Atlanta Real Estate | Atlanta Housing News for Real Estate

Jim,

I love the post!!! There are always snakes out there lurking among us...consumer beware!!! Thanks,   Fran

I have seen this situation several times in the past few months where a home was way over priced, set on the market for months on end and then the sellers wonder why, why, why? In the town in which I live there are several properties that have been on the market close to two years now because of this. I have actually seen the signs of two different companies flip flopping back and forth on one of the properties like a game. There were also a couple of homes here that were being sold, but no one knew that. I am friends with one of the owners and even I did not know for a while that her home was up for sale. She said the realtor told her not to put signs up, or let anyone here know it was for sale to ward off "noisy" seekers and lookers. There was never any notices in the papers or elsewhere either, only an MLS listing with no pictures. After the listing expired the agent told her she could not list it again for 6 months with anyone else.  She said she never signed any agreement to that nature but is afraid to relist now. I told her to contact an attorney for help in the matter.

I have even had an agent tell me I could not sell or show homes to buyers in another town close to me, because I did not work that county. I think she was a little surprised to find out that our license in our state allows us to go anywhere within the state. She was under the assumption that we could only practice in the county in which we live, and that we had to work only territories close to our broker. Needless to say, I am thankful for the knowledge of my broker and our local real estate associaton for keeping many of us informed correctly.

The story you give here is almost identical to the one our real estate association taught in orientation classes. Maybe someone will eventually learn from these lessons and maybe a few need to take their ethics classes again, huh!

Jim, I have written many posts about being bought out of listings. What I can't figure out is what the odds of success are? The odds are not very favorable without dropping the price. I guess I'm not the gambler I think I am...

Perfect. I love your understanding and your approach. I am going to adopt this. Thanks for sharing.

Great post, as usual Jim. Many agents are so afraid of NOT GETTING the listing, so they list for whatever the seller says.

Jim - Try suggesting that if the seller wants to list with the agent who seems so confident the home will sell at a high price that they insist on a shorter listing period so they have an out when they find ou the agent has hidden agenda. Any agent who is confident enough with a high price should have no problem being confident that the house will sell quick too. Let them know that if it turns out the other agent can't sell it and is using unsxrupolous tactics they can position themselves to move on quicker it it doesn't work.

Jim this is one of the most unfortunate parts of our business and something you see everyday in our business. It is surprising how many times sellers actaully fall for it. Unfortunately most sellers like to read the CMA report with their rosy colored glasses!

Fran 'The Title Man' Gaspari Title Insurance-PA & NJ (Patriot Land Transfer, Inc.)  Most agents aren't snakes.  I really respect that most of the other agents would not lie either.

Cathy Worrilow (Exit Realty Partners)  Thanks so much and I totally agree with you.  What is at the root of this is greed.  The other side of this scam is that the listing agent ends up double dipping the sale and making a big commission.  Some sellers think this is great, but do not understand it is the agents Modus Operendi.

Paul Henderson (RE/MAX Professionals)  What they play is a game of chicken.  Most other agents will not show an overpriced listing.  The sellers wear themslves out mentally, and drop the price or when a really hostile offer comes in they take it.  Also, sometimes that agents double dips. 

Trevor Elliott (RE/MAX Equity Group, Inc.)  Thanks it works.  I had a few sellers call us back, and some just sat on the market for quite a long time, and eventually sold for much less than I had proposed.

Erica Ramus, CDPE / Realty Executives / 570-622-6006 x301 Not very professional.  It is more professional to  turn dow hte listing if you know it is a totally wrong price.

Jim, Honesty  is always the best policy and your crediblity counts on it. No tree climbing in this market or any for that matter.

Bo

by Carol Culkin (Houlihan Lawrence Realty)  That could work also.  If I think it is a really great listing, I tell the seller keep us in mind if it doesn't work out.  Alos leave on good terms.  Some agents have a bad reputation for doing this all the time.

Bill Gassett Metrowest Massachusetts Real Estate (RE/MAX Executive Realty)Once in a while we get a seller that really wants to believe their is hope.  Especially in a time where they have an adjustment in the mortgage payment.  They believe if they sell it quick for a higher price they can avoid bankruptcy, foreclosure and all will be well in the land of OZ. They are playing Russian roulette with 5 rounds in the chamber. The sad reality is they run out of time

Bo Hussung/ National Title Agent (Cogent Closing Title Associates /National Title Agency)  Bo, you are so right.  Honesty is always the best policy.  If I do not get the listing, and the seller makes a costly mistake..that isn't my problem either.

Yep I have walked away from sellers because they wanted to much money.  They list with someone else and guess what?  It's still for sale.

Pricing a home is so difficult and important in today's market.  I priced a home $15,000 under a home across the street and it sold within 2 weeks.  The other home is still on the market....6 months later.  Great Post!

John Walters (7824 Real Estate of Louisiana)  You are a smart man.  It is the professional that walks away.

We sold a few homes last year where we were the only sale in the subdivision.  This happened in several communities.  It is smart to price a home correctly.

Great post, I love the comment you added at the end. My experience is that when we check listings that we did not get, they have usually sold for  the price we recommended at our listing appt.

I was victim to another agent doing this recently on an expired listing of mine. That agent told the buyer the home was underpriced. Now, a few months later the home is right back where I had it as that agent has lowered the price. The sellers later apologized to me after realizing they had been duped. I often think of that agent who "sells the most" as the "agent who lies the most".

Unfortunately, the home is overpriced but the seller wouldn't budge on price. On the bright side, I had a mind not to re-list the property anyway if the seller didn't agree to lower the price. Maybe that agent got duped!

At NO time will you approach the seller about a price drop??  There are times when a price drop might be the best move -- new listings on the market that change the playing field etc.

I agree on buying the listing. There is a Realtor in my market who has price drops at least 8 out of every 10 listings. It is quite shameful.

We had an agent do that years ago.  He then tells us just days after listing with him that we need to reduce the price because no one has shown an interest.  Our home had not even been put in the paper or marketed at all yet.

We called him out and told him and his agency to come get their sign out of the yard.  They cancelled the listing after we pressured them.

We have since moved away from that area but that is an agency that will NEVER get a positive comment from us.

Being dishonest is the quickest way to destroy referrals.

Excellent post.

This is so true, but unfortunately there are agents that see nothing wrong with this and give the ones that are honest a bad name.

Jim, rock on !  Excellent post.  The sad thing is that this practice goes on every day... I agree it is a waste of time for everyone and an extreme disservice to the seller.  I love your saying at the end... that is great. 

Jim, well said and very true.  I also tell an overpriced seller that I'd rather walk away now then disappoint them 6 months from now when the listing expires.  I'm sure we can all agree that if you take an overpriced listing even if you told the seller's it was overpriced or too high of a pricepoint, etc...when the listing doesn't sell - they will still blame you.  If you turn around and point the finger and say "I told you the price was too high, etc. they will throw it back at you saying you're the expert, you're the professional or you're the real estate agent. What the hell did I know?"  All they will remember is that you FAILED to sell their house.  When their house fails to sell with the agent who bought the listing...hopefully they'll remember your honesty and call you to relist...

Jim, well said and very true.  I also tell an overpriced seller that I'd rather walk away now then disappoint them 6 months from now when the listing expires.  I'm sure we can all agree that if you take an overpriced listing even if you told the seller's it was overpriced or too high of a pricepoint, etc...when the listing doesn't sell - they will still blame you.  If you turn around and point the finger and say "I told you the price was too high, etc. they will throw it back at you saying you're the expert, you're the professional or you're the real estate agent. What the hell did I know?"  All they will remember is that you FAILED to sell their house.  When their house fails to sell with the agent who bought the listing...hopefully they'll remember your honesty and call you to relist...

Hey Jim: Buying lisitns is the  Kiss of Death in CA where only 12% of listed properties are selling.  When the market turns, and it always does, they will have the reputation as the ones who can't get them sold and us honest guys and gals will prevail. 

Jim:

In our market at Lake Oconee, we have been blessed by not experiencing as great of a drop in prices, especially on water front properties.  Nevertheless, property is selling for less than it has in the past.  For the most part, agents are trying to educate sellers that they must realistically price their properties for them to sell for the most, in the least amount of time.  I haven't seen a lot of "listing buying" going on, just unrealistic expectations from sellers.  John Walters is correct.  If you've done the a good CMA, and you still can't come to an agreement, walk away.  It's a business, and there are more properties to sell at realistic prices.

Great post, as always.

I tell the sellers first of all, I am not interested in taking your listing at a price it will never sell at.

Now THAT is the decisive moment in all the presentation.  Even with all the whiz-bang marketing you bring to bear on the seller, it's all about the price.

I have never had a seller call me back after I have told them the house was worth less than they thought. Unless i called them when the house expired, I never heard from them again.

(DISCLAIMER) I am not a real estate agent, nore do I play one on TV, however as the owner of a "for sale by owner" (FSBO) service, I have spent a lot of time over the last 8 years educating consumers about the less-than-ethical practice of "buying the listing".  You see,  not only are agents competing with each other on a daily basis, they are also competing with the home seller who may be weighing the expertise of the competing listing agents with that of their own abilities.  Home sellers who wish to use "free" services such as a Comparable Market Analysis, are encouraged by us to make sure that the agent LEAVES them with the report. Many do not, and the home seller is left with hype (overpricing) rather than fact. By mixing "sold" with "currently on the market" data the seller gravites to the higher numbers. We recommend that sellers obtain (and pay for) a professional appraisal of theiir market value.  After all, the appraisal will determine how much the lender is willing to spend.

I agree with what you are saying, however, you didn't mention that often this happens because the seller is unrealistic with their expectations.  If they are a seller that wants to believe, they are going to look to the agent that is giving them the song and dance they want to hear.  Im not saying that was your recent listing appointment, but we all know it happens all the time.  Even in this market when the sellers aren't getting the money they think they should because homes sold for so much more three years ago.  Our jobs are tough!

Jim - I like the post and like your line about not asking for a price reduction during the time of the listing.  I wonder however, what you do when the market takes a shift during the listing period and you find yourself with a now overpriced listing?

OOOO, I love the last line.  I'll start doing that too.  

"It is fully understood between sellers, and listing agent that at no time during the listing agreement will the listing agent approach seller for a price reduction!"

This is a great post. It is sad to see these agents price a sellers' home too high. The seller looses and eventually as you said that agent will loose. It isn't honest and it is underhanded to gain listings. I can say honestly I will never do that. AS much as I might want a listing I will not take it for a higher price than where I feel it can sell.

sue from maine

Great post, and I love the idea to recommend having the agent put the verbiage into the listing agreement if they feel so strongly about the price!

I guess the only advantage we (the honest agents) have in this situation is we are the ones who get the call when the home expires or is canceled because it did not sell.  We stage their home, price it competitively and it sells close to list price in a short time frame and the seller is our biggest fan. 

However, the saddest part to me is how much money the seller actually lost because the previous agent was not honest.  The seller now has to overcome the stigma of high days on market, the market value may have decreased since the initial list date, the home is is now vacant (thus harder to sell), and the worst scenario (in my opinion) is when a few staging tips and a few cans of paint would've made them literally thousands more on their home if they had been given some tips... but after 6-8 months trying to sell, now they have no time and/or are long gone in another state. 

The good news is I think most sellers are now "on" to the agents who try to buy listings.  They have done their own research and can tell when someone insults their intelligence.  Even if they aren't excited about the truth, they want it and they want an agent who can sell their home.

Great post, it is indeed a waste of time for everybody involved, even the eventual buyer, the seller will lose time and money, the "Listing Agent" of that seller will lose time and money and our entire market suffers because of it. Non professional Realtors are a problem for all of us. I ask the seller, that if another agent tells them a higher price, to ask them to prove it by providing similar comparables to justify that price.

Antonio

C.J. Gotta ask you - what part of CA are you in? 12% of listings sell? I am in the notorious SW Riverside county - tell me about it. BUT - nice homes here are selling in 5-10 days, loads with multiple offers... I have a stack of offers on a shortsale today...

Anyway - Jim - Good post. Here is another thing. I walk my clients through the cost of marketing their property to the world. Sign, internet, flyers, MLS dues, Realtor does, you name it - if it is the cost of doing business, it's on there, as you know, this breaks down to a substantial amount of money per listing. And I just tell them, that is MY investment in getting their home sold, this is also part of why I charge 7% naturally. All my clients find thei very helpful and understand that I am not going to make the investment if I don't think I will get a return on it.
Oh, yeah, offers in 10 - 20 days on average - priced right and marketed to sell - not to get buyers to call.

Honesty is very much appreciated by our clients, unfortunately some people don't have the brass to take that route.

Jim,

An excellent post. I had an overpricing experience just this week. Seller said "Here is an appraisal from July 08. We need to start at this price. " I said "list with someone else, I can't sell it for that." To which seller replied "Family and attorney said we need to start here". I said "Fine...30 days and then we go to my price which will probably be  lower than my today list price." Seller agreed and we dated next 3 price reductions right on listing. Seller also gave me permission in writing to discuss the appraised price with the appraiser. Look for my post on this for more, Wynne from Michigan

Anonymous  I try not to haunt myself with those listings.  It wasn't meant to be.  In this market, they just do not sell.

Bill Dunn (Prudential Premiere Realty  Sometimes it is the sellers greed.

Kerry  The price drop is to call the bluff of the agent buying the listing.

Jim-

Another great post!  I just commented yesterday on another post about this problem that seems to be growing in my area.  I wonder how long before the consumer starts to catch on to this bait and switch technique!

Jim Troth (Habitation Investigation LLC)  Thank you so much.  Agency is a service between agent and seller.  The agent is supposed to have a fiduciary to act in the best interests of the seller, not themselves.  That is greed.

Blanca  I really know most agents are very good.

Jim,

One of the investment properties we recently bought was like this.  In fact the most beautiful part of the property was the agent's sign out front grabbing 1000s of buyer calls for the 10 months it sat overpriced en route to being foreclosed. 

We bought the property for nearly $90k under the original price.  The seller still walked with some money in pocket...but it could have been more if priced right because there was almost $20k in more fees going to the lender for back fees etc.

Christopher and Stephanie Somers - Realtors - Philadelphia Real Estate (RE/MAX Affiliates)  There is no point to take it personal.  Some agents are great with their skills and others by deception.  I prefer to move on to the next deal.

Jim,

I really like that sentence and I will use it if you give me permission! =)

Like you, I will not take a listing that is "over priced". I consider it "malpractice" to list a place for 10%, 20% sometimes 30% or more than what the home is worth to get a listing, I refuse to run my business that way. Honesty first, listing second. Great post.

Help lots of people and have a great day!!! 

Patty Da Silva, CDPE©, RESS®, AHWD®

CERTIFIED DISTRESSED PROPERTY EXPERT©

Real Estate Short Sale Specialist®

At Home with Diversity® 

Licensed REALTOR® & Mortgage Broker - Senior Financial Advisor

Visit http://www.pattydasilva.com for SouthEast Florida's best available properties.

Ph: 305-244-0609

This is why many properties  don't sell with the first Realtor.  It's usually the second wife and the third Realtor that gets everything.  If I can quote mike Ferry, "Tell people the truth and don't worry about the outcome."

I do agree with the idea that agents tend to inflate the initial listing price.  However, in many cases the seller is a little unrealistic on what they think their home is worth.  How many time have you heard the seller say they have the best home on the street because no else has done as much work as they have (as you're looking around asking what work?)  I guess they mean that park theme they painted on their kids bedroom wall - surely anyone with children will love that.  I am sometimes guilty of listing higher than I think I should.  I have told sellers that I was willing to list at their price because if we listed at my recommended price, for sure no one was going to offer higher (not in my market anyway)  We do have some obligation to the seller in securing the best price the market will pull.  While I think I'm really good at my job, I don't have a crystal ball.  There's always that chance that someone will walk in, see the wall and say "we finally found what we're looking for".  If I list at the sellers price, I tell them if we don't get any showings in the first two weeks the market has spoken and the price will have to come down to my suggested list price.  I sometimes suggest 30, 60, 90 anf 120 day listing prices and let the seller determine how long they are willing to wait for more money.  Yes, I do explain that time is money and the interest they're paying and so on but most just focus on the bottom line. 

Gina Chirico, Specializing in Essex County, Prudential New Jersey Properties (West Essex/Livingston)  All we can do is our best.  When an agent "Buys a listing"  if is not a little overpriced, it is a whole lot over priced.  It stands out like a sore thumb.  The agent that does this is recognized by their peers for what they are.  A total loser.

C.J. Johnson, Dirctors Realty-Tehachapi-CA Very well said.  What goes around comes around.

Jim, I don't buy them either...but some agents do that don't pay for ad's and do 50/50 with their broker. It makes no difference to them. One agent with one of those companies told me well you never know, I just throw them up against the wall and see what sticks.

Jim, Reading the comments shows that your post definitely hits a chord with many, many professionals.  We have all had this experience if we have done any kind business and presentations.  Unfortunately we all suffer from the bad image our industry gets when this behavior happens.  Loved your suggestion solution!

Jim,

Around here agents know the other agents who do this and they are generally not so well respected in the community.

Rich

Chris Charles (Sycamore Oconee Real Estate)  I agree. If you price a home correctly it sells at market price.  There is very little price loss.  In a changing market, no one knows where this is going.  Realistic sellers, sell.

I actually find that often the sellers think that they can fool buyers! In todays market with exposure, it's really doubtful. I find that a one line active of houses between a wide range of homes showing style, bedrooms, baths, garages and square footage within .5 miles, makes even the greedy relook at their numbers. "Mr. Seller, I anticipated that you might want to see what others in your area are priced for with the basic ingrediants. True they are not identical, but a buyer in this price range will see that also. Let's look at what size homes you will be competing with. In our market we actually want to show more value to attract the buyer now. The longer you are on the market, the more the buyer lessens value. "

This is very similar to the grocery line thought. Don't you want to be first in line Mr. Seller?

Overpriced listing eventually will sell but for far less in the market. Personally, I think that's a very expensive proposition with my reputation and costs.

I've never heard that term, but I know there are agents out there who are doing it!  For me, I spend so much money marketing my listing in the first 2 - 3 weeks, that I don't want to take a chance that the price is not competitive. 

I find it helpful to take the seller on a tour of his or her competition. That way they get to see what we see and the buyers see. It is harder to believe that their house is worth all that money after they have been on a tour of the competition.

Dear Jim,

I agree.  I get pretty tired of unscrupulous real estate agents giving the sellers pie in the sky ideas about how much their property can sell for BUT sometimes the sellers are adamant about listing their property high no matter what advice we give them.  I have done one of two things in those situations: 1) I just decline the listing politely or 2) I tell them we can try it for a short time and see what happens as long as time is not the essence in getting the home sold.  I don't like it because it costs me more money to market the property if it's overpriced and won't sell.  It's not a great solution, but the sellers make the choice with the understanding that I think their asking price is too high and it's up to them to decide if they are going to drop the price down to get it sold.  Some sellers just have a hard time relinquishing control.  (Even to the point of wanting to write our advertising copy!)  Those are the ones that I release their listings back to them and let them continue to march without me. 

What really makes me mad though is when an agent undervalues the home on a listing, knowing ahead of time that they have a ready, willing and able buyer looking for a deal that they can sell it to.  That is really criminal.  I've seen that happen so many times!!!  In the rural environment, dual agent sales happen quite often and if the agent is patently honest and works to bring the deal together with a fair price for both buyers and sellers, it's a great situation, but if they are not honest, and one party is undermined, it's tragic and an open invitation for a lawsuit against the agent if they are discovered.

I have worked for free on at least one deal just to get that point across to a routinely devious agent and he learned not to mess with me or my clients.  He represented some seriously distressed sellers and tried to represent the buyers too.  The buyers told him that they were working with me.  I was able to write an offer that made it possible for both parties to agree and complete the sale, but the stipulation was that a commission, IF ANY, even if it was 50 cents, would be split evenly between the two brokers. 

The pitfalls are many. It's best to remember that honesty really is the best policy and if losing the listing is the result of being honest, be honest anyway.

Jeff Geoghan MBA - Lancaster PA Real Estate Expert (The Jeff Geoghan Realty Group, Coldwell Banker Lancaster PA)  That is how I feel.  I was at a listing once and we had walked the home, and then sat down at the table to talk.  I asked the sellers, "What price did you have in mind?"  They said "You are the expert, tell us!"  I asked again, "I just want to know that we are all reading on the same page.  The then tell me the number and if it way off the charts...I close my presentation book, and start to leave.  I say "Wrong number!"  Then I substantiate my price position.  If they interview other agents...some will take the much higher listing number.  I don't think that is very professional.  It is weak.  I believe the listing agent conducts the interview, not the seller.  If I do not agree on price and terms, I thank them for their time and leave.  No hard feelings.  For other agents it is the conquest.

Hi Jim,

I have walked away from a listing about 4 times this past year because the Sellers were unwilling to list the home at a reasonable price or make the necessary changes to sell the home.  In every single case another Realtor convinced them they could list their home for much more. 

I even had one seller who wanted to list a floored attic with a pull down ladder as square footage- we refused because it could not be counted.  Needless to say he did find someone else to list his home and it has now been through 2 expired listings.

I love your last sentence!

My office doesn't take overpriced listings that we know will never sell, and we for sure don't TELL them to list them there!  My broker says "we don't need any more billboards in front lawns, we need to sell houses!"

Lynn Cromer - Pinecrest Real Estate (Coldwell Banker (Pinecrest Florida (Miami))  I've had it occur at least a half dozen times in my career. I would say I gained about 4 sales from a prior listing appointment.

I like to take the approach that I am educating my prospective clients on all the variables of their pricing, and what happens when they need to adjust their pricing later on. Of course sellers want the highest price, but the aggravation of pricing too 'optimistically' hurts them worse. I love your wording! I think I'll add that to my 'education' of the pricing strategy.

And when my predictions come through with what happens with the agent who bought the listing, I hope that they come back to me. If they don't I don't think I want the listing anyway!

Love the mutual admiration society comments, but if the majority of markets are only selling 12% of the listings, (as noted by the agent from California), that means 78% of the active listings are being "bought" by agents who are employing deceptive practices? Fat Chance. 

Sorry Jim,  but your post is outdated. The agents who are actually "buying listings" are those agents who are listing bank owned properties. Reality is, over 40% of total sales are bank owned properties, properties which are being dumped by listing agents who are too busy to provide accurate BPO's, are unfamiliar with the area they are working in, and are too greedy to turn down their 50th listing because once they say no,  they will get passed over by the bank's asset manager. All of these agents are guilty of "buying listings", in bulk, from one or two institutions. The very same institutions who we are bailing out with over $700B of our tax dollars.   Tim

Liz Provo, Mass Marketing Resources An appraisal I recommend on a unique or difficult property.  I have a apptitude for pricing.

I agree with you, I have experienced the same deceptive practice at times in my area. Unfortunately in our business some agents forget about the line in Real Estate 101, and Ethics, of ""working in the best interests of our clients" and tend to work in their own best interests!!

Great post JIM, Seem to run into this more and more in this down market.Some agents don't have any listings so they tell a potential client exactly what they want to hear. Figure they can get a reduction later. No wonder they are exiting the industry broke. Spending advertising dollars on a overpriced listing.

                           Greg  

Sally Picciuto - That is a very basic part of our careers dealing with unrealistic sellers.  If they are toatally unraelistic, and do not want to be educated, I am not interested in the listing in any form.

Great advice. It is so hard to be the bearer of realistic news to the seller but better to walk away than to buy a listing and disappoint them later.

Unfortunately we have quite a few "listing agents" in this area like that.  I hate that the poor homeowners are mislead like that since quite a few times I am the one that picks up the pieces afterwards and clean up the mess by selling their homes.

I totally agree and like your tactic.  But what if you were to end up getting the listing after having this conversation with the sell and then you are expected to put the same verbiage on the listing agreement?  This might get sticky if there is a legitimate reason for you to have to ask the seller to lower the price.  If this was asked of me to put into the contract, I don't know if I would......

Any other ideas to counter this scam?

Matt Stigliano (Exit Realty North-San Antonio)   If you are honest from the beginning, I have hte seller very well informed of changes in the market.  Neighborhood price reductions, closed sales, and area trends.  I forward them all the information we have available.  The sellers have always worked with us and sought our consul.

Great post.  I am in the middle of a negotiation of a home that is way overpriced and the agent does not want to put anything in writing because she knows her sellers are unrealistic and is picking up buyers and hopes down the road they will become realistic.  All it is doing is wasting everybody's time.

Todd Armstrong (Windermere Pacific Coast Properties)  It shows them what the other agent really is.

Good approach Jim.

I am finding that a lot of foreclosures are being listed at unrealistic prices.  I believe that this is a result of "drive by" BPOs.  I have been working on an offer for an abandoned foreclosure that has been vandalized to the point of being a teardown.  The kids that lived in the home drove through the garage door for fun.  The backyard has weeds over six feet tall surrounding a slimy green  swimming pool full of patio furniture.  The inside has been gutted.  Tiled ripped from the walls, bathroom plumbing fixtures torn out.  The listing agent could not possibly have seen this home and listed it at $300,000!

And of course another owner occupied home on a main highway built in the seventies, priced at $50,000 more than an almost identical home three doors away.

Desperate agents should consider other sources of income until they find their stride in this market.  Overpriced listings are NOT a source of income for the agent, and are a huge disservice to the sellers.

Desparate times call for sensible, ethical measures!  Thanks for a good post.

Sue Paige (ERA Today Realty, Naples ME 04055)  Sue you are the total professional.  When you really think about it, that is just common sense.  It is my money, my time, my reputation if it does not sell.

Angela May (NP Dodge Real Estate)  You said it well.  There are a host of problems when a home does not sell. One of them is facing reality.  A vacant home may need total new paint, carpeting and some updating since the sellers had to move on.  Faced with a lower priced home, a lower net...the seller may be again reluctant to lower price.  They may just blame the previous agent.

Antonio & Alexia Cardenas "The Realtors In Motion" Remax In Motion (www.ListedByAntonio.com)  Very smart.  That is why it is so important to know products, and pricing.  Right now thre is tremendous flux.  We must adapt to it.  Have you noticed there are agents that have 15 listings, and nothing under contract?  What is up with that?

Terkel Sorensen (Century 21 Award - Redhawk)  We all have to look ourselves in the face at the end of the day.  If I live my day right it is always easy to do.  People appreciate the truth, they may not like it.

Hi Jim;

What you are saying is all so true! What these usually 'young agents' meaning new to the business, don't understand is that they are hurting themselves and their new clients. The property takes longer to sell and usually loses popularity before the price gets lowered to fair market value. The result is lost sales,lost time, an upset client and a bad reputation!

Keith Kenner

706-835-5408

Mountain Real Estate for You!

Real Estate One Westrick  Thank you, but I have found those price reductions can be revoked.  If it is grossly overpriced, I will not take it.

Very true.  I lost a listing a couple years ago to an agent that took advantage of an out-of-state seller and convinced him that his property was worth more than $100k than reality.  It should have been listed for ~$180k.  The seller bought into the crooked agent and further told me that the other agent acused me of being greedy (because I just wanted to sell the property fast).  It's been two years and the guy is still on the market - priced 50k above market now.  The house is in a good location for signage but 100k over!  Really?

I just launched what is now my favorite listing appointment tool (www.updatelane.com).  Having Update Lane separated myself from a few other agents and helped me land the biggest property I've ever had - 4.7 m 10,000SF 46 acre absolutely gorgeous property!  Update Lane helps me educate and stay in constant communication with the seller during the marketing and closing.  They can track my marketing plan that I pitch, showings, read feedback, follow competing properties, and access all documents in one spot. 

Happy selling!

Dan

Jim - I hate not getting a listing after I put in hours upon hours of preparation.  However, I have yet to take one that I didn't truly believe would sell.  Ultimately it is a business decision and I don't believe in spending money knowing that there is little hope of achieving success.

Jim,

While I agree with you that to provide the buyer with an unreasonable approach in this market would be unethical.

But, the problem is that IF the seller says "here is what my house is worth" and you don't argue with them. You are their agent. You are doing what they advice.

Those kind of appointments drive me mad.

Jen Olson (First Weber Group Realtors)  Interesting thought.  I don't know the answer to that.   In the bottom of the market in the early 90's, there wasn't a lot of that.  Sellers were worn out, and just wanted the straight truth.

Marc Imhof (http://www.InstantEquityWorkshop.com)  You brought up another very interesting point.  Some agents only want their sign on the property for buyer calls.  They do not care if the home ever sells.  They will tell you how they sold three buyers from an overpriced listing.

Patty DaSilva, CDPE©- Certified Short Sale Expert-Fort Lauderdale (CERTIFIED DISTRESSED PROPERTY EXPERT©)  Of course you have my permission to use it.

ANONYMOUS  I love that line ""Tell people the truth and don't worry about the outcome."

I've been a full time realtor for 30 years. I've always done my homework and provided the sellers with the most accurate information. Most of the time I would get the listing but occassionally I would lose out to someone who lied to the seller.

Every time I researched what the listing actually finally sold for I found that I was right on the money. Too bad the seller had to take so much extra time through price reductions to finally sell their property.

I sure hope that all realtors will be professional with their dealings with the public and their fellow realtors. Times are tough for all of us but we can't turn against each other because that makes us look bad as a profession.

Keep up the good work!

Great post I'm stealing that last line of your blog and I'm adding it to my presentation.  I also like to go for the short listing period so they can get out of the contract.

Bean & Dunn Real Estate  Everyone takes alisting like that occasionally.  I am not talking about homes that ae  priced over market.  I am talking about grossly exaggerated priced homes.  I will not take them.  Some agents think they hit the lottery bacause they cannot hold their own with the seller.  Overpricing is real easy, it is not the mark of a professional.

dont complain, until someone turns them in for ethics violation or someone calls them out, they are going to get away with what they are doing.  You just have to have your A game on and be confident in yourself, and most importantly hope the sellers like you so they will hire you.   I like the post but I dont like people who complain about unethical practices but wont turn anyone in for it.  Its our job to keep us honest. Realtors have had it way to easy, its time to step up and earnt their $$$

It is truly disappointing how many agent engage in the behavior you described.  Many are "top producers" !  I think it is important that there are agents like yourself that shine the light on this practice.  It certainly hurts the entire profession.

Missy Caulk-Ann Arbor- Realtor(R)- Ann Arbor Real Estate (Keller Williams-Ann Arbor)  Missy, like you I run a business...overhead, expenses and results matter.  My life like yours is based on performance.  I like the point you raised.  Some have nothing to lose.  There money is not in the deal.

Sondra TenClay (Grand Rapids MI Coldwell Banker AJS-Schmidt)  We have all faced this in our business.  It is more common that we would like to admit.

Very good blog, I enjoyed reading it.

Hey Jim...  I haven't read all previous 89 comments, so somebody may have said this before.  If so, please forgive.  There are a LOT of agents out there right now that are so desperate that they would sell their Grandma down the river for a listing, any listing, at any price point.  Many are in dire financial straights themselves, and are even losing their own homes to foreclosure.  I'm not saying that justifies their "buying the listing" ~ I'm just saying that sometimes agents get blinded by their own personal needs and fears.  While I philosophically agree with you and your 'integrity' position, in reality, I suspect that we have many, many agents amongst us who are finding the lines of integrity quite blurred.  Thanks for the post!

Jim,

  This post brings a lot to home!  I've lost several listings because i won't list at any price.  It came to a point of "what am I doing wrong???"  I've had several listing appointments with sellers and really thought they liked what I presented, but no call, no returned calls, only to find them on the MLS for Way more than I said their home would sell for.  As a new agent, this is a blow to you as you think you may not be doing things the right way, but seeing this post has validate my beliefs!  Great post.

Richard Iarossi, Crofton MD Real Estate, Annapolis MD Real Estate (Long and Foster® Real Estate, Inc.)  Those agents are not respected anywhere.

Richard Iarossi, Crofton MD Real Estate, Annapolis MD Real Estate (Long and Foster® Real Estate, Inc.)  Those agents are not respected anywhere.

Jan McNulty In many markets the homes will not even sell eventually.  These are times were we must price it right the first time. If the seller does not, their problem.

I love the last sentence!   And I would love to see the expression on the agent's face when the Seller tells them they want that in the listing agreement!  lol!

KERRY LUCASSE - Your Intown Atlanta Real Estate Consultant (Keller Williams Peachtree Rd)  It is a very old term.  We have too much to lose, by not doing it right.

Lise Howe (WC&AN MIller) I have suggested that few times, but have never been take up on  it.  I do take full color photos of the interiors of the competition.  Seeing is believing for some.

I am in agreement. Why waste time and money on a home that will not sell. I have seen some agents promise anything to get the listing that is overpriced and then it just sits there. It makes me wonder wat goes thru their heads? I can not say I have never taken an over priced listing but we also counsel that when no responses happen the price has to be lowered. However some homeowners still shop for the best price. They need to be educated about real pricing.

I sure liked the way you handled it.  There are some folks that are happier when their ears are being tickled no matter what you do or say.

Thank you! It is always hard to tell a potential listing that their home or land is not valued at what they may think it is...but if you do your homework and you are prepared and are totally honest with them it will work out for the best for everyone in the long run.

Thanks,

Cindy

Cathy in WA I agree.  We need to stay on the right path.  It begins and ends with the truth.

I like loosing the listing to that other agent who overprices it....then when it doesn't sell, they will call me back!

Christine McInerney & Jennifer Halinkowski, Knoxville Real Estate (Southland GMAC Real Estate) That is still the right thing to do.

AMEN! The same scenario occurs in commercial real estate! I see overpriced properties all over the East Bay (San Fran). Loopnet is just a depository for overpriced listings- brokers have lost their ability to predict the probability of a listing making it to close of escrow. Perhaps that is why the attendance at marketing meetings is dwindling. Selling Agent doesn't cut it anymore- you have to be able to discover hidden value add opportunities, make the calculations and be able to explain your numbers! Gone are the days of "looking for a bigger fool", it's time for the professionals to repair the damage done. Continued Success.

Pete Chrzaszcz, www.ConsultPete.com

Foreclosure Expert Andy Tolbert (HD Realty/Compass Real Estate Seminars)  Selling homes pays the bills also.

Tim  I disagree.  Each market is different and there are loads of overpriced homes out there that are not bank owned.

Bob Hardiman RE/MAX Real Estate Center It really does begin and end with ethics

Sharon & Greg Miller - Realtors / Lake Wawasee Real Estate, Syracuse IN. (Century21 Integrity Real Estate Group)  I think in the long run, the sellers are the biggest losers,  They cannot regain the time, the opportunity or the money lost.

Lisa Southern - Well Said!

Larry Story Real Estate Greensboro, NC Triad (Coldwell Banker Triad of Greensboro)  In hte long run they will beyour most loyal clients.

Hi Jim!  Excellent post.  This is not a common issue in our area, but I agree that if the CMA is actually a current (120 days or less) and the seller is not willing to list at that price then it is better to let the other agent have the overpriced listing.  It will cost the seller in the long run. 

Anonymous - that verbiage is for the other agent, I would try to price it to market.  I very seldom ask for price reductions.

Alexander Chandler (Alexander Chandler Realty)  Just be able to demonstrate the truth. Back up your market knowledge with hard facts, photos, and recent statistics.

TERRI HATTAWAY (I.N.I. REALTY INVESTMENTS)  Well said,  Overpriced listings do not pay any bills.

Buying the listing never works -- strange why agents still end up doing this.

Keith Kenner  So true!

Jim,   I live in an area where Buying the Listing is Par for the Course. I have seen sales 100,000 Less than the original listing price. It's a shame but the same agent keep doing this over and over again. I rather walk away from the listing and wait till They call me back in 6 months.

Dan  Thanks for the real life example.

Erik Hitzelberger, --Louisville-Bullitt County Real Estate (RE/MAX Alliance)  The difference is that you think wiht a business mind.  No one pays our bills but us.  As a business person more harm is caused than good gained from it.

Toby Boyce, MBA, Delaware Ohio (Keller Williams Consultants Realty)  Get even, don't take the listing.

Florida Pam  As realtors we must be ethical.

Mike Henderson (Genius Ventures)  Go for it Mike!

Jim, I love that idea with the verbiage in the listing agreement.  There are some agents here that do nithing by BUY listings.  This will be a great tool to have to beat them.
Thank,

Steve

jay - Thanks Jay

Joan Whitebook, ABR,e-Pro,CEBA Southern New Hampshire (Buyer's Option Realty Services) I know many are big numbers agents.

Roy Brumley (Exit Realty Crutcher) I'm glad.  Thanks for stopping by.

Randy Hooker / Dreamcatcher Realty / Greater Phoenix Area  I guess those agents haven't heard of Broker reciprocity and generating buyer leads form the Internet.  Their loss

Frank Bailey, ABR, (Prudential Classic Realty)  It is not about the listing numbers.  They will bury you if they are not correctly priced.  Ans agent that cannot tell the truth at the begging, cannot tell the sllers later.

Krista Fuchs Chester County Realtor(484) 459-8025 Home Buying and Selling (Prudential Fox & Roach)  I'd love to be a fly on the wall for that one!

Barbara The sellers are adults, and they have to live with their decision.

Fran Gatti - Realtor® Crescent City CA Real Estate (RE/MAX Coastal Redwoods) Amen!

Cindy Hartpence (Edisto Real Estate Company)  In this market I had a friend htat had a stroke.  He needed a sale, and told be up front he thought the other agent was just telling him what he wanted to hear.  He called me because he knew I would tell him the truth.  He listened, and we sold the home in 4 days for exactly what I said it would sell for.  All the other homes are still listed.

Pat Tasker Realtor Milwaukee Metro Area WI (Shorewest Realtors)  Exactly!

Pete Chrzaszcz  I think it hurts this current economy more.  Just price it right.  Look at the numbers, Big big boys and girls.

Dona Reynolds, ST JOSEPH MISSOURI REAL ESTATE (Prudential Summers Realtors)  When it is way overpriced, let the other agent have it.  I do not want it.

Bob & Carolin Benjamin - E Phoenix Arizona Real Estate (Benjamin Realty LLC)  Some think it is a prize.  Post closing is the real celebration.

Patricia "Pattie " Romano Your HomeTown Realtor 609 312-9043 (RE/MAX AT BARNEGAT BAY-)  In the ealy 90's I liked to be the agent on the 3 or 4th time.  Sells start to listen then.

Jim,

In our MLS, if your home sells for 10% less then you listed it for, you have to give an explanation of your ineptitude. It dose nothing, but it shows that enough people complained about the abuse.

Yes, buying the listing is how an agent, who is afraid to lose out, doesn't understand their job, doesn't tell the truth about what they are there for to begin with, and has no respect for their career.

Their misleading the public, in the end, gives our industry a black eye when things don't happen as they say. I always hope the listing runs out before they then convince the seller to reduce the price.

Caring about what we say to people, is all we really have. Repeat business comes from not giving surprises.

Richard

I guess I'll be the lone voice of a different opinion.  I may take a listing that's overpriced because signs bring signs. If I have a listing, I will get to market around it, have open houses and will in fact meet many other sellers and buyers. And when someone says it's overpriced, I say yes, let's go buy you a house that's priced right. And when other sellers call me, and wonder why it's not selling, I say it's overpriced and the sellers wont be reasonable. And then I take their listing and signs bring signs.

The idea (at least for me) is to get business and to buy and sell homes. Not to be self righteous. Many of the top producers take overpriced listing and then do price reductions, and they have signs all over the neighborhood. They are killing the competion, while many others are saying "I can't take that listing, it's overpriced". I'll take it all day long and laugh as my phone rings off the hook from the people I can meet from it.

Jim, I hope you don't mind me responding to Andrew- BUT I MUST

Andrew , just by being the lone voice of a different opinion is saying it all-  It's not being self righteous It's called ETHICS and professionalism

Jim, you hit the nail on the head!  That is one of my pet peeves.  Also it is "I already have a buyer for your house".  I wrote a post about it recently and I agree with you 100%!

Join my NEW group for professionals who work from their home office at http://activerain.com/groups/virtualoffice

Regina P. Brown

Jim, you did a great job with this post.  Ultimately, that's what it boils down to: deceit on the agent's part. 

Very good information. I see this all the time. A sad part of it is the first two weeks of a listing gets the most attention. And its overpriced causing most to ignore it. (?)

We've had the opposite incorporated in listing agreements, that the seller chose to start out higher against the agent's better knowledge but agrees to a price reduction after 3 weeks should there be no calls or other inquiries about the property. It worked, we reduced to OUR price 2 weeks into the lisitng period. Unfortunately, we did miss a lot of attention during those first two weeks.

We've also done listing presentations where the seller agreed to our lower price (the seller even stated the previous agent overpriced it and that's why it didn't sell), then calls us later on to tell us he listed with another agent AT THE SAME HIGH PRICE THE LISTING EXPIRED TO BEGIN WITH. Beats me!

Jim,

Well said! Congratulations on your featured post. You are so right and I like what you do to give the seller reason to doubt these false claims.

Very good post. I agree and salute you!

-Tre Pryor | www.trepryor.com

I am really glad you posted this. I often alert my potential clients to those that would buy the listing and there are some.

Jim,

It's all about getting the seller to tell the agent what they want us to list for....it's a disservice to them for us to list it too high just so we come back in 30-45 days and get it reduced....just another way to get it and hope that they'll reduce in time to sell it. It's even taught by agents just to load up on inventory...I just tell the sellers that I have plenty on inventor that is priced right and won't move so why take a higher out of price listing just to say we have listings...makes no sense and the sellers can hold it against us.

I have blogged on the same topic a number of times...it's unethical...it can and has and will take folks into foreclosure...and it has is and will be ignored by the borker/managers because the largest offenders are top producers who "win by attrition".....until, if and when ethics become more important than dollars...this horrid practice will continue.

Jim,

Thank you SO much for posting on this. I just lost a listing for this very reason. I just can't lie and tell a seller their house will sell for $50,000 more than all the other comprables. The seller told me that the other agent was "more positive" about what they could sell for. It has NOTHING to do with being positive. It has to do with data and market stats...period.

Thanks again for posting this and more importantly, doing the RIGHT THING!

I agree Jim...It has proven to be a waste of time.....I recently was "given' 8 listings from a person very close to me, and the price on each one was 30 to 50% high........They were all vacant lots or acreage, which is not moving at competitive prices now, much less greatly overpriced.......Nope,,,,........never got a call or any interest....Duhh

These are all great points and I completely agree with your philosophy.  However,  some sellers just can't see the forest for the trees.  They think their house is "special".  It happens often.  However, I have no desire to see my sign blowing in the wind for 180 days so I take the route you have chosen. I tell them the plain hard truth.

Excellent post Jim. if I decide to take a listing that is outside of my realistic range of value, the seller gets a "Over-pricing disclosure" that requires them to acknowledge the dangers in overpricing.

Jim...

I didn't read all 150 comments, so I'm certain that this has come up before, but I have some listings I'll gladly sell! lol

Don't forget that "the big lie" makes the consumer hate us all.

I've reached a point where I hope that every agent who would "buy a listing" is successful doing just that to a point where they absolutely choke on them.

Jim - another great post as usual. I have a variant on your approach.

"The seller and the listing agent agree that if the listing agent requests a price reduction the listing agreement is terminated."

So many of you presume to have been at the table when the listing agent secured the listing. So many of you who were the 'flies on the wall' failed to hear the agent describe the market conditions and the likelyhood of the home selling at the homeowners hopeful price. You closed your ears before you heard the agent explain the 5, 10 and 30 strategy for monitioring buyer response and the corresponding corrections. You choose not to hear the agent explain that the home owner and the price they pick is the most likely predictor of when the home will sell. The words were foreign to your ears when the agent explained the home seller is always in control of selling their and and the task of the agent is to give the home exposure and explain the results.

Too many of you see within yourselves the triats that you rant against. Take a pill and chill.

Jim..really like thisd post, and totally agree with your tactic.  The comments you have received on this post are great.

Richard Stabile Bergen County New Homes Builder Realtor (REMAX real estate associates)  I like that MLS rule.  We will be judged on performance not promises.

Andrew What about your clients?  Isn't that kind of self serving?

Patricia "Pattie " Romano Your HomeTown Realtor 609 312-9043 (RE/MAX AT BARNEGAT BAY-)  Thank you Patricia.

Regina P. Brown at R.P. Brown Real Estate  Thanks I appreciate it.

Palmetto Bay | Redland Real Estate | Maggie Dokic (EWM Realtors)  Thanks.

Craig Guffin (Coldwell Banker Monsees Realty  I agree.  Thanks

Andrea Mills YourHighlandsCountyRealtor 863-202-0729 (ERA Advantage Realty)  Other agents use that high price like bait on a hook.  Some sellers cannot resist.

Dorie Dillard: Canyon Creek & NW Austin Living (Coldwell Banker United)  Thanks!  I agree.

Tre Pryor (Rick Shaw Realtors)  Thanks so much.

Janice Roosevelt,Ecobroker, ABR, e-PRO (Matt Fetick Real Estate Team - Keller Williams Real Estate -)  Unfortunatley there are.

Neal Bloom-Realtor ® Assoc.-CRS-Weston FL (RE/MAX Premier Associates)  I agree Neal.  It doesn't make any sense.

ANONYMOUS - I agree. "ignored by the borker/managers because the largest offenders are top producers who "win by attrition"  They want their sign out there.

Jim:

Here is a statical fact. Here in San Diego county after the first of the year 2009, we had 1800 expired listings. What does that number indicate? I am sorry and ashamed of the agents that have taken these listings and have done such a disservice to the seller. Too often we are told by our brokers that we must go out and get business at what ever price. I apologize for being a bit cynical about the "WHY" an agent does not honor the code of ethic's that we all had to take at the time we became Realtors. In today's market the very worst thing that an agent can do to a seller is incorrectly price the home. I spoke to an expire the other day that was on the market for 455 days, and they were baffle as to why their home did not sell. Could it have been price? Good post.

Andrea Passantino - (RE/MAX Realty Suburban) -  I love hte positve thing.  Some agents are more upbeat, and positive.  Tell me how that is working for your 9 months from now.  You're right it is about stats.

Mike Norvell Sr / Norvell Consulting Group (Norvell Consulting Group)  Not even the buyers will call on it.

Tracy Santrock-Cary NC Real Estate Blog (Fonville Morisey)  I do the same thing.  I would rather do nothing than list ahome that will not sell because of price, and listen to a seller belly aching for the listing term.

Kevin Comerford (Coldwell Banker Preferred Real Estate)  I think that is a fantastic idea!   I like that!

Richard Weisser Coweta Fayette Real Estate ERA United Realty  LOL!  Thanks for stopping by.

Fly on the wall - Thanks for stopping by.

Rebecca Gaujot Coldwell Banker WV (304) 520-2133 (Coldwell Banker Stuart & Watts Real Estate)  Thanks Rebbecca.  I am glad you enjoyed it.

Lenn Harley Homefinders.com MD & VA Real Estate  I feel the exact same way.  Those agents made their own bed, not sleep in it.  They kill the industry.

Lorraine Crescent Moon Realty & Land N Sea Auctions LOL!  I love it. 455 days on market, and they don' have a clue as to why it didn't sell. 

Great Post Jim.

You could put a line in the listing agreement stating that the seller agrees to drop the price every few weeks depending on showings and feedback. I explain to sellers that what they want and even what a (uneducated) buyer might pay is not the bottom line-It's what will it appraise for. And for a property to actually sell it needs to be priced according to comps so that there won't be any problems with the appraisal.

I think most of us agree. An honest realtor will suggest an honest price and if the owner insist on going with an unscrupulous realtor who claims their home is worth more, then it is their lesson to learn. No point in trying to convince them otherwise. Some homeowners return a year later and list with me at the original suggested price. Others still drop the listing lower but perhaps because of embarrassment, or refusal to give me the credit for being right, they go with some other realtor. Those who refuse to lower the price never sell the home. ( Notice that usually when that home does sell it is never sold by the realtor who listed it too high?)

In the end we have to accept that what is... is ... When someone is emotionally attached to their property their judgment is not always in their best interest. All we can do is give them good representation and uphold our own integrity. In the end, I can sleep at night, and I am rewarded with great clients and an honest income.

Great post! I wish all sellers...and buyers for that matter could read this (and all the responses from ethical  agents) to understand why price is so important...the right price that is.

Thanks for posting something of great relevance!

You hit a home run with the explanation. I know agents that do this every week, they cannot get away from it. Its like people getting invisible money and then it dissapears.

Great post Jim - I really like the last line....that'll make em think!!

Nice post.  The worst sellers are also Broker/owner or agent/owner.  They have an emotional attachment to the property and would rather list said property at an unrealistic price, and or take it off the market because they think they are not getting what its worth.  As opposed to lowering the price.  I love the added clause that the Broker should add  "they will not lower the price while they  have the listing".  Since many Brokers list at a higher price just to appease the seller knowing well the property isn't worth it. If they do however get the listing they will then be able to lower it after the fact.  What a waste of time.

Just make sure you keep those sellers on your watch list, so when the listing expires, you can come back to them, and they'll be more open to your terms.  Another way that I think agents buy listings is by immediately lowering their commission.  If they are so easily ready to lower their commission, are they going to be an effective negotiator if/when an offer comes? 

I also like the last line of your post!

Age old problem here, Jim.  Do you take the listing to have another listing, or do you work with the clients best interest at heart and tell them what may be painful for them to hear?

Great post.  I agree completely it doesn't serve you or the client to take a listing under false pretenses to only not be able to sell it.  There are several agents in my community that do exactly that.  I have always taken the philosophy that if you aren't honest with yourself and your clients you serve no one.  I am not in this business to waste my time or treat people unfairly.  Eventually sellers always come to there senses and will always call back and say "You were right" now sell my house.

Jim, the last line in your post is Golden.  Can I use?  It is truly priceless.

In the current economy, I've seen more and more overpriced listings.  I think the problem is twofold.  You still have the agents that 'buy' the listings and now you have agents that simply can't bring themselves to tell the sellers their property is overpriced.

I love the bleeding to death by a paper cut line.  So true.  Great post.

Fly on the wall was correct. 

You all jump on your self righteous positions so quickly that you can't fathom the possibility that the client chooses the price of their own sale. Why do you assume that the agent is "tricking" them into anything. I have many time told a client that the price is too high, and they look at me and say to "try it" anyway. In my mind I'm saying "try what?" but, I can't again stress the importance of how signs bring signs. Good listing or bad listing all bring calls which lead to more deals. Is it really unethical to do what the client is hiring you to do? It's their house, their money, their deal. Were just helping them make their deal happen.

I am actually one of the most ethical / honest agents any of you would ever have the pleasure of working with. And what cracks me up is that everyone on this post thinks so highly of themselves that people that take listings must be unethical or "tricking" people into something. I have done neither, but I have had overpriced listings, and I'll continue to take them.  SIGNS BRING SIGNS. (at least where I work).

I work with crappy agents all the time, but I guess their not on this site patting Jim on the back.

I gotta run to a listing thats overpriced, but I need to go refill the flyer box for the 3rd time. I've already had 2 other listing appointments from my "overpriced" house.  

Have fun sitting there until the "perfect" deal comes along. I'll be happy to take the rest.

Obviously you have touched a nerve here, Jim. I have written several times myself about "buying the listing." It is always so frustrating when you have put your heart into trying to come up with just the right list price so you can do a great job and still get the seller the highest possible price, but then the seller sits there and looks at you like YOU are the one that is lying. The other agent has given them the impression that you are just trying to give their home away so YOU can make a commission!!

Bleeding to death by paper cut - what a great visual! Usually by the time the seller starts doing the price reductions they do it behind the curve of how prices have been dropping lately. If they just priced their property reasonably to begin with, they would have ended up with more.

I never thought about writing something out for the seller to have the other agent include in the listing. That is AWESOME! Hope you don't mind if I "borrow" the idea.

Jim, we call them the "numbers gang" in our company. They take listings at any price the seller wants, hammers them for price reductions, and hope that by the volume of listings they will make money off of the ones that happen to sell.  We got that from Steve Woodruff, a real estate trainer, who has a good method for avoiding this situation. He teaches not to give the price until after the seller has agreed to work with you.  This way, the seller selects the agent on the correct criteria, which is the agents skills, integrity, and the strength of their marketing plan.  It's brilliant, but sometimes difficult to pull off. 

Great article, Jim.  I once had an appointment where the seller told me, after I presented my listing price opinion to her, that she had already met with another agent who quoted a price about 10% higher than I did.  I stuck to my guns and re-explained my reasoning.  Then, to my surprise, she pulled out an appraisal report that she got a few days before my appointment with her.  It showed a value within $100 of my opinion.  She said she appreciated my honesty and hired me to sell her home.  So I listed her home and it was under contract 3 days later.  Win/win!

186 comments... good job.  I just wonder if anyone defended buying listings.  I won't.  I have had to go up against that a few times, and it just annoys me.  It is even more annoying when you know that the agent was not just innaccurate, but downright dishonest. 

I teach absorption rates to agents at Keller Williams Greater Portland, Maine. They have found it to be very successful for both Buyers and Sellers. However, in my smaller resort market, where traditionally the top agents have always bought the listing, and continue to do so, I find these agents telling sellers that I always sell short.  I am now including education about Absorption Rates in my Adult Ed classes.

Great post, Jim.  If you want to stay in the business for the long haul, you can't be dishonest.  You have to stick to your guns.  Although, some sellers simply refuse to budge on the listing price and a listing will linger on the market for months longer than it should have.

Another thought,

Why is everyone using the words,  dishonest, unethical, lieing, greed, scam etc. etc.

I look at it kind of like having a consignment lot or a car lot. If I fill my lot with cars or sofas I will get a lot of business. (some cars may be overpriced, some sofas may be overpriced etc) but, I will also get many buyers and sellers that are reasonable in their pricing and I will ultimately make them happy.

It's not my house, my car or my sofa. It's my job to put buyers and sellers together. If I keep my lot empty until the perfectly price car / sofa comes along then it's going to be a long winter.

Unless the people are pure ass'es, I'll take the deal to help fill my lot.  SIGNS BRING SIGNS. (both good and bad).

And seriously, I'm none of the words that everyone is throwing out here so freely. It's not dishonest, or a scam, it's called business. 

People, your NOT THAT IMPORTANT.  We are selling something that someone else ownes, they worked hard to buy it, and they can try to sell it at whatever price they want. It's their house, their money, their life.  Try to keep your wants and needs out if it. It's not about you.

We are here to put buyers and sellers together. No more no less.

I agree this is a foolish practice and it's unethical. Tell the truth and the sellers will eventually come back to you.

That happens some of the time.

However, the big reward for these agents is the drastic reduction in price by the sellers who became desperate during the listing.

So, they do it again, and again.

Brian Madigan

Great Post. I love your suggested verbiage for the listing agreement.

I like the leave behind of the no price reduction strategey. 

The issue sometimes is an unrealistic seller who values their home at a higher price than the market values it.  Some agents will agree with the seller and get the listing and then work to adjust their expectations.  I like to use the practice of putting price reduction guidelines in the listing contract when you write them up.  You add in language which includes time lines and deadlines, such as " if this property has had a few number of showings and no offers then after two weeks we will reduce the price to  x.  If after ....   "  This lets the sellers know you feel you will work with them, but you get them to commit to reality.

I totally agree with what you posted!  Listings should be priced right, this happens in my area too!

I am always somewhat apologetic and explain that the price I suggest may be lower than what they want but I cannot stretch the truth just to get you to list with me. And people usually understand, or they insist on the "let's just try it it at this price" plan-which we know does not work, and only wastes your time and marketing budget.

You may not get the listing but it is better to not get the listing than to get an overpriced listing you cannot sell or even get any interest in.

The part about your house sold in 30 days or I will buy it.... and the small print is so small the are not aware of what "buy it" really means......

why would you want to do that to yourself. you are making things worse. you are better off having no listings.

Telling a seller you know what you will get for their house also leads to the idea that somehow realtors can tell the future.  I have been in a situation where the seller tells me another agent told them they would get such & such a price.  I usually respond with a question, "is the agent planning on buying the house at that price?".  A puzzled look is usually the response until I explain that unless the agent is a fortune teller, all they can tell you is the current snap shot of the market and their plan to move the home.  The final price will be determined by a yet, unknown buyer and the seller .  If you take a little time to explain what the other agent is doing in trying to buy the listing they can see through the ploy. 

I love the idea of suggesting they add that verbiage.  I think it would definitely give sellers something to think about when they decide they are going to pick an agent based on their "selling price."

We all can attest to this.

One makes me leary is that when sellers take the higher price, they have to know that their home won't sell for that amount, but maybe not, if the agent didn't inform them of the market analysis in the area.

I know some sellers have a price that they absolutely must clear in order to sell their homes, but if the market is saying otherwise, then that seller may need to sit back and wait a bit or be prepared to bring some funds to closing.

Great Post.

People have a biased sense about their home. It's sometimes a sensitive issue when it comes time to discuss pricing their home.

We have a home down the street from us that has been for sale for over 2 years. Guess why.

Incredible post Jim -- I too have written about buying the listing, and talk to sellers about it, so they can make an informed, unbiased and factual decision on who should represent them.  The last point is something I would have never thought of.  In a downward market, with a 6 month listing agreement, I would only put this in if the seller were ultra competitive from day 1.

An agent once tried this on me (before I became an agent) back in 1996 and I could smell it a mile away, and I actually rejected them because I knew they were totally unrealistic.  Their response when I told them it was too high is:  We fight like mad for our sellers. 

I thought:  What does that have to do with reality?

I can't tell you how good it is to here someone finally addressing this problem.  I've been through three Brokers already in less than two years of getting my Lic.,for this very reason. Two of the Brokers are Big Name Franchises (Won't mention name here).  Sell the listing-go back and low ball the price!   Finally I found a Broker who like me works mostly with buyers.  It's important to note here that I do have almost 30yrs experience in sales within the Financial/Investment  Industry. Not to mention that I have been Investing in Real Estate for a long time.  As an Investor/Agent working for Buyers, I can assure you that I know exactly what the listing price should be.  Which tells me, the listing agent sold the listing. If my client makes an offer at that point in time-It always appears to be a low ball offer to the seller.  Needless to say, it makes the negotiating process almost impossible when your offer price is going to be $30K under ask.  How's the Seller's agent going to explain that one????  They can't-That's why I now present all my buyer clients offers in person.   Maybe after a few embarrasing moments in from of their seller they won't sell the listing anymore.  Try It-You'll like it. 

Jim,

You are a huge help to my moral, I have taken a beating this last year over this very practice and it seems to be continuing into this new year.  Although the national market is struggling sellers are still doing good in my area of North West Iowa and that is a really good thing.  Unfortunately, they are listing with agents and brokers who either don't do a real CMA or who promise the sky and then can't deliver.  It makes all Realtors look bad and I for one won't do it.  It has cost me dearly in listings, I am trying to educate sellers but it seems all they hear is the sound of money. I have discussed having a comment like your: "It is fully understood between sellers, and listing agent that at no time during the listing agreement will the listing agent approach seller for a price reduction!" in the other person's contract if they are so sure they can sell the property for the inflated value.  However, it still really hurts when a seller goes with another agent or Broker.

Georgia Weaver

Hi Jim,

You nailed it! Thanks for the article! I find that even if I price it right and get the listing, that we are in a declining market and I still may have to go back to the seller for a price redcution.

You're right (about turning down an overpriced listing). How many agents DO IT? They nodd their heads in class or at meetings, stating it's wrong... then they DO IT!

Jim,

It is rare for clients to make offers on "bought" listings and when they do, it is painful for the Seller, the Buyer AND the Listing Agent. Not to mention it is often a waste of everybody's time. Still, we make fair market value offers on the homes my clients want to buy and sometimes we get an agreement from the Seller in spite of their agent.

Ideally, for ALL parties involved, the homes would be priced appropriately from day 1.

Less hassle, stress and emotion involved for all parties and certainly less time on the market for the Seller.

Keep being professional!

Dear Jim,

Congratulations on a superior post.! I totally agree with you and it seems that everybody else does too!

Barbara

I read your blog and can totally say- I get it !! I just wrote about this same situation in a recent blog entitled Overpriced listings- don't they get it? I really like the spin on the "bought listings"

Excellent.  This is too common I think.  Look at all the overpriced listings in MLS that sit there & sit there before they ever get a price reduction.  I have read that statistics show that a house properly priced from day 1 not only sell faster, but often for more money than the one that has sat there for who knows how long with price reductions. This is especially true in a declining market.  An extra month or 2 in a declining market can cost the seller thousands of dollars.  I think I would also sugest to the seller that if the other agent is so confident that their inflated price is the right price that the seller only give them a 30 day listing.  If they get multiple showings & good traffic, they can extend the llisting, but if it sits there w/o any showings, they can relist with me at the right price.  Or you could even offer to match the other agents list price for the 1st 2 weeks or so, and have a price reduction written, signed, post dated  the day you take the listing.  Nothing is worse than letting a seller talk you into a higher list price than you think will sell with the verbal agreement that they will reduce it if the house doesn't get any showings, only to have the seller change their mind later & not reduce the price. Been there done that when I was green.

Margaret Barnes-DelColle - I have tried in the past having the seller reduce, but the seller can cancel that at anytime.  After all, we are agents of the seller.  It s an agency relationship.  I stopped doind that and opt for teh right price range to start the listing.

Gary Ward (Exit Realty Mountain Properties)  "MEGA DITTOS"  I feel exactly the way you do.  Very good summary.

Jeff McIntyre You are more than welcome.  This is something we face every day in our business.  Now hopefully more of us will understand what is really happening.

Eric Bouler (Prudential Gardner)  Thanks Eric.  I am out their in the field.

Dan Magstadt (Meridian Financial)  I agree. We must educate the sellers to what is really happening.

Orgen Brown (Catalyst International Realty, Inc.,) - Funny that you mentioned "Owner / Agents"  A high percentage of homes in Atlanta area that are going into foreclosure are "owner / agents"  It is very noticable.  They are way overpricing!  I was discussing this the other day with some agents here in Atlanta.  Good observation.

Chad Boyers (The Danberry Co.)  I agree.  BTW I don't want to turn this thread into a commission topic, but I agree with  you.  They can also buy the listing wiht a reduce commission.  However, many of the reduced commission crowd in Atlanta are starting to lose their doors.  They have not earned enough to pay the bills.

Kris Kombrink ~ Real Estate Marketing (The Kombrink Team, RE/MAX Excels - Chicago's Western Suburbs) I really believe it is working in the best interests of the client.  That comes first.

Tammy Lehman (Edward Surovell Realtors) That is why "Honesty is always the best policy!"

Roger Johnson (CENTURY 21 American Homes)  Sure go ahead and use it.  That is why I shared it.  I agree with you.  In the Atlanta market there were so many homes sold wiht no money down the inexperienced agents do not know how to tell the seller the truth...that they are upside down.  So (((((group hug))))) and a high price keeps everyone happy...thus insuring the foreclosure.

 Andrew - Thank you for your thoughts.  

Brian Madigan LL.B. (Coldwell Banker Innovators Realty)  To those agents it s "payday!"  The seller wore themselves down.  It is agame of "wits" with the "Witless!"

Tom Lowy (Duffy Real Estate Inc)  As I've stated before, even if it is in the listing agreement, it is all abut agency.  If he seller has a change of mind and says "Hold off on the price reduction"  you must follow their wishes!

 Mary PAUL, ABR, CRS,GRI, e-PRO, (RE/MAX Advantage Realtors, Searcy, AR)  I think this is a very common practice.

 Mark Brian (Silver Star Real Estate LLC)  I know one particular agent that lists loads of homes and sells very few.  Their full time job is an airline steward.  I am like you, I'd pass on taking something way overpriced.

HHhhmm.. Left out the other part of this ploy... - Ahhh you hit the nail on the head.  That is a bigger part of the scam.  A real confidence game if you ask my opinion.

Diann Tonnesen (Prudential Americana Group Realtors)  Go for it!

Kenneth Fisher (Prudential Burroughs & Chapin)  A hard thing in Atlanta is getting the "at bat!"  There are so many agents still in our marketplace it is still difficult to get in front of as many sellers as we used to.

Randy Willis (Metro Brokers-Pure Colorado Real Estate)  You got to stick to your guns. A friend of mine many years ago was going corporate and really had to interview 3 agents.  He wanted a higher price, and was really mad when he also had to reconcile the 2 appraisals. I was within a $100 of both. We got the listing and sold hte home in 4 days.

Lane Bailey - REALTOR & Car Guy (Diamond Dwellings Realty)  Thanks Lane I agree. Most agents actually do the right thing. Even though we belong to different companies and compete wiht one another we do not cross the line. Some do and think they are very creative.  They aren't.

Cheri Ellenberger - I noticed recently there is a contry club community in my area that one agent is known as the agent.  They have most of the listings, the signage and recognition.  But when you search the statistics, most of the listings expire and never sell.  They are overpriced.  This agent sells less than 25% of what they list!  "Neighborhood Expert?"  I don't think so...that facts say different.

andrew - The great thing about being a real estate agent is that you can basically run your business any way you want as long as it is within the laws of the state you are licensed in and with approval of your broker and office policy.  Thaansk for sharing.

Overland Park Homes & Real Estate:: Michael Russell (Overland Park KS Realty Executives ) My sentiments exactly.

Julie Cleland (Prudential California Realty)  Some sellers will see it for what it is, and many will not.  I love that line ""will that agent buy it at that price?"  LOL!  Too funny.  Tell the sellers to ask the other agents to put that price in writing also.

 matt mathews (mathews Realty Advisors LLC)  As a buyers agent I used to present, but no longer do.  I am good at what I do, but it really ticks off the listing agent.

Georgia A. Weaver Realtor Broker/Associate CRS, GRI (PROMISE Realty of Real Estate Specialists of Storm Lake, Inc)  Don't take it personally.  In real estate it is good to develop a very thick skin.

Tim Lund - This is a declining market and price rules.  So why start out on the wrong foot overpriced in a buyers market?  It just does not make sense.  If this strategy could ever work, it would work in a rising market.  It shows you how many agents are out of touch in real estate.

Erica Ramus, CDPE / Realty Executives / 570-622-6006 x301  You are so right.  I have some really good freinds in the business, and they always have way overpriced listings, and they think it is OK.  But nothing is selling!  What does that tell you?  Duh!!!

Benjamin Clark - Exclusive BUYER'S AGENT - Certified Negotiation Expert - SLC, UT (Homebuyer Representation, Inc.)  I agree.  No one wants to waste their time on an overpriced listing.  They are difficult to negotiate, the sellers then beleive they are giving it away, it will not appraise, and it is an excercise in futility.  The buyers agents job is not to educate the seller to price.  That is the listing agents job.

Barbara Delaney (Park Place REALTORS, Inc.)  Thanks!

Rama Mehra (Windermere Select Properties)  Great Blog.  I agree there are many aspects on pricing.  Some is even in denial.

Craig- I agree.  Now more than ever in this market - price rules.  Even when priced correctly, we are shooting a moving target.   I personally believe there is going to be a capitulation in pricing shortly and real estate prices at some point could move down quickly to reflect the reality of this market.  I am seeing signs after the first of the year that sellers are getting tired, and want to get it done.  So for the rest of the sellers, it is wise to get it done correctly before it is too late.  I've been in the market and have witness downturns, but nothing like this one.

I am working on a particularly difficult CMA and I am painfully aware that I must nail the price on this listing. There is nothing currently active, but there have been many expired listings due to overpricing. and homes that were on the market for well over a year sold very low. (I know this, because it is part of my farm area.) This is my first opportunity to list in this neighborhood, and my reputation is on the line as well. It is a huge deal to me, and I do not want to be wrong about the price.

The damage has already been done in this neighborhood because of agents who have bought these listings, or caved in to the sellers. Because of this, it is going to be a tough sell -even with the right price.

Jim:

I have been a follower of your blog for a couple of months now, and I really enjoy the comments you have.  YES, it is very unfortunate that there a few agents out there that will do anything to get a listing.  Thanks for sharing your thoughts and most of all thanks for reminding us that we do have a code of ethics we must live by.  I am a realestate agent in Uath and we have the same issues here as well

Jorge Sanchez
www.JorgeSanchezRealestate.com

I think we've all been through this at some point in time... Great post!

San Diego Short Sale Experts / San Diego Short Sale Experts

Dawn Isenhower (Coldwell Banker West Shell)  On a unique property, I would recommend an appraiser.  Otherwise go over the numbers with your broker or mentor.  We do that often.  As long as I am in real estate, there are times it is hard to have all the answers.  That is why we have a good circle of friends that we ask their opinion, and sometimes even invite them over on the listing appointment.  Don't fret, you are not alone!

Jorge Sanchez (Remax Results)  Thank you Jorge for such kind comments.  I find all too often there are topics in real estate that no one wants to talk about, yet we face them everyday.  It is very frustrating.  Brokers like to have their name plastered all around town, but smart brokers want all their listings to sell.

San Diego Short Sale Experts - Glen Henderson - Realtor (San Diego Short Sale Experts / Silvercrest Realty)  I think it is real estate 101.  I drove through a neighborhood today, and saw the name of a real estate agent I knew from a long time ago.  This agent has a big team an ego.  They have loads of listings, and their signs are all over the place.  They use the signs to attract other buyers.  The listings are usually way over priced.  Things did not change.  The listing was priced way over everyone else's. Some things never change.

To some it is a numbers game, throw enough stuff against the wall, and something at sometime will sell.  Iam in a different camp.  I would prefer a few good listings, that sell.  I do not need to bond with sellers for 10 months while we do a price reduction waltz!

Jim ~ this just happened last week while on a listing presentation.  I, too, try to be as close to a fair market price as I can.  I look at all the angles when assessing what might be the best price point for the property.

So, here I am, sitting in the seller's home, which is full of rooms with the 80's faux finished walls, lots and lots of country nick nacks, and 20 year old carpet.  So, in reading her body language, I see she is very attentive to the information I am sharing, until I get to the price range I am recommending.  There were plenty of recent comps to pull from the community to obtain this number. 

Anyway, I see her arms crossing, and she sits back in her chair...so I ask her, what her thoughts are.  That's when she says, "Oh the other agent I interviewed recommended "X" - which was substantially higher then what I had ascertained.  I asked her if she had been shown a CMA.  She said oh, yes, and the agent went outside the community to get all her numbers.  Well, despite my attempts to reason with her on pulling from the community first, providing there is a substantial amount to use, I could see her mind was already made up.  So we exchanged pleasantries and I was on my way.

Honestly, I don't want the listing, because she also had said she was going to just do the minimal amount to get her house ready for the market.  So, she wants big returns, despite her little effort.

Some sellers (and agents) forget that selling a property is a team effort.

Thanks for your post...I always enjoy reading them!

Susan

SOMETIMES IT'S NOT ABOUT THE CUSTOMER!

I have known agents before that would list property at a higher than marketable price, I assume at the request of their customer, and brag about it at the office.  These properties would always be on heavily used roads and streets, and the agent would simply enjoy the free advertising signage for 6-12 months, or longer.  Potential clients seeing the signage and the agents name over a period of time would assume success and strength.  It's alot cheaper than a billboard and name recognition is important.

Agree with it? No! Is it done?  Yes, Commercial and Residential.

We're all here to make a living by providing a service to our customers.  Not by using them!

I had a listing and told the seller it would sell for $479,000.  After I wiped them up off the floor, they were determined to list at $539,000.  I told them that if we did, they would only be upset with me because it would not sell at that price.  Well, after 3 months, few showings, negative feedback, what did they do?  They gave it to another agent who listed at $499,00 then sold for guess.......just guess.............$479,000.  Big lesson learned.

Kim Pennington, Music city USA

Jim - Great post and although I've never lost a listing (not my expertise), I have seen my fair share of REO agents who have "bought their listings".  By that I mean that the reason they have the listing is because they agreed to lower their standards and ethics to those of either the REO servicing company managing the property or the REO bank holding the lien.

Right now, I have a client in escrow on a property where the REO LA and REO bank are absolutely the sleaziest, slimiest, most unprofessional and unethical pair I have ever come up against.  So far, I have witnessed a number of violations (starting with the MLS listing) and 99.9% of me wants to report them (right after I wrap my hands around their neck and strangle them until they turn blue) to the proper authorities.

But there is that small part that knows that if I do that, my client is the one that has the most to lose.  The escrow was put on hold the day before we were to order docs (not the time and place to get into the gory details) and my client had already given notice on his apt and his landlord already had it re-rented so he moved out, put his stuff in storage and began sleeping on a friends couch. 

We're working the issues but if I were to report these sleazebags, my client would have to start all over again.  I know I have a duty and responsibility to report violations when I see them but I also have a duty and responsibility to do what's best for my client.

Jay is right that until we all step up to the plate and do what's right, these slimeballs will continue to operate.  Just like Randy said, the line does get a little blurred.

I wonder by your post if nice guys do finish last.

Listen, I agree with you- honesty and integrity means everything- at least to me.

What I don't agree with is 'buying this listing' as you put it.  However, if the sellers are stuck on a price that is high- I think I rather have the listing and work it than not.

Thanks for the great blog - this is after all the point of active rain, to help each other out! I recently read that in CA at least, it is against the law to over-promise or over-inflate the price, esp on a bank owned BPO - I hear about this a lot - the agent performing the BPO hopes to get the listing and over-inflates the price! Bad news - and banks are typically getting 2 or 3 appraisals to also help them with values. Banks are our new sellers and as such it definitely doesnt pay to buy the listing.

WOW,  Great post and great recommendation!  As a fairly new agent, I ran into others buying listings a lot and it was a bit demoralizing.  Thank goodness I've stuck to my recommendations at what I truly think a house will sell for...

This happens often when two agents are competing for a relocation referral in our town.  9 times out of 10 the seller chooses the higher recommendation.  I like this idea.

Susan Cunningham* r.e.VISION ~ Suwanee,GA (NE Atlanta Home Staging)  The seller was using you to confirm a price that she had already been sold.  She wasn't happy.  It is OK to excuse yourself at that point, she had no intentions of giving you the listing.  I have been in the same position many times.

CHARLOTTE AREA SALES EXPERT - BILL MEDLIN (THE BEST OF THE BEST - CENTRAL CAROLINA REAL ESTATE)  It is done every day in our business with agents that have no scruples.

Kim Pennington (Prudential Woodmont Realty) Kim, we've all been there one time or another.

Donne Knudsen (Pacific Financial Mortgage  I agree.

Eugénie Eckler Oakville, Ontario 905-582-6311 (Century 21 Miller Real Estate Ltd.)  If it is totally beyond any reasonable price  it is unprofessional to do so.  Those are my thoughts.  I am not talking about a small over priced home, but rather grossly overpriced.

Suzanne Grace The law sounds good, but very hard to enforce.  One home could have loads of extras, and upgrades...and next door nothing.

What about if the agent "buying the listing" is truly imcompetent and thinks the value is really worth what they quote to the client.....Because there are those kinds of agents out there :scary:. But I understand where you're coming from and I'm positive it happens a lot.

Same goes for loans, imo, with "I can get you x% as a rate" when in reality, it turns out they can't.

A very popular post, Jim. One of my New Year's Revolutions (I wrote a blog about them) is to NOT take any more overpriced listings. I took one last year and now the house is in pre-foreclosure and a day doesn't go by where I don't feel terrible about it. I just took a listing this week and actually feel really good about the price.

Joshua Espiritu (Real Estate America)  If the agent is incompetent...then it is the sellers problem.  Lets face it folks, we do not need a college degree to get a license.  I know it is the same in many professions.

Jim, Very well said.  I LOVE your clause to "not reduce the price".  PERFECT!  What a genius idea.  I went on a listing interview in MY neighborhood a few months ago.  It went very well, and I gave them the CMA, based on market at THAT time....4 months later, they call, ready to sell.  I do an updated CMA, using the past 3 months. (as you said, we truly can't use 6 months back anymore).  The price had dropped...not a lot, but had dropped.  They wanted me to list it for $30,000 OVER neighborhood comps.  Now, mind you, I know my own neighborhood. I'd do back flips if their house sold at the inflated value they have in their minds. I'd slap a for sale sign in my yard and be "outta here" if I thought I could get what they have in mind, per square foot.  Long story short, I turned down the listing.  Agent "Z" has it, and it's priced $30,000 over market. 

Fast forward: Neighbors moved to Boston and home is vacant.  They called me last week wanting to know why I hadn't shown their home...they asked their agent if I had shown it...They are desperate to get it sold and don't understand why I'm not showing it.  Waiting for it to expire, then maybe they'll believe me:)

Huntsville, Alabama Real Estate Agent Elizabeth Ramsey Cooper-Golden (Remax Huntsville/Madison)   You are so right. I had the same experience.  In this market slightly overpricing is the "Kiss of Death!"  I had one in my old neighborhood, and I advised them of a great price before the market went bad.  This is a year and a half later, 3 agents and many price reductions..and it still for sale.  That extra 30K over comps insured it will not sell.

Great post and very good responses.  I can't think of many things worse then an overpriced listing in any market.

Jim, It is unfortunate that this goes on.  Reminds me of the old bait and switch.

Richard Weeks, REALTOR®, Broker Associate, GRI, ePRO, eAgent (Keller Williams Dallas City Center)  This certainly the wrong market to even try this.

Stephen Parks Destination San Antonio ()   It really is a bait and switch.  It ia real "Con Game!"

HEY Jim , NICE POST, THIS HAS BEEN GOING ON IN NJ FOR 20 YEARS! It never ceases to amaze me that homeowners still don't get it ! I am aways the lowest,most realistic and correct value when i price a home.Numerous times the sellers go for the highest just because its what they wanted to hear!!

  they all pay the price later, the owner,the agent etc.!!

chris HILL - It is very true.  Perhaps it is just greed and human nature.

Jim - One of the best features I've read this year!  I agree with you 100% - in this market, you have tell them the awful truth.  I just told a seller yesterday who is listing with another agent for $50K over the price range I established that they should list with them if they believe them...  They are "hoping" they are right.  I already know how this will end up.

Debbie Summers - MoveToLakeMary.com or 407-758-1020 (RE/MAX Central - Florida)   Sometimes I think of setting the price as "A Day of Judgment!"  Some persons will work with you, to get it done, and understand the events.  Others just want more.  The deceptive agent, just takes advantage of the entire situation.

Always leave the door open and on good terms so they can come to you when they realize you were right after all!!

Kristi DeFazio Colorado Springs Real Estate 719-459-5468 (RE/MAX Advantage)   Kristi you are totally right.  Always leave on great terms.

Great Post!  We all need to educate sellers in this way!

It has been very  interesting reading all these comments.  As with most other areas we have agents who also "buy" listings.  I too believe it does not follow the Code of Ethics by which we are bound.  It does a great disservice to your client and seller.  They want their home sold or they wouldn't be looking for a Realtor to do that for them.  Pricing it right will get the job done sooner.  I like to say if you want to keep it, then list it high; if you want to sell it, list it for the appropriate price.  I just sold a 71 acre tract and was told I listed it to low by fellow Realtors, but when I had a contract three days later and for cash, it seemed to be the right price.  I just recently got a listing on an expired because I did the CMA, and came up with an appropriate sales price with which the owner agreed was approriate.  The owner also told me he had told his previous Realtor it was listed to high.  It sat on the market for quite a while.  With the way the market is today, it better be priced right or it will sit until you have to drop the price.  Buy the listing?  Not in my lifetime.  I want to make sales, not look at them sitting there unsold or with another Realtor's sign in the yard.

Thanks for all the other comments, they have been very insightful.

Jim, just a little note, my info was not included in my post.  Hopefully it will be this time.  Thanks again to you for your Blog.  I plan on making sure I keep up with it as it was very interesting to see how wide spread this problem really is.

Emily

 Emily Hudkins (Jesse James Real Estate)  Great comments.  I totally agree with your approach.  What is the point of wanting to be a success in real estate and not having any of the listings priced right?  It is a total disservice to clients and self.

I was taught to ALWAYS TAKE THE LISTING even if the seller feels its worth more than it really is. However, its my obligation and job to make sure that if I DO decide to take the listing at a price above what I think it should be, that I will in turn, also be more expensive. I will increase my commission and explain to them at that price, it will be a lot more work and therefore, I should be paid more :) Gets them on the same page with me really quickly.

Winter Baserva Realtor Atlanta, GA Homes For Sale (ERA The Good Broker) That is an interesting way to do things.

I have a life-long friend who has been attempting to purchase a home in the Stockton, CA area for over two years now. He is a CASH/CASH buyer!  As you are aware, Stockton, CA is reported to be one of the most depressed economic and real estate markets in the entire nation. 

He has on several occassions offered full price with cash, and on a few other occassions offered ABOVE the listing price.  The house will either sit until it falls off the market (again) or has a "sale pending" sign for 60+ days, only to go back onto the market again, wherein he again makes an offer on the property but doesn't even receive a response -- He is working with a real estate buyer's agent.

These properties are REO bank-owned.  The listing prices are INCREDIBLE, "too good to be true" prices.  He has offered CASH with no contingencies, but not even entered into negotations.  So what is the game here?  Are they listing these prices simply to lure prospective buyers in with the hope of possibly creating a "bidding war" amongst interested unsuspecting potential buyers?  Given this has occurred so many times, it appears to be something unethical if not illegal in regards to the listing pricing. 

Can you point me to the specific Real Estate Law (CA) that governs listings and pricing of properties?

Something is definitely amiss in that market.

Thanks

John Cannata - Mortgage Loan Consultant - Frisco Texas - Reliant Mortgage Ltd (Servicing Frisco, McKinney, Plano, Dallas, and more)  Personally, I think something is amiss with a lot of real estate these days.  I have noticed similar items in GA and VA.  A property disappears off the market..only to re-appear several months later.  Bait and switch?  Bidding wars?  You may be on to something.  I've written many Blogs about this but I have no final answers.

Telling Sellers, and Buyers the truth allows me to sleep at night.  I may still take the listing, but at least they will know what to expect and the true reality of the market.