Agent2Agent in Boston>Question Details

Scott Murphy, Real Estate Pro in 01876

AS A LISTING BROKER - HOW DO I OVERCOME THE ISSUE OF A HOMEOWNER WHO HAS GROSSLY OVERVALUED THEIR HOME?

Asked by Scott Murphy, 01876 Fri Aug 26, 2011

Everyone has sad stories on this one. Let's read some success stories from people who are overcoming this challenge. Thanks!

Help the community by answering this question:

Answers

15
BEST ANSWER
This has been going on ever since Cave Girl smartly priced her nicely-decorated cave, leaving the Cave Man down the street cursing picky buyers and bargain hunters!

Here's the thing - Homeowners have a Constitutional Right to Over Value Their Home. Real estate brokers have a right to contract with Sellers Who Insist On Exerting This Right.

Listing Brokers owe their clients Loyalty and Honesty. It is a Violation of Realtor(r) Ethics (this is true) to mislead Sellers as to the value of their home. So "buying" listings is an Ethics Violation.

That said - if everybody else thinks the house is worth $400,000 and the Seller shops for a Broker that will take the Listing at $600,000 - how is this our business?

Now, being as We are all Ethical Brokers, we're going to tell our prospective "Seller" what we think is the truth, right? "Mr Murphy, yeah, you know, houses like yours - look at the comps, three-seventy, four-twenty. At six hundred, people are getting circular driveways with fountains, moats with fully-automated drawbridges, they're not next to gas stations, they have roofs and siding that's more substantial than blue tarps . . . "

So there's really nothing to "overcome." Sometimes, the Seller is delusional. Sometimes, they really don't want to list with you! And, sometimes, you're willing to give it go. So long as you've been straight with the Seller, frankly, I don't see the problem.
4 votes Thank Flag Link Sun Aug 28, 2011
Have an agreement in writing with the client that, if after x days of no showings and no offers, they check back into Hotel Reality.
Web Reference: http://www.321property.com
3 votes Thank Flag Link Fri Aug 26, 2011
Ok Scott you’ve received 12 different answers from 12 different agents and we all say the same thing there are no success stories from grossly overpriced listings! Doing business in this arena is bad karma and not smart. Being creative with staging, educating the sellers, seeking top dollar for your client are the positives of real estate and client satisfaction. There is no win in taking an overpriced listing unless you enjoy abuse. I like Mack’s answer best!
2 votes Thank Flag Link Sun Aug 28, 2011
Hi, I either walk away from the listing table or there has to be a clause in the listing agreement that states we will do a price reduction after two weeks. As agents we spend alot of time and money representing a listing, I would rather not knowingly waste my time and the sellers for that matter.

Christopher Pagli
Licensed Associate Broker
Accredited Buyer Representative
GREEN Designated Agent
William Raveis Legends Realty Group
914.406.9023
2 votes Thank Flag Link Sun Aug 28, 2011
Homeowners frequently use the wrong factors in assigning value to a home. They will consider how much they paid for it, what kind of improvements they've done, how much they owe on the mortgage and how much they want to clear on the transaction. What they should be considering, and what you need to show them, is their home's actual value in the current market based on comparable recent sales and comparable homes currently on the market. It's not easy to convince a homeowner that he has overvalued by tens of thousands, but putting a house on the market at the wrong price merely gives you a listing you can't sell. It is a constant objection to overcome and like anything, gets easier with experience.
2 votes Thank Flag Link Fri Aug 26, 2011
Walk away. Let them list with someone else....when it doesn't sell, go back in as the second agent. Most likely, they will be a bit more willing to be reasonable.
1 vote Thank Flag Link Wed Aug 31, 2011
If the seller is willing to lower their expectation if you diligently market the home and the market proves you right, great. If not, walk away. It will be the 2nd, 3rd 4th or more broker that actually sells it and gets paid ( or none of the above ).. but assuredly, it would not be you.

Offer to split an appraisal is one viable option.
1 vote Thank Flag Link Sun Aug 28, 2011
Often times sellers feel the NEED to try their price first, but at some point they have what I like to call "Market Education". This term means that they have cleaned their home for showings, cancelled family parties, and have flat out turned their lives upside down just to hear that the buyer feels the home is over priced. Once the sellers have reached this point we sit down with them and again ask what their goal is? If they say it is to get the home sold, then we go over the market data again and look at what the market suggests their home will sell for. This not our price or the sellers, but rather the market.

Unfortunately, in this scenario we often have to reposition to below market value for buyers to take notice, but this is the risk the sellers wanted to take. We do get results but in the end they have accumulated carrying costs, and usually sell for less than the original expected sales range. Best
1 vote Thank Flag Link Sun Aug 28, 2011
From where I have been...
I have started a recent program where I don't give clients a value/listing price for their home, but rather give them the comps and allow them to add/subtract all the upgrades and come to their value. This way, at least they are educated. If they continue to live in the dreamland where their home is valued dramatically over the curernt market, that clear indicates to me that I don't want to work with this seller. I took this idea from a friend of mine, and I have to say, this has been amazing for me and I think it has prevented me from dealing with at least 2 sellers that would have been nightmares for me.
1 vote Thank Flag Link Sat Aug 27, 2011
Educate them with the facts....Their house is only worth what someone is willing to pay for......
1 vote Thank Flag Link Sat Aug 27, 2011
To me this concerns the overall marketing plan for my business model. I focus on making every client a repeat buyer or seller, I want them to remember the level of expertise and professionalism I displayed when handling their transaction. So with my # 1 goal of client satisfaction in mind what areas of the market do I stay away from? Short sales, I only make offers with seasoned investors who truly understand this type of transaction. A short sale purchase or listing puts the situation out of my control in regard to meeting my goals of repeat business since the banks can take months and months and still not close the deal everyone is upset and I will never see the clients again. Grossly overpriced listings, this also hurts my business model of client satisfaction and repeat business. Getting calls, demanding open houses for months and months because no showings have occurred because the property is 10% or more overpriced what’s the point? Even if by some miracle we were able to get the price they wanted we still have to go through the appraisal process in which I am sure the deal will be killed or demands for a price reduction. At the end of the day I ask myself the question will I receive referrals or repeat business from this type of transaction? I do have strategies for dealing with moderately overpriced listings (3-5%) such as a set timetable of lowering the price as detailed in the written contract, a flat fee service offered to clients above a certain price point with some money paid upfront for targeted marketing. I present the facts and the current picture of the real estate market place to the client and spend hours educating them and help them make the right decision. When it comes time to ask for the listing agreement to be signed most are ready and understand the market place. In the end I just won’t take the grossly overpriced listing.
1 vote Thank Flag Link Sat Aug 27, 2011
Tell the Seller when they are ready to jump off the ledge of fantasyland, to either call you or ask you to help them down gracefully. Ususally tell them I can give them 10 days of "fantasy time" but that may cost them more in the long run when potential Buyers see large price reduction(s).
1 vote Thank Flag Link Fri Aug 26, 2011
Thanks, everyone, for your contributions. Lots of good responses. I had to pick Mack's strictly because he made me laugh (per usual).

I'm working with a few agents who are feeling a bit frustrated by sellers who have overvalued their homes. My agents feel like they're losing the listing when in actuality they may be losing the headache. They want to sell these homes and they want to be the first agent listing the property in doing so. They're looking for solutions. And I love talking to and working with people who aren't afraid of curveballs. I'd rather adjust my swing and knock the ball out of the park than wait for the next pitch.

I'm just as sure that some of these sellers and their properties can be reasoned with and sold as I am that some should of them be avoided. This has been happening (as Mack cleverly put it) since the cave man days. So it isn't new and it isn't uncommon. It comes up all the time and it makes all the sense in the world (to me anyway) for an agent to figure out how to convert these deals. I don't expect anyone converts all of them, but I do see some agents fare better than others with this kind of stuff.

I was looking for success stories. A default answer of "Walk away" assumes no risk and (hence) offers no reward.

Thanks to everyone who offered their solutions!
0 votes Thank Flag Link Tue Sep 6, 2011
After sharing the existing market data with home owner is it of value to also describe how the market reponds to frequent errors such as overpricing.

it is imperative to understand the motivation to sell the home. As some marketers advise, stay focused on 5, 6 and 7.

Get an agreement from the seller that if the overpriced home receives the expected response of ABSOLUTE SILENCE, they will follow your counsel. So,if the home overpriced by 30% receives absolute silence and the homeowwr does not want to reduce the price to 'get on with their life with new wife in Denver' there just may be something wrong with thepicture.

Often, sharing the data for the competing homes, ask the seller, "Which of these homes would you buy?"
Sometimes the need to 'get on with your life' requires a polite walk away.
Web Reference: http://www.mydunedin.com
0 votes Thank Flag Link Sat Aug 27, 2011
I hear you loud and clear. This is a nation-wide problem in my opinion. When I've run across this, I take a an hour or so each evening for a week and "comp" everything close to the client's property. Then I schedule an "informational" meeting with them. The informational meeting is beneficial because it tends to make you look more reasonable than they are. As you go through the multitude of "comps" they will have a hard time justifying their current pricing. I also make it clear that "price" is the #1 issue for buyers (bottom line), without telling them what they need to price the property for.
Stick with them through the process, and keep the occasional "comps" coming to them after that. In time, it will generally help.
However, it does not always work out the way it's supposed to. Recently, I told a potential client that their house was a between 395-405K in it's current state. Another Realtor told them it was worth 450K. Wrong... At the 450K price under the other Realtor, at 60 days on market, they've had 0 calls and 0 bites. Now they are calling me saying that they will lower the price to my suggested recommendation. Problem is, the other listing agent owns them for 4 more months.
0 votes Thank Flag Link Fri Aug 26, 2011
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2014 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer