Recently I've been noticing some new listings popping up that are priced at a point that I just don't get.
I know it's been debated by many in the industry as to whether or not it's a good idea to take a listing at a price the seller wants to start at even if we know the market can't handle it. After all, we can always reduce it, right?? I've gone over the pros and cons of such a practice again and again and again, and have decided that for me, I simply will not take an overpriced listing. And it's for a simple reason:
I feel like I'd be doing the seller a huge disservice.
Those first few weeks a house is on the market is the best opportunity we have to grab those buyers and bring them through. At what price can we get buyers to look at our seller's house over the competition? At what price can we generate the most activity and interest, and ultimately the best offer?
The list prices I recommend to my sellers are based on a market analysis that includes a summary of comparable properties currently on the market and a summary of those that recently sold (typically in the last six months). I take into consideration the number of bedrooms & bathrooms, square footage, recent updates, and improvements and location.
An appraiser will do the same. If the comparable properties sold for tens of thousands of dollars less than what my seller's house is listed for, how can I expect that it will appraise out?
A few years ago I walked away from a listing when the sellers decided not to reduce the price as we had agreed to. It was one of the hardest decisions I've made in the business, but I knew the market could not handle their current price. They have since listed it with a few other brokers, and it has still not sold.
I recently met with three different sellers about their respective properties, and although the data I provided supported my recommendation, it was clear they were disappointed in what I was telling them. All three ultimately listed their homes with other brokers at prices that are well above the competition and any recently sold properties. Ouch.
But as I watch these properties sit and sit and sit, I know each of these agents did a huge disservice to their sellers.
Part of my job is to be honest with my clients even if that means delivering news I know they don't want to hear. What is the point of misleading them and letting them think they can and will get that inflated price?
One of the first questions I get from buyers when we go looking at houses is, "How long has it been on the market?" The higher that number of days is, the more they think the seller must be getting desperate and will take anything at this point or there is something wrong with the house.
I don't want any of my sellers to be in that position, because once they're there, it is extremely difficult to get out.
So I will continue doing what I've been doing. If that means losing a listing to an agent who's willing to mislead their seller then so be it. It's more important to me to maintain honesty and integrity with my client than to provide false hope and have my name dangling from a sign.