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.
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.
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.
Emphatically, I can say we do not tell a seller a higher number to secure the lisitng. We don't buy listings.
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.
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
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.
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?
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.
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 :)
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.
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.
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.