When we as Realtors can present to Sellers the reason why they should list at a price that will sell and not guarantee a listing by giving them a fantasy land listing price. Then we will as an industry regain credibility. It is better to have a tough 60 min conversation at the listing presentation than a 60 min conversation every week for 3 months, then blame the market for not selling the home.
We are swamped with business because we have a no excuse policy and if you do not want to list at top 1/3 price and you are not top 1/3 condition We can not take the listing.
Apparently she had bought the palce and 6 months later put it on the market. (See her conversation with the nobody-there open house sitter.
I will agree the realtors were gutless by not looking her dead in there eye and saying:
The granite countertops do not add anything to the price.
Nor do the windows. Nor do the electrical repairs. Nor do the plumbing repairs. Those are maintence, Forget getting what you spent back.
Unless that master suite and laundry were new sq footage, they don't add any amount to the value that would even come close to what you spent.
The house will appraise based on the sq footage, the lot size and the size of the garage. The rest is cosmetic and decorating and no bank will appraise if for more just because you changed the countertops.
They didn't tell her to get a grip on reality that the bottom of the jumbo mortgage fell through the floor in August. The difference in rates before August and after August basically meant a 10% drop in the sales prices.
They didn't tell her to face the fact that the market for flippers is over. the market is falling. There are no more weird mortgages out there for wanna-be wanna-get-more-than-they-can-afford buyers.
They didn't tell her that her stainless steel appliances didn't add squat to the value - some people hate them and would yank them in a NY minute.
Now she has her own webage and it is sitting.
Assuming that she bought about 1 year ago (the reference to 180 days), she will be lucky to break even on the purchase price - and forget getting baack her routine maintenance and decorating costs.
It is not a buyers market. Fudamentals - Supply and demand determines market conditions. Currently in New York County (Manhattan) inventory is low (supply) and demand is high (many buyers)
However over priced listings don't sell in any market. In a sellers market if there are no offers within a couple of weeks the price needs to be reduced. At the right price there is usually multiple bids. I have seen multiple bids after a price reduction when there was little activity at the higher price. Often the lower price with multiple bids will end up getting the seller their original ("overpriced price") or more. Sale price is determined by what a buyer is willing to pay at any given time. it is not determined by sellers or REALTORSÂ® or neighbors previous sales. Comps are only a tool the market and variables determines the sale price.
went under contract that week. So we decided $925k and they go through their marketing plan, statistics and CMA. Four hours later as I'm leaving, they tell me I can't take what they presented to me home until after I have signed the listing agreement.
The house is almost finished in May and I sign the listing agreement two weeks in advance. We have a brokers' tour and everyone says the same three things: "Beautiful", "I don't have anyone right now" and "Good Luck!" I immediately drop the price to $899k. I leave the country for 2 weeks and no action while I was gone. They tell me the home is over priced. I ask about marketing and for a copy of the listing, contract and presentation that they still haven't given to me. The listing doesn't mention anything about the $300,000 worth of improvement such as new: windows, plumbing, electric, master suite, 2nd fl laundry, etc. Aside from SS appl and granite counters, it looks like the same listing as a year ago. We fix the marketing and give it two weeks. Still nothing. I then look through the CMA and see their original recommendation was $850k. I'm upset but I lower the price to $850k. Too late, the damage was already done. I go to my own open house as a consumer and none of the marketing material is there. I ask, "How long has it been on the market?" The guest agent says, "A looong time." She then flips through her paper work and says 180 days last year priced at $525k. "What?!" "Oh wait, then it sold. It didn't look like this before, they painted it all the fashionable neutral colors." I fired them.
I then dropped the price to $799k (our breakeven after negotiations and commission) through a flat rate broker. We had 5 interested groups but no written offers. We just dropped the price to $700k. There are too many gutless agents telling sellers what they want to hear. I said from the beginning, I want to price it to sell.
It seems that a lot of sellers are in the stay mode, even those who have already relocated leaving their homes vacant (and even harder to sell).
The law of supply and demand will eventually kick in with some of these hold-outs, or they will make the choice to stay.
I seem to be running into this more and more as a buyer, at least in the bay area. Some homes I see have little equity built due to I/O mortgages or refinancing on appraised value from a few years ago (and spending all the money where they now owe considerably more than what they paid for the house), and now the sellers are trying to pass their misfortune/misjudgement onto the buyers.
I listed 4 homes within the last 14 days where I told the Sellers that I would NOT list the house unless it was listed at a price that it would sell at - Not a price made up by the sellers because it's a buyer's market and we have to assume that every buyer is going to offer 10% less - but a price they expected to get after negotiation.
One home sold the first day on the market for full price. The second home sold in the second day with a home sale contingency)for more than asking price - then we sold it again with no contingency - same price - 6 days later. The third home had 3 offers within 2 weeks and was negotiated up to full price, and the fourth actually sold at an open house I held the first weekend on the market.
Overpriced listings are bad for the sellers - check out the David Knox video (Pricing Your Home To Sell) I tell them that it is my marketing dollars that are going to waste on a home that is going to sit and I don't believe in wasting money for a listing.
I actually was pretty tough with my sellers and they liked me more for it.
Unrealistic is expecting a Realtor to show you 30 houses and then asking them to cut their salary.
Unrealistic is having a Realtor market a home for months and then you as a buyer come along and expect them to take a pay cut.
Is your asking price based on reality or what you "have to get", "need" or "want"? Unfortunately, if many sellers DON'T reduce their asking prices, the one who is going to get a pay cut is going to be them--the sellers. Because they either aren't going to sell at all, or sell even later at an even lower price. But this is what we deal with every day: totally unrealistic sellers.
Sellers are willing to negotiate .. but it will also take great patience and the proper education from the "real deal" realtors out there that sold those very same homes ...
Keep in mind, you're the very same folks that stood with your hands on your hips 4 years ago and said:
"I know values went up 25%, but if you don't make a decision today you'll miss the next 25%.. " .... well guess what.? .. buyers were ill-advised ...
Agents need to work harder than anytime in history to educate their sellers if they want to survive in their own industry ... the days of showing 5 houses on Sunday and a contract by Wednesday is nothing more than a fleeting memory ...
The easy part is done, you got the buyers into this home ... the hard part now, is the ability to get the sellers "out" of it ..
The question is .. how many agent/realtors are up to the task.?
Time on the market. For serious sellers, too many days on the market with no offers, or offers consistently below asking, should be a sign that they may have overpriced their home. The problem is sellers are emotionally attached to their homes and fail to understand that once its put on the market it is a PRODUCT. It must appeal to buyers in order to sell.
If a seller can wait it out, then they will not reduce and hold out hope (maybe false) that somehow, someway , a buyer will just fall in love with the house and pay close to asking. That seems to be the reality as I see it.
Good question, Darlene!
The bad part is the "grubby" realtor that does take the listing 100k over asking price.. makes us all look bad. It is not just the homeowners.. it is awful real estate agents that encourage and accept these OPT's (over priced turkeys) that create the secondary problem.
Currently I have close friends whom insist to ask me weekly how much is their home now. I wonâ€™t list their home and they are quite perplexed by that. Similarly a family relative has the same problem and I will not list their home either.
I think in overall we are aiding the real estate crisis. Many agents are just eager to list with the ulterior motive to drop the price later when the listing is secure. I rather work with three reasonably priced homes then with ten over priced listings.
A listing price is arrived at by going through the recent sales, current actives, and any pendings that are truly comparable to your home. Based on that data, you and your agent arrive at a "marketing price". Your agent doesn't just unilaterally arrive at a price.
If the marketing price that you've determined together, fails to garner an offer, or if market conditions change (which they always do... ie: the sale of the house listed across the street, that's exactly like yours, and it sells for $50,000 less than you're listed for...), then you have to be prepared to adapt to the new market.
The real estate market is a living market, just like the stock market, that goes up and down.
Bay Area, I'd like to see you find an agent who will agree to that. And I'm SURE you'd have agreed when the market was going up, to give whatever you made ABOVE the listing price to the agent. ;) (Which, by the way, is illegal). As an illustration of how ridiculous the comment was, 5% commission on a 600,000 house would be $30,000. If it is overpriced and sells for 525,000, you are seriously deluded if you were under the impression that the agent was going to kick in 75,000. You are just baiting. And just a guess, probably also a renter in his 20s.
It's *your job* to school the sellers properly with a real deal strategy .. you do this everyday, most consumers do it every 10/15 years ..
If the seller is adamant about some silly price, then walk away .... the reason why you don't walk away is because you want the listing, you're hoping one of the other 2,863 agents in the area will get it done.
First, as the Realtor's love to say, "Real Estate is local." The size and price range of house I am selling has increased in value 10% over the past year. Second, the house has appraised for $100,000 more than the selling price. Third, if you buy below market value and the comps justify the improvements, then you should get back what the comps justify. Just like it doesn't matter "how much we put into the home" it also doesn't matter what we paid for the home.
We put too much money into the home because half way through, the comps were sky rocketing up and rates were low. If the master suite and kitchen were all new, then the remaining bathrooms would look horrible. A million dollar buyer would not spend that much unless they were done too. Then the bottom fell out and realistic prices came back. The homes with 4 bedrooms, 1 bathroom, leaky windows and 60 amp electric don't sell even with the granite countertops and SS appliances.
If we had priced it right in the first place, we would be making $100,000 more than by pricing it wrong.
Isnt it possible that many people have their homes listed at an unrealistic price because they have refinanced them to the point of having little or no equity left?
It doesn't matter what they owe, what they paid for it, how little or how much. It's up to us to educate the consumer about the market and similarly priced comps. We can't "make" them do anything, though, and there will always be agents who buy listings.
Re: overpriced listings - It takes two to tango. Someone has put those overpriced listings into the MLS and it wasn't the consumer.
I am in the early stages of Ruth's postition. I told the Realtor that I wanted to price the house realistically. Then I priced the house 10% BELOW the Realtor's recommendation. I am getting no traffic thru here.
What will it take? Well, to paraphrase from Carmelo's comments below: We consumers have to put our foot down and say LISTEN. We want a marketing plan. A plan to realize the highest possible value, whatever that may be. We want a true pricing analysis. We want something more thant throwing it in the MLS and hope it sells.
If the realtor wants to cut the price, I won't hesitate to do it. But I would like some substantiation rather than throwing darts with a blind fold on.
But I wonder about the realtors who are accepting overpriced listings.
Unfortunately - the owners had no choice as their mortgages won't allow for a drop... I don't even want to know what will happen if they don't sell soon....
I will say this - for as long as they have been on the market - had they taken my advice - the could've sold by now and saved all those months of overpriced mortgage payments. (... did I just say "I told you so"?)
I walked away from 2 listings this week, and 1 last week. You couldn't be more wrong, but you continue to waste your time badmouting realtors here. Why is that?
Of course this assumes the sellers are going to purchase a new home and not wanting to just cash out.
There is not going to be a short term answer. A seller will always want to walk away from the table with a fistfull of dollars and then want to retain as much as possible when he buys.
The ones hardest hit in this market are the first time buyers with no equity to trade up or the homeowner that bought poorly and has no equity to move on.
The only true answe is for all the Homeowners to agree to drop there prices across the board on Feb15 at noon. and all buyers get prequalified to buy on that day.
If we are all in agreement.....on your mark.....get set....