Agent2Agent in Chicago>Question Details

Patti Pereyra,  in Chicago, IL

Agents, are you willing to take an overpriced listing?

Asked by Patti Pereyra, Chicago, IL Sat Aug 18, 2007

I've learned my lesson with overpriced listings: Never again! The wasted efforts, marketing dollars, and being blamed for the house not selling, even when you've advised your sellers time & again that the house is overpriced....

These days, if after presenting the seller w/ hard data, comps, etc., to set the right price, he still wants to try to list with his version of what the market value is, I write a price reduction into the listing agreement that must take place 2 weeks into the listing. If they refuse, then I know it's going to be a lost cause during the market time of the property, and will not take the listing.

What has been your strategy with 'hard-headed' sellers who perceive the value of their home to be much higher than it really is?

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The only time it makes sense in my opinion is in the odd confluence of factors in which both the seller and the agent are not necessarily harmed by the home not selling. For the seller testing the waters, who will only move if he/she can fetch an extreme price, it can make sense. This is fairly common. What is not common is the agent being in a similar place. For me, I would consider taking the listing if it happened to be great signage in an area I farm heavily. I might be willing to take on the advertising expense, knowing a sale is unlikely, if it helps me gain in-roads into a certain neighborhood. Of course, the positives of the signage and meeting all of the neighbors has to be weighed against the damage caused to reputation if the home ultimately does not sell. You know what, I think I just talked myself out of it!
4 votes Thank Flag Link Tue Aug 21, 2007
Yes, once every decade, or so.

I recently took an overpriced listing on a piece of land. (it would be correctly priced if there were not a sewer moratorium in the rural village that it is in.) I did so because 1. the clients are willing to accept a direct exchange (possibly even one that is also exuberantly list priced) 2. The sellers are past and future clients for other properties. 3. It is vacant land. - I don't have to "show" it #3b. I explained I would not spend any on advertising. 4. It has cost me less than ten dollars in marketing ( Gas to drive up and pound the sign in to the ground, and a re-usable sign rider for the acreage. 5. It generates sign calls for free. 6. The seller knows it won't sell until the new sewer capacity is added, and don't care. 6. It doesn't require any showings, open houses (its dirt) 7. It is kind of like having a small billboard rental, without the rent.

In 2004 the market was shooting up so fast, I actually reccommended a list prices that was higher than the seller suggested, but it was still correctly priced.

I have sometimes been sandbagged into an OPL by a seller who promised to clean, paint, plant flowers,, and generally follow my staging advice, who then balks at getting their end of the bargain done. Price was ok if house was clean but was OPL by 5 to 10 K because it iwas not.
4 votes Thank Flag Link Mon Aug 20, 2007
Jim Walker, Real Estate Pro in Carmichael, CA
I think it boils down to motivation of the Seller. We ask qualifying questions and my more revealing is, "If we don't sell for this price what's going to happen?" I then make a business decision to either go with a price I feel is too high but where the seller has demonstrated a high potential for reducing in the near future or I thank them very much for their time and get up and leave. That alone can get a price reduction!
But as we all know; there is power in numbers. The power to just get up and say thanks, good luck, means you always want a deal but don't NEED a deal!
I've taken overpriced listings for I belive most signs produce calls, give me an opportunity to "touch" my client data base, and the neighbors around the listing. I use Joe Stumps old "drip" system where I ask the Seller I need their help in marketing the property and exposing the home to as many buyers as possible. I then have them fill out a form listing all their friends, relatives, co-workers, anyone, who I can then call and "touch" and get into my data base. It goes out with a personal referral letter from the Seller asking them to help ME find a buyer for their HOME!
Heck, for the past 7 year here in Sonoma County I thought I was listing overpriced properties but kept getting offers way over the asking!! Now I'm just trying to find the bottom.
2 votes Thank Flag Link Wed Jan 30, 2008
Amen Patti! You hit the nail on the head. My up-front marketing dollars spent are too much to justify a 180-day marriage to a stubborn seller.
2 votes Thank Flag Link Sun Aug 19, 2007
Erin Stumpf…, Real Estate Pro in Sacramento, CA

My experience is exactly as you detailed in your question. You simply CANNOT win with an OPL (over-priced listing). My strategy has been to listen quietly while they complain about every little thing, and then I ask if they're ready to drop the price. I ask it over and over again as part of every conversation. Because it's the only thing that will make the difference.

If I'm not honest with them, then I'm doing us all a huge disservice.
2 votes Thank Flag Link Sun Aug 19, 2007
I wish I could resound such an emphatic "no", but we pick and choose. If we think the seller will adjust quickly, or see a sufficient motivation to sell, we will take the listing. Sometimes a seller really believes their property is worth more than it is, but will accept and listen to market feedback. Key factor in our decision is "how much" overpriced is it? Will they agree up front to lowering the price if the market feedback warrants the action? If a seller is really over the top, it does not make sense to waste the time. If the sellers learning curve to reality is long, we cannot afford it.

Emphatically, I can say we do not tell a seller a higher number to secure the lisitng. We don't buy listings.
2 votes Thank Flag Link Sun Aug 19, 2007
Deborah Madey, Real Estate Pro in Brick, NJ
Absolutely not. I t would be doing the seller and myself a disservice to tak an overpriced home especially in this market.
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2 votes Thank Flag Link Sun Aug 19, 2007
Pam Winterba…, Real Estate Pro in Danville, VA
Possibly, if I explain to the client that I think the listing would be overpriced and get an agreement with them that if it does not sell w/i X number of days that we will try out a lower price of X - and/or you can always get them client to agree to pay or share in marketing costs -- BUT, if they are not flexible as to some or all of these compromises, then NO.
2 votes Thank Flag Link Sun Aug 19, 2007
Not anyomore. I, too, have learned my lesson. The owner gets upset, cancels the listing, and ends up relisting with another broker for a lower price. On two different houses, the relisted property sold in less than 2 weeks time, at the sales price I quoted in my original CMA.
2 votes Thank Flag Link Sun Aug 19, 2007
Absolutely not! There are plenty of motivated sellers in my area...I don't have the time. If they choose another agent that "buys" the listing with a higher price, I monitor the MLS and make sure I am the first phone call the seller receives when his home expires. I almost prefer picking them up from the expireds. They have learned the lesson and are willing to listen to a professional.
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2 votes Thank Flag Link Sun Aug 19, 2007
The Hagley G…, Real Estate Pro in Pleasanton, CA
I was in meeting the other day when someone said that we should only take sale-able listings. So, on over priced listings. NO MORE!!!!!

If it can't be sold in a reasonable amount of time I don't even want the listing. I'd rather put my energy into something more productive.
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1 vote Thank Flag Link Sat Feb 16, 2008
No way, unless the seller wants to pay for all the marketing up front!
1 vote Thank Flag Link Sat Feb 16, 2008
Yes, but within a reasonable amount - if it is so outrageous an amount, then no. I like to educate my clients in an honest and “matter of fact” manner and ultimately let them decide if they would rather have the home on the market for (6) more months or reduce the price to the "comparables" range and sell within 30 days. That lets me know also, if they are seriously motivated or just testing the waters. They usually understand the “dollars and cents” explaination. It takes a lot of marketing hours and money to get a home sold, so I would not want to waste my time or theirs.
1 vote Thank Flag Link Sat Feb 16, 2008
Here is why some agents do take overpriced listings from time to time... Check the link hereunder...
1 vote Thank Flag Link Wed Jan 30, 2008
"Many people are "stuck." They need help. I have taken them, as long as the seller knows the reality."

The reality for me is that I have no expired listings on my "record" and I don't want any. I've sold every listing I've taken.
1 vote Thank Flag Link Sun Jan 27, 2008
When I recently took a continuing ed class the instructor had this pearl of wisdom regarding overpriced listings.

When you take an overpriced listing your saying the following....
1. The property is over priced and I know the property will never sell for this price.
2. I'm going to spend alot of my advertising dollars and my valuable time marketing a property that won't sell at this price.
3. My collegues will also know that the property is overpriced and not call to show it.
4. I'd better take this listing so my collegues and competition won't spend their money & waste their time listing this property. I wouldn't want my competition to bog themselves down with an overpriced listing.

Kinda funny when you think of it like that
1 vote Thank Flag Link Sat Jan 26, 2008
No way, hosay!
Why bother?
I think when you do this you compromise yourself, and show what you are not worth to all parties concerned and don't do your client justice.
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1 vote Thank Flag Link Mon Sep 17, 2007
No. And unfortunately, on Long Island some people will buy listings for more than a million over what they are worth. It's bad enough to lost a listing you think should be priced at 550 to someone who lists in the 700s, but losing a 999,000 listing because the homeowner thinks their waterview is worth 2.9 and finds an agent to do that is mind boggling. The really unfortunate thing about this, IMO, is that those agents end up with multi million dollar customers who call them on these listings who they can then flip into something WORTH 3 mil. I'm very tempted to take such an overpriced listing.
1 vote Thank Flag Link Sun Aug 19, 2007
I have taken overpriced listing with no success. Not anymore! When I go on a listing agreement I set us up to discuss this in the beginning by saying one of 3 things will happen. "I may get the listing and that would be great, I may not get the listing and that wouldn't be so great, or I may decide not to take the listing, does this sound fair?" You will almost always be asked why you couldn't take the listing. Then you explain, that the seller may have needs you can't meet. During the course of the listing presentation when price comes up. If they have to have a bigger price than the market will hold, you then remind them that there would be reasons why you couldn't take the listing and this is one of them. You politely collect your materials, wish them all the success in the sale of their home and walk away. Then you wait for them to list it higher with someone else, and call you back when it doesn't sell at the inflated price.
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1 vote Thank Flag Link Sun Aug 19, 2007
Dear Patti,

To answer the specific question, the strategy is to not work with them in the first place. Assuming the language of your question is rigorous if a listing is "overpriced," it is not going to sell at that price. Your closing skills should be drilled down to "closing" your clients on an appropriate price range rather than them "closing" you on wasting your time trying to move something that's overpriced.

If the sellers aren't comfortable with your comps or BPOs, then have them order and pay for their own independent appraisal. Or as others have suggested here, have them commit to paying for marketing costs up front so that you don't waste your money on a probably doomed sales effort.

We all know that listings get the most and best attention when they first hit the market. If your listing is overpriced, you are burning more of your resources than should be necessary to market a property that's unlikely to sell. Expand the concept too far and you as a Realtor are out of resources and out of business. Don't do it.
0 votes Thank Flag Link Sun Nov 23, 2008
I don't show overpriced listings, and I don't take overpriced listings. No exceptions.
0 votes Thank Flag Link Sat Nov 22, 2008

My way or the highway.
0 votes Thank Flag Link Sat Nov 22, 2008
Micheal from Santa Rosa is the only one of all these posts that hits the crux of the situation!
I think it boils down to motivation of the Seller.
It all goes to motivation. Where do the sellers want to go and when do they want to be there. It is the most important qualifier we need to know. Our job is to get them there when they want to be there.
If the seller isn't motivated to go then reality will never set in. It on the other hand they want to go somewhere else then you will eventually get them to see that you knew what you were doing.
So yes I'd take an overpriced listing from a motivated seller even before I'd take a market priced listing from an un-motivated seller.
Find out the motivation. Why are they selling? Two questions Where do you want to go? When do you want to be there?
0 votes Thank Flag Link Tue Jun 24, 2008
Jed Lane, Real Estate Pro in San Francisco, CA
As an agent, I wouldn't take an over-priced listing. As we all know, sellers like to believe their home is better than all the other houses in the subdivision. When we, as agents, give them the facts, we have done our job. Some sellers will shop around until they find an agent that will list their property at the "over-priced" price. After their home sits on the market for 6 months, most of them will come to realize that the advice we had given was accurate.
I do agree with writing in the listing agreement a price-reduction clause...this protects us as Realtors.
If the seller still isn't in agreement with your opinion, I suggest to them to pay for an appraisal.
0 votes Thank Flag Link Tue Jun 24, 2008
That is a tough one. But I'm honest with my clients and tell them that according to the information I have this is what you MIGHT or MIGHT NOT get for your home. I will list your home at your price but only if you agree to lower your price after 30 days. It gets them thinking more about it, plus if they can not agree to lower the price at some point this means they are not serious.
0 votes Thank Flag Link Tue Jun 24, 2008
Our job as a listing agent is to give a true market information to our client that will have a end result of a sale. To overprice a home just to get a listing is false information to our client and costing the agent time and money in advertising for a end result of unhappy clients and a bad reputation for all of us.
0 votes Thank Flag Link Tue Jun 24, 2008
The seller would not be served by having their property placed on the market in excess of the current market values. Even if a buyer was willing to pay overmarket price, the property would still be subject to the appraisal process via the lender; financing would then become improbable. Scovell+Sabatini Team
0 votes Thank Flag Link Wed Jun 11, 2008
I very much dislike to take listings that are overpriced. In this market, they will not sell I will spend all my weekends showing it to no avail. You are so right that it creates an uncomfortable situation for you with your sellers. Sad to say, but there are some occasions when you have to walk away from a potential listing.
0 votes Thank Flag Link Mon Jun 9, 2008
Hi Patti!

From my personal experience as a broker, I agree with you, it isn't worth it. You're fiduciary duty is to represent the best interest of your seller client - by knowingly taking a listing that is not priced realistically, you are not helping your client. I learned this the hard way by taking an overpriced listing that languished for months.....after a price reduction, it did however sell - and we had a bidding war to boot! Go figure.

I learned to happily walk away from many listings where the seller just did not want to face reality. Provide your local knowledge, recent data and market conditions and stand firm - your are the expert - you do this everyday. Those that headed my advice and data were pleased when we closed :)

0 votes Thank Flag Link Mon May 12, 2008
I give them the comps of avtive and closed properties. I also show sellers the active properties that are priced right their markets time. I come to the listing appoinment with a listing addendum sheet. If they want to price it too high, i have them sign an agreement say that they are going to lower the price by s certain date. that way you have it sign and dated and if the property has not had any traffic, offers, or contracts, you have the right to automatically change it. I add more than one date. I lower the price 2-4k each time. That way its it introduced a lot more. And i tend to do reductions right before an open house and state it on the listing. I also have caravans. I get a group of agents and we visite each others listings and get there opinions, have them right it down and let the seller know. If they refuse, then its time to fire yourself.
0 votes Thank Flag Link Sun May 11, 2008
I am not interested in working with sellers who will not price their home properly for today’s market. It is a bad thing for everyone involved. If you want any chance of selling your place in a reasonable amount it must be priced right.
0 votes Thank Flag Link Fri May 9, 2008
I try to do my best to educate sellers. If they still insist on drastically overpricing their home I make the business decision to not take the listing. If they desire to moderately overprice the listing I will accept the listing only if they sign agreeing to a price reduction within 2-4 weeks (depends on how overprice the home is) at the time we complete the listing contract. I've never had a seller refuse to sign the price reduction. They all just know that their home is going to sell in 5 minutes. Once it's time to reduce the price they're somewhat disappointed that the home didn't sell at the inflated price and are eager to adjust the price and get some traffic through the home. If I absolutely can't convince them to price correctly I remind myself that I'd rather be remembered as the agent that didn't accept the listing rather than the agent that took the listing only to reduce the price several times.
0 votes Thank Flag Link Thu May 8, 2008
I too have learned the hard way with OPL. It would be great to reduce all the stale properties off the market & reduce the listings to only those truly interested in selling. A market correction is currently needed nation wide & as agents we have the abilty to decline OPL & let those currently on the market expire.
How does it reflect me as an agent to have a sign in someones yard for 6+months? It does not do me or my sellers any good. By that time you are just throwing away a rotten banana. The banana should be sold while it is ripe & green, not yellowing with brown spots.
0 votes Thank Flag Link Tue May 6, 2008
No..It is not fair to the seller, the broker and agent who are paying the advertisments or the buyers as most sellers who overprice their properties are usually not motivated!
0 votes Thank Flag Link Wed Jan 30, 2008
"I'd take it if it was on a main road...." (Christian, below).
Hmmm. I'd take it on a main road, if I wanted to misrepresent the marketability to the seller or if I wanted to pick up business, ignoring the impact on the market- ovepriced properties sitting, compelling buyers to wait, and wait. Christian, exactly who (beside yourself) do you represent when you list or sell properties? I don't mean to be rude- I'm truly curious, and would be more so as a seller/buyer.
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0 votes Thank Flag Link Wed Jan 30, 2008
To answer your question: Yes, I would take the listing if it was moderatly overpriced (up to 10%). You have to be upfront and honest with a seller. Ask them this question: What is more important, price or time? If they come to the conclusion that price is more important (even if it's overpriced) then they are willing to wait until the right offer comes along-longterm, although it's eating away at their potential profits-short term. If time is more important to them and they have to unload their property, then I would put a price reduction clause into the listing agreement for somewhere around 30 days. It's all about communicating this to your seller. If the ultimate result is some money spent on marketing and buyers lined up to work with you, then what did you really lose by taking the listing?
0 votes Thank Flag Link Tue Jan 29, 2008
A few years ago I took an overpriced listing...........of course it never sold. The seller had an appraisal done and everything, but no one would buy it. I did put some marketing dollars into it, but didn't really have to. It was in a great sought after location. I got so many buyer leads from that listing and I've closed several transactions from it.
0 votes Thank Flag Link Tue Jan 29, 2008
One reason to take an over-priced listing is if it's going to generate a ton of inquiries regardless, for example if it is unique, or if it is an investment property where someone will have to examine the numbers to find out just how over priced it is. The obvious reason for this is the buyer leads. Also if the seller "just wants to try" that price occasionally it can be worthwhile if you know that there is real motivation there. EXAMPLE: I am at the tail end of an investment property liquidation of 4 buildings. The seller insisted on overpricing them but I happened to know that he had serious personal issues that were forcing the sale. To date we've put all of them under agreement, closed one, and are re-marketing one that fell out so - - totally worth it.
0 votes Thank Flag Link Sun Jan 27, 2008
For me, it largely depends on "how far overpriced" and the mindset of the seller. If we should be priced at $205,000, but we're going to try $219,000, and the place shows well, nicely decorated, I may be willing to try it, along with the seller's understanding that if we don't see some decent activity within 7-10 days, we're going to have to adjust down to $205,000 very quickly to correct for any damage we might have done to ourselves.

Granted, this isn't the optimal way to approach a listing, but sometimes, you need to let the seller hear it from the marketplace. Under those circumstances, I'm willing.

If the client, however, wants to price the same place at $290,000, I won't waste my time, effort and money to help them live in fantasy land at my expense.
0 votes Thank Flag Link Sun Jan 27, 2008
Alan May, Real Estate Pro in Evanston, IL
Many people are "stuck." They need help. I have taken them, as long as the seller knows the reality.
0 votes Thank Flag Link Sun Jan 27, 2008
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