Home Selling in Severna Park>Question Details

Tina L., Both Buyer and Seller in Maryland

Aren't listing agents informing their clients of the reality that real estate prices have declined?

Asked by Tina L., Maryland Fri Aug 14, 2009

I have been watching several properties that are overpriced in this market, these properties have been sitting for a long time until I see them go on short sale. I still see 2005-2006 prices on many properties. Shouldn't the listing agent explain to his/her clients how the real estate market work and that the property value is based on when they list the property and not two years ago? If the clients need to sell to avoid a short sale and eventually a foreclosure, shouldn't someone tell them that it's not smart to list with unrealistic prices? 

Sellers have to realize that buyer's banks appraise property based on the NOW value.

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Tina:
You speak to a daily reality in my life as a realtor. What it really comes down to is seller motivation. Although many sellers are desperately trying to avoid a short sale situation, others may just not be motivated enough to price their house at a level that will get it sold. With every new seller, I try to begin the conversation with a question: "how important is it for you to sell your house?". If they sound serious I then prepare a detailed, accurate and up-to-date Comparative Market Analysis. I spend a lot of time going over Days on Market, percent sold price to list price, houses not appraising up to sales price etc. I then suggest a listing price range based on my analysis. Many sellers will still resist my recommended price range. If their preferred price range is high but still somewhat reasonable, I may agree to try it for a short period of time before I begin advocating for a price reduction. This is not a full proof system, however, it acknowledges the need many sellers have to first experience the market at their number before they are willing to fully accept what they are up against.
0 votes Thank Flag Link Sat Aug 15, 2009
Tina, Yes they should -- and they ARE. The sellers aren't always listening.
In a short sale situation, the bank may be part of the reason the price is so high, because so much is owed and they may not accept a lower price on behalf of the seller.
We don't know the situation on these properties. It is possible that their motivation is amount of $$ not speed of sale. It is possible that they won't sell at all, however, the sellers may maintain that their home is better than the others. :-)
It is an unfortunate situation, but keep in mind that the listing agents most likely ARE telling their sellers this same thing. It's just not getting through to those sellers.
I hope that helps!
Sincerely,
Marney Kirk
Keller Williams Excellence Realty
2 votes Thank Flag Link Sun Aug 16, 2009
Likewise, most Sellers agree that Real Estate has lost value and that prices are going down. EXCEPT for their house!
~~~~~~~~~~~~

ROTF! For sure. Theirs is bigger, better, etc than all the comps!
1 vote Thank Flag Link Sat Aug 15, 2009
We are buyers and of course are being told the market we are buying in has not gone down. That seems to be the case when we buy but not when we sell. Hmmm.....
0 votes Thank Flag Link Tue Jul 26, 2011
Thank you all for your overwhelming response!

Because of BRAC, real estate is sought after in this area, however prices have declined due to short sales and foreclosures.

Though it was a very difficult pill to swallow, we had to listen to our realtor's advice and list @ $40,000 less of what we were expecting 6 months ago. We did a DIY staging. After two weeks in the market, we are now under contract.

In our area where we are selling, according to our agent: appraisals are based on comps sold within 2 months within the 2 mile radius.

So that's the selling part.....
0 votes Thank Flag Link Mon Aug 17, 2009
NOW VALUE? appraisals are based on what has sold over past 6 months, compare to given area.

Not all areas are distressed difficult have buyers understand that. We have some areas example in Dallas have gone up in value low ball offers are unacceptable.

National Featured Realtor and Consultant, Mortgage Loan Officer, Credit Repair Lecturer
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Lynn911
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0 votes Thank Flag Link Sun Aug 16, 2009
Tina,

Wow, that is such a great statement you are making. My answer to your question is YES! I tell all of my selling clients about recent sales and the fact that prices have gone down this year by a certain percentage. I always do a lot of research for each listing I take before I have my first meeting with the seller. If I meet with a seller that is not realistic with pricing, I do not want to work with them. I just feel that when a seller wants more for their property than they will end up getting, then I am working against myself, the market and not in their best interest.

It is a tough market and a hard pill for some sellers to swallow that they have lost so much equity in their homes. I have met with 3 clients this year that would have been short selling and I talked them into staying in their homes until the market improves to their favor. Unless you definitely have to move for your job or financial reasons, I feel that a seller should stay in their home and try to work out a mortgage payment adjustment with their bank if they need it. Short selling not only will lower their credit score, but will put them into a position where they cannot purchase another home for at least 4 years. It also could burden them with the debt difference owed to the lender/bank which puts financial stress and strain on a person or family.

I love it when a person like yourself has a realistic picture of the market. It makes my job so much easier. Hang in there, you will find a home where there is a realistic seller with a realistic price since there are so many homes on the market now. You definitely have your choice!
Web Reference: http://www.tinabeasley.com
0 votes Thank Flag Link Sat Aug 15, 2009
Great question and one that I blogged about not too long ago. Experienced and ethical agents will always tell a client what they need to hear, not what they want to hear. Unfortunately, even for some that fall clearly into the ethical category each seller meeting/interview is an opportunity for them to earn business. And if a seller is (1) certain his home is worth more than the neighbors or (2) is trying to pay of his mortgage even though values have declined that's a no win situation. It takes a strong Realtor to provide a persuasive and factual analysis of value range. If the client doesn't trust you on that first and most critical decision it's always best to walk away, but ultimately it is not the real estate agent that sets the price it's the home owner.

Sounds like your neighbors have found agents who are willing to spend their time and money marketing a product that won't sell and continues to lose value. That's going to hurt both of them in the end.

Customer service and satisfaction is critical to a Realtors long-term success. If you know up front that you cannot meet that clients expectation for a sale price it's best to bow out gracefully and thank them for their time. They may be back to see you when the home doesn't sell and they need guidance from someone who can and will outline the facts on what it will take to make that home move!
0 votes Thank Flag Link Sat Aug 15, 2009
Tina,
It is refreshing to hear a seller worried about pricing correctly in their current market. I have been on many listing appointments with sellers that are very unrealisting in the value of their home. It spend time with these clients educating them on the pitfalls of over pricing. I can usally get them to understand and price their home well. In the case of a short sale many home sellers think if they price it at a certain price they will not be short and can maybe break even. Most lenders are much easier to work with these days when dealing with a short sale and in many cases will take the loss. It's better to take a little loss then have it go into forclosure and take a much bigger hit. Pricing, condition and location are the biggest factors in a home selling quickly. Thank you for your concern.
Christine Joyce,
Champion Realty
Severna Park MD
410-507-9968
0 votes Thank Flag Link Sat Aug 15, 2009
Tina,

You are absolutely correct......agents should be keeping their sellers inforrmed about market trends and listing them accordingly.

It is an often difficult and involved process when convincing sellers to lower their prices and can require time. It is obvious that many homes ARE over priced and are not a true reflection of the current real estate market.

Our advice to buyers is to do one of two things when confronted with this situation:

1. ignore the property and move on to explore other options

2. make an offer that is a true reflection of the current RE market and ignore the inflated asking price. Be sure to be able to justify your number with recent comps.

Good luck
0 votes Thank Flag Link Sat Aug 15, 2009
Tina, As a listing agent I have informed many sellers of the current market. Unfortunately several listing agents in my office have walked away from listing appointments without listings since sellers didn't agree with our pricing. Most agents do not take overpriced listings because no amount of marketing with make the home sell for a higher price than current market. The Maryland market has changed a lot from 2005 and 2006. In parts of Maryland we have noticed an increase in sales, but several neighborhoods are still affected by shortsales or foreclosures because the agents are instructed by the bank to sell the property immediately. My neighborhood had two recent sales for $380,000+ and now we have a shortsale for $349,000. This is why everyone is getting frustrated. We feel your pain.
0 votes Thank Flag Link Fri Aug 14, 2009
One corollary:

Everybody in America dislikes Congress. EXCEPT their own particular Congressman or Congresswoman, who they continue to re-elect.

Likewise, most Sellers agree that Real Estate has lost value and that prices are going down. EXCEPT for their house!

-----------

It can be frustrating to explain to Sellers that prices will continue to go down, and they will lose even more money by not starting at a realistic price. Sellers also risk having their house get "shop worn", and getting a reputation as an over-priced listing that nobody will show.

Short Sale can be stigmatizing and discouraging (in addition to wreaking havoc on one's credit score and credit rating), but Sellers must face reality and bite that bullet if necessary.

Real Estate Agents also bring up the question of Ethics when they take an over-priced listing. Some do it in the belief that "they will come down on the price soon enough", or the desire to get their sign in the yard, in the hopes of selling prospective buyers something else.
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0 votes Thank Flag Link Fri Aug 14, 2009
Thanks for answering Abraham.

But then I see the overpriced properties prices cut down, by then they have been sitting on the market longer until they go through another round of price cuts. By the time the property reaches the current market value it's already into short sale. As a buyer, I look at the number of days a property has been on the market and if I see 150+, I would wonder what is wrong with it.

When the property goes into foreclosure, are the sellers going to be in a better position than in a negative equity?
0 votes Thank Flag Link Fri Aug 14, 2009
Tina, what makes you think they aren't? it is extremely difficult for sellers to understand that they bought in 2005 let's`s say and 4 years later their property value is under water, upside down, less than they borrowed? I just presented an offer to a seller whose FMV (fair market value) dropped significantly. we shall see the outcome. Either the seller recognizes a fair offer or ends up owning the property for a long time.

These are very difficult times for many sellers. Many don't know what to do when they owe more than the
property is worth. I want to say to those sellers: Take your heart in your hands and chose the option that serves you best under the circumstances. You always have an otion and it is not foreclosure or doing nothing. Educate yourself of your state laws, go to Legal Aid if you can't afford counsel but do something.
0 votes Thank Flag Link Fri Aug 14, 2009
Tina,
I agree with you that sellers should be made aware, but many folks are then put into negative equity positions, so they can't drop the price further.
0 votes Thank Flag Link Fri Aug 14, 2009
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