Today, I had to tell a seller that I did not wish to list his home. More accurately, I CHOSE to tell a seller that I did not wish to list his home...but it was NOT an easy decision.
Since beginning my real estate career in 2003, I have sold more than my fair share of 'challenging' listings. In fact, my 'trophy case' is quite full of successful sales that I call my 'repeat offender' and 'fat-chance' listings.
'Repeat offenders' are those properties that have been listed by at least one other agent previously, without success.
'Fat-chance' listings are properties that are either so unique that the buyer pool is reduced to one in 47,243 buyers -OR- so ordinary that they do not stand out from the plethora of available, cookie-cutter homes.
Early in my career, I realized that there was a magnetic force field surrounding me that attracted these types of listings. Being the hungry, new agent in the office...I viewed EVERY listing as an opportunity to gain valuable market exposure and establish myself as the best REALTOR® in my area. With each closed sale, I acquired more self-confidence and more respect from others.
Even more importantly, I learned that there IS a buyer for EVERY home...
IF THE HOME IS PRICED RIGHT!
In other words, there is a 'magic formula' that looks something like this:
SIZE + CONDITION x LOCATION - WEIRD -or- PLAIN JANE FACTOR = JUST RIGHT PRICE
As a professional, experienced REALTOR®...I know and understand the current market conditions. By combining my knowledge with the 'magic formula', I am able to determine the 'right price'...the highest price that the market will bear. YES...you heard me correctly...the HIGHEST PRICE the market will bear.
Today, when I recommended that we list his home for the 'right price'...the seller suggested that we 'try' a much higher price...even though he desperately needs to sell his home quickly. After explaining (again) how I had arrived at the 'right price', he insisted that he wanted to 'try' a higher price. Without hesitation, I thanked him for the opportunity to meet with him and sincerely wished him the best of luck with his sale.
You see...IF I had agreed to list his home for the 'wrong price', in a market with eleven months of available inventory...I would have done both the seller and myself an injustice. I may have even placed him at risk of losing his home to foreclosure. As difficult as it was to tell him that I did not wish to list his home today, it was far easier than knowing that I was setting him up for failure in the future.
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Written and Posted by:
Elizabeth Nieves - Broker, REALTOR®
The Elizabeth Nieves Realty Group @ Keller Williams (A Bilingual Real Estate Team serving Raleigh, Durham, Chapel Hill NC and surrounding areas.)
Search Raleigh, Durham, Chapel Hill and ALL Triangle Homes for Sale
Show me the Data! I have had to break this bad news to potential clients as well. Generally, I try to "lead a horse to water" and let them drink on their own. In other words, I show them what similar homes in their market are listed for, how many have expired or were cancelled, and what the ones that actually sold went for.
It seems to make it a little easier for them to take the bad news...
Not a good time for listing or selling here... unless people understand 2004/2005 values.
Lots of rain here this week! XXOO
Elizabeth,
Very nice way of turning down a listing. I like the calculation that you use to determine the "right price". GBU
Elizabeth,
Good post. I like your calculation to determine the right price. That coupled with the "current sold data" is the proof. If sellers can't make the right decision then you are doing them and yourself a favor!
Elizabeth, I just went on a listing appt. yesterday and although the sellers are very reasonable people, I don't think I'll be able to give them the price they are looking for...we'll see what happens
Hi Elizabeth:
In this market, I'm finding that it keeps getting tougher to price a property.
I like your formula!
Not all listings are ones that we should take. Sellers don't realize that there is a 'just right price' sometimes and they insist on using a price that they believe their home is worth - emotions and all.
One of my strongest responses to a seller that wants to 'try' a price for a while is this:
"If you start at $xxx and get no interest, then start reducing the price, you are running the risk of a buyer thinking there is something wrong with the home. That thought will keep you lowering the price to increase interest and you will be where we should start anyhow. Meanwhile we have lost valuable market time."
Often the last sentence gets a seller to realize that they should heed the advice of the professional.
~GBU~
Elizabeth you did what most agents have the hardest time doing...walking away! It is funny I must have bought the same magnet you did - LOL I seem to always draw at least a few of the hardest homes to sell. You hit the nail on the head though....there is an $#% for every seat. If you are able to nail the right price you will end up with a sale eventually. I have you flagged on this one:)
Now days we get to give the seller news (reality) they don't want to hear in most cases. However, it is what it is. So we professional communicate all the options and resources available to them.. You make many excellent points and this is a great post.
Elizabeth, You go girl! You know you did the right thing. Good for you. I think the most violated code in our code of ethics is 1-3: "REALTORS, in order to secure a listing, shall not deliberately mislead the owner as to market value." I wish all brokers would memorize that code.
Price IS key in this market. I have just finished writing a post on the very subject. I really believe that if we get these prices at a place they need to be, it will get this market in check. Education our clients about this is paramount.
This is fantastic!! Great explanation Elizabeth!
I just did the same thing recently and saw just yesterday the house went into the mls as the much higher price and with a discount commission to boot. Good luck with that I said to myself.
You did the right thing, not just in this market, but in any market.
This is a great explanation and I have to admit that you're right on. When we going to combine our stars? Time for a new rockin post wouldn't you say?
Great article. Thanks
Elizabeth, Funny that I think you may hear back from this person after he thinks about what you said and speaks with others. He's going to realize you were honest with him--and I hope that's what he's looking for (I know some people don't want to hear the truth). Walking away sometimes is the only thing we can do. GBU!!
You are one smart cookie...and you definitely stand out in the crowd! :)
Elizabeth - you clearly did the right thing. Why waste your time? Unfortunately, his will likely be wasted by some willing to take an overpriced listing. Perhaps he will see the light and call you back. Like your formula, BTW.
Jeff
Elizabeth, I walked away from my very first listing opportunity for this very reason. It was really, really hard for me, but it was the right thing to do.
Thanks for the great post...if every agent would fall in sync then we wouldn't have so many listings sitting there for so long.
Good job Elizabeth. At this stage of my career I'd rather walk away from a listing too than work for months on it, just having the seller get more and more upset with me. But I am tired of seeing the listings go on with another realtor, only to have the home sell 8 months later, for the price I recommended.
Hi Elizabeth. This is an excellent post. I wish I could reblog it. We are doing a diservice to a seller when we over price it. I like many others though, take every listing I can. Maybe we will get lucky. I would rather have my sign, than the remax agent accoss town. It is so hard to let the competition have it.
But in the end, and like you, I have been around enough to understand this, they are mad at me in the end, because it did not sell. So I have wasted my valuable time in the process, and perhaps damaged my reputation.
I have never turned one down yet. But I will need to think about this. I have one now, that expires in 3 weeks. They are mad because their overpriced home did not sell after a year. But I was not the owner who left the cat poop on the floor during my open house.\
Thanks for the inspiration
Don Bradbury
Great post! We should walk away from each and every listing where an unmotivated seller is not willing to list it at the right price.
Donald - you mention wanting to have your sign up rather than competition's. But I ask you, what is the general public saying about you as they drive by your sign on that 6 month old listing? They are saying, I'm never going to list with that guy (and possibly that company) because it's obvious they don't know what they're doing. Personally, if I know that the seller is unmotivated, I would rather let my competitor's sign languish in the yard (with their name rider swinging back and forth saying don't list with me!) than let mine be there. I hope to pick their listing up on their second run, when they're ready to listen to reality.
Another poster mentioned that this isn't really a good time to sell or buy in their area. Nothing could be further from the truth for people trying to move up. Let's say I have a house in good condition, that in 2005 would have sold for $275,000. Now I can only get $255,000 for it. But guess what, the $400,000 house I wanted to buy in 2005 is now down to $365,000. I "lost" $20,000 on my current house but I "saved" $35,000 on my new house. This is a great time for people who have some equity and decent credit to move up.
And how about the deals on lake homes out there?
There are plenty of opportunities in this market for buyers and sellers, if you know where to look!
I love that formula and I vote you as the trainer of the year for all agents who take underpriced listings and new people to the field!
Hi Elizabeth !
I have had 3 listing appointments over the last year where I was told by the sellers that another agent they had met with agreed to list their home $50K - $60K higher than my comps were suggesting. They all liked me as a person and asked me if I would 'try' listing at the higher prices. I politely turned all three down, telling them that I didnt think it was in their best interest to list too high.
... 2 of them called me back soon after the meetings and listed with me ... at my price :o)
Hopefully, your client will do the same. Kudos on sticking to your integrity !
Cheers !
Sheldon
Elizabeth,
Great article! When I took my real estate course, I distinctly remember the part about not taking every listing and when I got out into the real world, the first two companies that I worked for had the mentality of "never turn anything down." And another company I interviewed with told me that "he who has the most listings wins." Not necessarily.
It is not easy to do. I had to do that recently on a property that I had listed when I worked with RE/MAX and the folks are just in desperate need to sell but he refused to even look at my CMA or talk about reduction and what the actual going price of property is in his area so when I moved to Coldwell Banker, I let it go because I couldn't in good faith even promise to show it to anybody because it is so grossly overpriced.
In this market, even properties priced right aren't guaranteed to sell because we are so saturated with listings. It's sad for those that desperately need to get out from under their mortgages.
Again, great post!
Elizabeth, you are so on target with your guidance here. There is a market reality and then fantasy. I am so proud you don't want to couple yourself with fantasy land sellers.
Elizabeth - great post you have written. And you are so right about properly pricing a home to sell. So many sellers overprice and want to "test" the market. This is not the market to be testing to see how it goes . . . days on market are not a good thing for a home for sale.
Hi Elizabeth,
You did the right thing. Unfortunately, some other agent will probably list it at the higher "unrealistic" price and the home will just sit on the market.
Elizabeth - Great post. It's best to walk away from a listing where the seller insists on a price that will not "fly" in the current market. However, we all know they will eventually find an agent who will list it at their desired price and it will sit on the market for a long time.
Elizabeth - Cute formula! Sometimes you have to walk away. This is such a tough market to price in. Some homes are still generating multiple interest and others not so much. One way or another the market "speaks" in about 2 weeks to 30 days and it's imperative to act fast.
This really isn't meant to be rude, its just accurate.
If you want to sell your house soon, the price you should go with is the one that will piss off the neighbors.
That is the price that will gather attention, and result in a full price sale (that may be more than a negotiated sale too). Crunch too many numbers and you'll be in the middle of the pack or chasing the market down. This won't work in today's market.
It's worked for me.
Great post. I also turn down overpriced listings. It is a disservice to the seller and to your self. Sellers are savvy and other potential sellers will tell you they have seen your sign on a house for a year and you haven't sold it. At that point I feel you really can't "defend" yourself without saying something negative about the over priced seller so you just plain look bad.
Elizabeth, I also discovered the home seller's personality sometimes also have a magnetic attraction for similar like kind persona's. So if it is Mr. Grumpy the buyer will be also be a Mr Grumpy...
Hi Elizabeth,
Great post and you are absolutely right. We do a diservice to our clients when listing a home for a price the market won't bear, we waste our time, marketing money and valuable time and chances of our seller. It is very unfortunate to see that some owners still instist in listing their home with their overprized numbers and than sit on their property.
Hi Elizabeth, The premise to your post :
You see...IF I had agreed to list his home for the 'wrong price', in a market with eleven months of available inventory...I would have done both the seller and myself an injustice. I may have even placed him at risk of losing his home to foreclosure. As difficult as it was to tell him that I did not wish to list his home today, it was far easier than knowing that I was setting him up for failure in the future.
... really is rthe secret to successful marketing. Hope your 2009 is the best ever !
Hi Elizabeth, You are so correct. I had a past client that was loosing his home and did not want to put it at the correct price for the market, listed with someone that listed at this price and Guess What, he lost his home. I felt bad for him, but he should have listened.
Good for you! You probobly saved yourself much heartache and much money!
great post! I like this formula!
I can attest that we all have stories like these.
I had been approached by a seller twice to sell his home. Each time when I ran the numbers and presented the information to him, he sent me back to "re-calculate." Mind you this seller lives about 45 minutes from me in an area that I no longer really service. After our second meeting, I told him to get an appraisal and let's go from there. I also informed him that it does not benefit me or him to list his home at an overpriced amount.
Sure enough a few months later he calls me again and informed me that he had listed his home with another agency, for the price he wanted, but with no results. At the point, I told him that I was not willing to work with him as I no longer handle the area where he lived.
Sellers should understand that we as professionals are out in the market everyday, watching numbers... watching sold listings... watching active listings, so naturally, we would have some idea of what's going on out there.
Ironically, I should be speaking to one of my builders today and inform him that we need to take another look at his prices, since recently there have been 5 sold foreclosed homes in the community that he is building. All brand new, all at least 1500 square feet larger than his.
Reality Bites I know, but it is what it is!!
Hi Elizabeth... I have said it before and I will say it again... for any business owner, knowing when to turn away business is one of the toughest lessons to learn, but it can also be one of the most important! Great post!
I'm turning down more listings now than I did in my 25 year career in the biz. But I refuse to take one more overpriced listing from sellers who just want to try it at that price.
I agree 100% with the above poster!!
Nicely put and congratulations on walking away!!! My best wishes to you and your duaghter for 2009 IMP GB Diane
I tend to run from listings these days because of this very situation. Our market was so hot in 04,05 and 06 that people just do not have a realistic view of what the right price is in the market today.
Elizabeth - I think you did everything you could do. Hopefully the seller will become a little more realistic and call you back!!!
Elizabeth, it's nice to see someone who understands how the business works. Good luck in the new year!
Good job, Elizabeth! My partner Nancy and I have a presentation coming up soon, and we already had this talk about turning down the listing if the seller is unrealistic.
It's hard to do, but if it isn't going to sell at the price the seller wants - what is the point of taking it? It's bad for all the parties involved. Congrats to you for doing the right thing.
Totally agree with you...and it's hard to do. I always try to tell people that I'm telling them what it will take to get their home sold, not what I think it's worth. Those are two different things. I really try to take the emotions out of it which isn't easy. I also try to put them in the shoes of the buyers and show them the competing homes that are currently active and compare.
Not an easy thing to do, to walk away, especially when you enjoy helping people because you are not only walking away for them but for yourself as well.
Great post!
Good for you! I too refuse bad listings. Probably why I'm sitting on so few at the moment but it is a total waste of time and my MONEY.
'Repeat offenders' are those properties that have been listed by at least one other agent previously, without success.
My favorite category because by the time I get a chance to work for these people they are more willing to be "realistic"!
This was great Elizabeth and you even provided a formula! Your prospective client may not have been happy at the time but down the road he will certainly have a great respect for a valuable lesson. I think you are the bomb!
Thanks for the reminder about subtracting the weird or plain-jane factor. I sometimes forget to factor these things into my CMA.
This advice is sooo important. A friend of mine is learning this the hard way! Her sister is a Realtor and I am sure she didn't listen to her sister's advice. Now, they keep lowering the price -- it has been over 6 months and things are very slow in the winter! It is important to have the right price from the very beginning.
ELIZABETH! YOU are so on! This post was very well written, and so apropos for TODAY - NOBODY could have said it better than you! A STAR very well earned and deserved! Did you bake those yummy looking cookies????
You "TRUTH-MONGER" YOU! Gby!
Thanks for your great formula!
I just love how you put things Elizabeth, It just makes sense. I will send you snow if you send cookies. :)
Truely a great post and even a great way of putting it out there.
My weakness :)
Best to you and yours always.
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I hope everyone reads this... Including Realtors. We still see quite a few Realtors in our area over pricing homes here... Just to get the listing. They sit, expire and give other sellers false hope - not to mention scare off buyers. While we make a positive influence in real estate, it's quite frustrating to have to answer to their selfish promotion. On top of that, the market isn't driven by buyers here alone, it's really being taken over by appraisers. No point in pricing the home wrong and spending all that money if it's not going to appraise out anyway.
Hi Sis! First of all, congratulations on that little gold star! Well written and REALLY needs to be out there, front and center! Sellers can be too stubborn for their own good and if you don't feel that it's a good fit, then don't slip into those ill-fitting shoes! You are just costing you and your Sellers money, time and frustration!
That's what needs to be done so we are not throwing away marketing money. I have a feeling he may call you again. Let us know if he does.
As realtors, we now have far more of a weight on our shoulders than we had a few years ago, given the economic strife we are dealing with. It is now our obligation to explain how important it is to list correctly in this market, given the consequences of bankruptcy or foreclosure. This was always a "background" issue but now it has come to the forefront.
I can't repeat myself enough, the price, the price, the price. That's all that matters. You are so right. too many sellers want a price they "need" out of the home and not what it's worth.
LOL - Elizabeth - I just looked at our stats for 2008 and we turned down as many listings as we took - 1st time ever for us - People cannot expect to pay for their next dream home by inflating the price of their current one.
Or
if you take one or more home equity loans out - its just like a cash advance - you will not make up this money in a year or think you can just raise the price to cover what equity you've depleted.
We would prefer to say no but we will come back and be the 2nd or 3rd agent after your home doesn't sell due to price or if you'd like to price it right to sell now you will save 1 year of mortgage payments, taxes and utilites :)
great post
GBU sis
Sincerely,
Grace
Wow - this formula is too cool - I have to apply it to my current inventory to see what I get.
Thank you!!
Hi Elizabeth,
I loved your formula, thanks for sharing. I'm sitting here with my friends Marty and Steve, showing them how AR works. You are the best example in AR, and in life!
xoxoxoxJannA
I understand exactly what you are saying. It really blows my mind that some people still don't get it.... Thanks for sharing!
Elizabeth, I met with the owner of a gorgeous townhome and had to tell her the bad news,;she overpaid for her unit and I couldn't list it for the price she was asking. I would love to have the listing, but the goal is to SELL the property not let it languish on the market because it's overpriced. It's better to walk away.
Elizabeth, not only a good story, but I like the way you turned it around at the end and said, "Want to know the right price" to sell your home. If you want your home to be sold, it is truly about setting the right price for the market. Good for you for not taking a listing that wouldn't sell. I have a feeling this seller will come back to you in time.