Should Realtors take over priced listings?
Sylvia and I have turned down some listings recently. We only take listings we think we can sell. The result is, in a market where half of all listings end up Expired or Withdrawn, we just had our first Withdrawn listing in a couple of years last month. And that was because the owner rented the house before we were able to find a buyer. We’ve not lost any listings to Expired status.
To some agents, we are fools. Don’t we know that every listing should generate two new buyers from the sign calls, and therefore even a listing that doesn’t sell is still a listing worth taking? Yes, we know that logic. We know about the 800-number rider signs that would text the Caller ID to us so we can call the buyer back in 3 minutes and try to convert them to an appointment.
We just don’t work that way, nor do we agree with the premise upon which that business strategy is based.
So, there are two basic camps of thought on the issue. One says that listings are supposed to be sold, and if an agent doesn’t think the listing will sell, then don’t take it.
The other point of view is strictly business and numbers. Listings, if marketed properly, generate buyer calls which can be converted to buyer clients who will buy other houses. Who cares if the listing doesn’t sell? Two other sales (on average – if you work it right) will result from having the listing, and that’s good business, right?
Wrong. I disagree with the second line of reasoning, and here’s why.
How do we measure success? I measure it by asking, “was I able to help the person who hired me accomplish what she wanted?”
I’m being hired to sell a house. That’s what I want to do. That’s the outcome I seek. I’m in service first and foremost to that seller client and the client’s needs, not my business plan or profit strategy. If I don’t get the house sold, I deem myself to have failed. I’m not in business to fail, so we don’t take listing that we know won’t sell.
I was on an “expired listing” appointment a few weeks ago. The seller was not happy with the listing agent and was interviewing new agents for the listing, which was about to expire. The house had been listed in the $460Ks. My CMA priced it at about $380K, which the seller absorbed with grim faced disbelief.
The problem with the former agent’s CMA is that he didn’t weed out the greenbelt and golf course lots, and he cherry picked the highest sales, some of which were built by a higher-end builder. It’s like comparing a Lexus to Corolla. His pricing analysis was garbage. Garbage in, garbage out. The home was way over-priced.
I explained to the seller, one by one, why each of the higher priced comparable sales was no good. We eventually were left with the proper homes against which to compare the subject property. Homes on interior lots with no greenbelt, no golf course view, and built by the same middle-of-the-road production builder DR Horton.
The sales data proved that the house would not sell for more than the $380Ks, which was about what was paid for it brand new 3 years prior. That brings up the second reality check, which is that big 4000 sqft homes that sold new three years ago do not sell for much more, if any, than they did three years ago. Especially in neighborhoods such as this one where new homes are still being built.
The third and final reality check was that in order to justify a price in the $460s, one would have to believe that this particular home had appreciated at 7% annually for the past three years, while the values of all the surrounding homes were flat or had fallen over the same period. It’s simply madness to ignore all of this data and think that a house will sell for an unjustifiable price.
“Can we just try it at $449K and see if the right buyer comes along”?, I was asked. “No”, I said. “It won’t sell in the $400Ks. The right buyer won’t come along. I’d be wasting your time and mine if I listed it at that price. $389K is the highest list price I can take”.
The seller was unwilling to price the home right. We parted ways. It’s back on the market with a new agent. Priced in the $460s again. It’s not going to sell for that price, or anywhere close. Of that, I am 100% certain.
Should I have taken that listing? No. Doing so would destroy the credibility that Sylvia and I enjoy when we talk with prospective sellers about our success ratio. We don’t participate in seller fantasies. We sell houses.
Also, more than once, we’ve had buyer agents who brought offers tell us something to the effect of “when I saw it was Sylvia’s listing, I knew it was going to show well and be priced right and I called my buyer right away to go look”. Why would we give up that reputation?
Why has the seller been able to find two other agents to take the listing at such a high price? Because some agents take any listing they can get, no matter the price. Other agents simply don’t know how to price a property, or they want a listing so badly (ego) that they ignore reality and think maybe they’ll get the seller to drop the price later.
No matter the rationale, it’s not a recipe for success for either the agent or the seller. It might be a recipe for profit for the agent, if he works the sign calls right, but profit and success are not the same. We succeed by helping others achieve, not by using them to further our own gains.