Home Selling in 32459>Question Details

Murray Balkc…, Real Estate Pro in 32459

How do you think sales, or sale prices, would be affected if agents didn't take over-priced listings?

Asked by Murray Balkcom, Broker, GRI, 32459 Wed Aug 18, 2010

Help the community by answering this question:

Answers

14
This is an interesting question, however, I'm not at all sure that taking over-priced listings ultimately has any effect on sales prices. Properties will generally sell for what they are worth and frankly, the only thing an over-priced listing does, is help sell the properly priced listings.

Moreover, in a downturn market, an over-priced listing ends up costing the homeowner, because while the property sits unsold, its value continues to decline.
Web Reference: http://www.golftobeach.com
3 votes Thank Flag Link Fri Aug 20, 2010
For the most part, Murray, I think we over-think this. I don't think many sellers care about our "closing success ratio;" most have at least a visceral notion that we can get any home sold if we offer it at a low enough price.
2 votes Thank Flag Link Sat Aug 21, 2010
There would be no impact.
2 votes Thank Flag Link Fri Aug 20, 2010
Sergio, you bring another question to mind. How do you think the listing agent of over-priced properties is affected? Do all the other local agents begin to learn that the agent doesn't know how to correct property? Do his or her lack of ability to sell homes, make them less likely to get listings which will sell? Do sellers still want to know the agent's closing success ratio?
1 vote Thank Flag Link Sat Aug 21, 2010
Unless a seller is willing to list at a competitive price, there is no point is listing it at all. My experience is that if a property cannot compete in price, it will either sit on the market and become stale, or you will end up with a very unhappy listing client that blames you for it not selling. Stick to the comps! If the seller isn't willing to price the property where it shoud be, advise them to keep it off the market until you can justify the price with comps.
1 vote Thank Flag Link Thu Aug 19, 2010
Oh, don't get me started...

a) I refuse overpriced listings, based on the experience that after I have done the prep work and marketed it nicely, I get fired by an impatient and grumpy seller, the listing then goes – heavily discounted – to Dump-It-Fast Realty, and they quickly earn an easy commission.

b) my observation in our market: nearly all overpriced listings with no price reductions expire, get cancelled or withdrawn.
Overpriced listings with reduced prices eventually sell down the road if they get priced according to market, but take time.
If priced well or aggressively right from the start, listings can sell within 30 days or less, even in this pitiful market we have.

Overall, I would say our market is quite similar to what Keith describes.
1 vote Thank Flag Link Thu Aug 19, 2010
I'll admit that I will list a house at ANY price a seller requests but will not pay for advertising and other costs if the price is unrealistic and not even in the ballpark. I don't see I have anything to lose with an overpriced listing, it's only the Seller who loses--especially when prices are decreasing. Eventually if the Seller truly wants to sell they will have to reduce their asking price closer to market. I advise my clients as best as I can but if they insist they want to list it at a ridiculous price, I will.

I truly don't think a buyer who is looking to buy a lot in a certain neighborhood will care if owners are deluded enough to think they could actually sell their lot for 3 times the current market value. I often show overpriced listings and am not afraid to submit a "market price" offer if my client likes the property.

So, if you're trying to get information here to encourage your Seller to come down to earth on their asking price, well you should recommend they pay $300 to a licensed appraiser to get a very crystal clear idea of "current" value.
1 vote Thank Flag Link Wed Aug 18, 2010
On average 20-25% of listings sell within 30 days in our market, 101.2% of asking price.
The remainder sell over the next 30 to 365 days at about 96-97% of asking price.

So what does that tell us?

1. 70-75% of listings are overpriced ( and these are the one's that sell - excludes expired and canceled listings).
2. Only 20-25% are priced correctly.
3. What if all listings were priced correctly? I agree, the law of supply and demand would probably result in overall lower prices.
However, given the significant amount of listings that are overpriced, no fear of that happening.
IMHO.
1 vote Thank Flag Link Wed Aug 18, 2010
Keith Sorem, Real Estate Pro in Glendale, CA
MVP'08
Contact
Great thread. I agree that over pricing a listing hurts in the long term. But saying that, I am very active in calling expired listings. These are the listings that generally have not sold because of the overpricing. Most of my work has been done. The seller is easier to work with. The message to sellers is that honestly priced listings sell. When you take the listing you need to negotiate the price reductions up front.
0 votes Thank Flag Link Sun Dec 2, 2012
Murray, maybe this makes for a better blog than a discussion piece - clearly, you have a point to make, which is that agents taking over-priced listings is damaging the market.

I'm not so sure that's true; I don't really think that having lots listed at $150,000 damages the saleability of the $50,000 lots. When a supermarket puts a 12-pack of soda on special at a lower price than a 6-pak, people don't throw up their hands and walk out without soda, they buy the 12-pack.

I agree with Alma; having short-sale houses in that subdivision listed at $100,000 would damage the value of the $50,000 lots more than having $150,000 lots listed.
0 votes Thank Flag Link Wed Aug 18, 2010
Mack,

Price is a big part of supply/demand. Using your analogy of retail stores selling products, let's filter that a little more closely for a better comparison to real estate. For this example, let's look at only houses in one subdivision which have 3 beds and two baths, varying between 1600 sqft - 1900 sqft. And, instead of looking at sales of an entire store, lets look at one type of item in that store, like milk.

Brand Jersey Farms milk is priced at $3.59 per gallon and Brand Dairy Farms milk is priced 30% greater ($4.67 per gallon). Theoretically, all else being similar between the brands (eg - not comparing organic to non-organic), more Jersey Farms milk will be sold and not many of the Dairy Farms' milk will be sold, until after the store is sold out of Jersey Farms' milk.

I see similar things happening with real estate. You have lots in a subdivision selling at $50,000. There are several similar lots listed at $55,000, and 15 lots listed at $150,000 which is the price the seller needs in order to break even. Guess how many of the $150,000 lots have sold?

The answer is zero, and they won't likely sell unless they can get in line with prices buyers are willing to pay. Do you think it is confusing for buyers to know what is a reasonable price to pay for a lot in that subdivision if prices are all over the place? Buyers would rather not look the fool, and they are avoiding those lots altogether.
0 votes Thank Flag Link Wed Aug 18, 2010
Way to keep that conversation going, Murray!

Actually, I think they'd be much lower. I think of a retail store with thousands and thousands of SKUs; fact is, any one shopper is only going to buy a relatively few items at a time, and some items are just never going to sell. But if you cut back the inventory to only the hottest-selling items, then you end up fewer sales and smaller profit.
0 votes Thank Flag Link Wed Aug 18, 2010
Alma, are you suggesting that when 85% of a market's listings are overpriced, that the excessive inventory doesn't make buyers think they can drive down prices? What has happened to ECON 101, supply and demand curves?
0 votes Thank Flag Link Wed Aug 18, 2010
Hi Murray,

I don't see any harm in "ovepriced" listings. What is harming us and the market is "underpriced" Short Sale listings!

All my best,
Alma
0 votes Thank Flag Link Wed Aug 18, 2010
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2015 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer