done what is needed to sell the home. My favorite line for them is -
Let me refer you to someone who specializes in overpriced listings!
I've seen houses priced at $359,000, only to sit and sit . . . and then when it was at $259,000 find a buyer.
I think we've ALL taken these listings and regretted it later. It's so hard to move on when you want the listing.
I love it ... that was the good ole days...
Ginger
Hi Rich~ Some sellers just don't get it! Some will eventually, but it is a hard lesson to learn.
Richard, I surprised to hear there are still folks stuck in that time warp. He must not get out much. It's been quite awhile since I have had to deal with that.
You do run into one of these every once in a while, but for the most part, I deal with pretty realistic sellers. Nearly everyone knows that the market has taken a huge dive and know that their house is included in that. Congrats on the feature!
You did the right thing by not giving in. Call him when it shows up on the expired list :)
Rich, I know what it's like to turn down a job. I'm not a Realtor, I'm a Stager, and I've had to turn down a Staging job once because he wanted me to bring in furniture into a room with a poorly installed/wrong type of flooring, outdated light fixtures, and a kitchen that belonged in the '70s. He didn't want to make any improvements whatsoever, not even paint, so Staging would not have worked for his house.
You made the right decision to turn down that listing. Good for you!
A post spoken from one who really knows real estate. I sure wish there were a fool-proof way to allow sellers to self-discover, other than having the market drag them through the mud for months.
Most definitely, Rich. I recently lost a potential listing to an agent who "bought the listing" - the house is priced some 40k higher than what the comps suggested it should be. I will very patiently wait for this house to expire and then reach out to the sellers...maybe they will then listen to reason...maybe...
Sadly there are some sellers that aren't willing to give up the money. either they do or they don't sell.
Unrealized equity is an illusion of wealth. You may have had $100,000 in Google stock when it was still at $700 per share. But, today you do not. The past has no relevance on today's values. Sellers need to simply look at what their asset is worth today and decide whether they want to go forward.
Hi Richard,
I think that I've met with the same seller recently, or atleast we had the same conversation.
Hey There Richard: It's been said so many times here on Active Rain, It's A Price War and A Beauty Contest, and when all is said and done, it's a price war. This is a brilliant blog; it's spot on.
Great post Rich! Funny- most of my sellers realize themarket changed and are willing to price their homes accordingly. Although I just had a divorce situation where I represented the clients on numerous occasions... I was called on by the attorney for one party to give a BPO on a rental property they own together. When I have my opinion- which was significantly less than we could have sold it for 4 years ago...the attorney argued that my price was too low because the city assessment was at the 4 year ago value. Sigh....
If he gets a buyer in this market, it won't appraise and he'll be at square one. It was probably best that you parted ways.
Rich, I have a piece of land with waterfront. I've had it listed for 3 years. I just called the owners again and they said, "since we haven't had any offers and we've listened to you getting us to drop the price with the market, we've decided to stay put and maybe even raise the price." Strange but true.
I always shake my head at this. It is like on ostrich who buries their head in the sand. I have a client right now who is lost in the same concept. The very best I can ever to is show them the stats on a similar house that sold high in "2005" and recently sold for less, or a a greatly reduced price. I always tell these rose colored glass wearers, "Your house is worth what the market will bare at the time is FOR SALE". The price it would fetch in the past means nothing now, not even what you paid for it originally. The only price that matters is what will it go for NOW? Maybe the all important factor now is not Location, location, location. but, Timing, Timing, Timing!
Oh - he'll find a Realtor who will take the overpriced listing in order to get his sign out there. If this seller is in your circle of life and you run into him - you should give him this advice based on a cheesy 1980s Ballad by CHICAGO
Well, you called me up this morning
Told me 'bout the Realtor that you found
I Said, "I'm happy for you. I'm really happy for you."
If you see me walking by, your house not selling I won't cry
Look Away - Seller Look Away
Don't look to me you just won't sell your house this wa-ay.
Rich, it's funny, because as I am showing homes in this one neighborhood in Baltimore City where there are a lot of short sales currently, I find that almost ALL bought them in 2005. One for $569K, and it is on for $349K (and will probably sell around $325K).
Good for you for walking away. You are a true professional!
Rich, today I wrote an offer on a house that was priced at about 2007! And my client is an economist. We included a cover memo with a really interesting price analysis. The sellers will either say "Hmmmm" or they tell us to get lost and wait a while. I hope they say "Hmmm!"