Let’s say you want to list your home for 8% above it’s market value. You’ve interviewed three Realtors, seen three different market analysis (that price the home in a narrow range), know what your home should sell for, but you still believe your home is special and will fetch a higher price than the market suggests. And you’ve told the Realtor that if you don’t get your higher price you will simply take the property off the market after 6 months.
Can you find a Realtor to take your listing and market it aggressively for you?
Absolutely.
Will it be profitable for a Realtor to so so?
Maybe.
Among productive Realtors, there is definitely a “walk away” versus “take them all” argument that is debated. I’ve heard panels of top producing agents at real estate conventions argue both sides of the issues, and both sides have legitimate points. It all comes down to the business model and philosophy being employed by the various agents.
The argument for taking the over-priced listing.
A Realtor running a good buyer lead capture and conversion system knows that, statistically, every listing will produce 2 buyers who purchase a different home. Your over-priced listing may never sell, but the agent will in fact acquire two buyers from sign and ad calls who will buy something else.
Therefore, it’s not unprofitable to take your over-priced listing. Few Realtors have an aggressive lead capture and conversion system in place though. Solo Realtors will have a hard time achieving the capture and conversion rate that a large Team with “buyer specialists” can achieve. Often, those buyer specialists will follow up within 3 to 8 minutes of the buyer’s inquiry (email lead or call to a 800 number that captured caller ID) and start aggressively working the buyer for an appointment to get them pre-approved and start looking for a home.
More commonly though, the listing is taken by a solo agent who isn’t even aware of the information I just outlined above. Instead, they are a weak listing agent who can’t persuade the seller to price the home properly. They also might share the seller’s hope that “the right buyer” will come along, be poorly represented, fall in love with the house, and pay too much. They may also have nothing better to do and will take the listing for vanity reasons.
The argument for NOT taking the over-priced listing.
The Realtors who never take over-priced listings have a fairly simple and straight-forward rationale. “We only work with motivated buyers and sellers”, they will say.
If a seller doesn’t have a compelling reason to sell, and isn’t willing to price the home correctly from the start, the listing will probably not result in an eventual sale, and the Realtor would rather spend time and effort working with sellers who actually want and need to accomplish selling their home. They are willing to walk away and move on to the next motivated seller rather than have a listing sit on the market for 6 months that they know to be over-priced. Since they don’t employ the “buyer capture” systems as described above, the overpriced listing is a liability, not an asset, to their business mission.
Which Realtor will better serve your needs as a seller?
Well, if you actually want to sell your home, the second argument is the one you need to hear. If you’ve been wistfully thinking of moving up, but only if you can get the high price you want on your current home, the second Realtor is still the one with the message you need to hear.
The first one will take your listing and let it produce as many buyers as it can for other homes, and they may also try to get you to renew the listing if it’s in an area with a lot of buyer activity, but neither you or that Realtor care if your home sells, so it probably won’t.
My wife is a realtor and just faced this situation. She took a “hybrid” approach to the situation. She prepared an exhaustive market analysis for the seller and showed them factually that the price they wanted (needed?) was over the market by 5-10%. She repeatedly advised them to lower the asking price. They insisted on holding the price. So she took the listing, worked very hard to bring them 3 offers (all in line with the CMA she presented), and captured all the buyer leads that advertising their property generated. Through this process, she has gained a tremendous amount of credibility with the SELLER, who will probably refer her business, as well as gaining access to new BUYERS.
My point here is that if an ethical Realtor walks away from a seller that wants to list too high, that seller will never be educated as to the true market value of the property. They will end up working with someone who re-inforces their “pipe dream”. However, if the Realtor professionally shows the seller that their asking price is too high, there is a lot to gain by taking the listing, meeting new buyers, and letting the market demostrate to the seller the true value of the home.
Interesting post, more for a glimpse into the inner workings of the real estage business than for its commentary on overpriced listings. I wonder if we will see increasing consolidation in the business much as we see in other businesses — not so much internet driven consolidation but increasing drive towards corporate offices that provide these type of lead capture and other centralized resources. Technology makes this very possible….a logical next step, then, would be the dominance of super brokers at these offices with lower paid apprentices and technicians. Much like lawyers and paralegals and dentists and hygenists.
Hi Paul,
> My point here is that if an ethical Realtor walks away from a seller that wants to list too high, that seller will never be educated as to the true market value of the property.
Well, I get your point, but the education has happened on the front end. What does need to happen often, for both a seller and sometimes an agent also, is that the passage of time erodes denial. As reality sets in and the home doesn’t sell, a seller becomes more willing to believe and trust the market data.
Hi Bill: Nice to hear from you again. Yes, there are many inner workings of real estate Brokerage that are not commonly known or understood. What’s interesting is that even a company such as Keller Williams, which believes in a “big office” model (we have 800 agents at the SW Market Center in Austin – the largest real estate office in the world), still largely leaves it up to individual agents to run our businesses with little intevention or economies of scale being inserted by the Broker. At KW SWMC, agents who sit phone duty get the sign calls. There is no “top down” system or approach to trying to capture and convert calls. Just the individual agent’s ability to earn the business of the caller.
We have our own custom signs with our own phone number, so our sign calls come to us, but there really aren’t that many anymore. People have many different ways to learn about a listing.
Some of KW’s agent-centric approached seems counter-intuitive given the large number of agents, but we were the only major real estate company to grow last year. All the others lost agents.
Steve,
Some realtors also take an overpriced listing because they get caught up in the competition of it. I will admit that if I know they are talking to other realtors my pricing is higher. Why ? Because I’m afraid I’ll lose it to an agent that will price it higher and drop it later and get the commission and I’d rather get the commission in 6 months than not get it at all. It’s sad but true. I should be giving the sellers the same price whether I’m in competiton or not.
Pat Hiban
Maryland