Southern New Hampshire Real Estate and Short Sales: Would You Rather Be A Seller Or A Way For An Agent To Gain Other Business

Would You Rather Be A Seller Or A Way For An Agent To Gain Other Business

As the reports of an improved real estate market become more prevalent, an age old real estate argument has resurfaced:  are you betraying your seller client if you agree to place their home on the market at a value that you KNOW is too high?

Although it may be different in other areas of the country, in the markets that I have always worked in - New Hampshire and Massachusetts - real estate agents operate under Agency Law.  Therefore,  when we enter into a contract with a consumer to list and sell their home for them (or, as a buyer agent, to help them purchase a home - but that's a whole other issue), we are agreeing to be bound by certain FIDUCIARY obligations including the obligation to put our client's best interest ahead of the best interest of anyone else...INCLUDING OUR OWN.

As someone who takes my fiduciary obligations seriously, I believe that JOB 1 is providing my prospective clients with accurate, and accurately interpreted, information so that they can make an informed decision as to whether or not it is in their best interest to enter into a major, and for the most part, unfamiliar transaction.

If a seller wants to place their property at a list price higher than the market shows it will bear and the agent agrees, are they not misleading that client into believing that the attainment of that price is possible?  I think they are.  I believe that no matter how much discussion there is about what is going on out there and what the probable sale price will be, once the house goes on the market at a certain price, the seller begins to believe that price is really attainable and they, therefore, end up making all of their subsequent decisions based on a fairytale.

Self Serving Real Estate AgentI have recently participated in several on-line discussions about this subject and the agents on the side of taking overpriced listings seem to fall into three categories: 

  1. the, "It's not really my job to help the seller figure out what is going on in the market.  My job is too try to obtain whatever price my client wants" group (which, imho, is code for, "I am clueless, I have no idea what's going on in the market so I'm just going to throw everything against the wall and see what sticks");
  2. the, "I'll tell the seller what they want to hear and take the listing overpriced and then I'll get them to face reality over time, it will take longer and the seller will end up netting less but, at least, I'll already have the listing" group
  3. and the even more disturbing, "I'll take overpriced listings anytime.  I don't really care if they sell.  I'll use those overpriced listings to generate other business.  They'll increase my signage in the area, thereby generating more listings, and my presence on Trulia, Zillow, etc. thereby generating buyers" group.

Clearly neither of the last two viewpoints expressed even consider the seller let alone what is in his/her best interest (the first viewpoint is just frightening).

Telling the prospective seller the truth when you know it is not what they want to hear, is not the easiest thing to do.  It's particularly tough in this market when all the talking heads are shouting that REAL ESTATE IS BACK and flinging about insanely high appreciation numbers. It takes a significant amount of extra effort to help the prospective seller understand that those numbers are national and real estate is local. 

Have we had appreciation in this area...YES...but not to the degree that the national news might lead you to believe.

I have lost listings to agents who fall in one of the other groups but I remain steadfast in my belief that my first obligation is to provide the prospective seller with an accurate interpretation of the market so that they can make an informed decision.

If you want, or need, to sell your home in Southern New Hampshire or Northern Massachusetts and would like an accurate assessment of the market, you can contact me at 603-490-5344.

Comment balloon 36 commentsJoy Baker • July 15 2013 06:01AM

Comments

Joy, excellent post. So many agents ar willing to take the listing just because and hope that they can eventually get it sold and the seller does exactly as you state, make all future decisions on the value that it had when initially placed into the system.

Posted by Ed Silva, Central CT Real Estate Broker Serving all equally (RE/MAX Professionals, CT 203-206-0754 ) over 5 years ago

Thank you, Ed.  Not exactly in the seller's best interest, is it.

Posted by Joy Baker, So NH RE & Short Sale Specialist (RE/MAX Insight) over 5 years ago

Lot of good agents, broker, REALTORS out there doing a good job on the pricing, marketing, information delivery too.

Posted by Andrew Mooers | 207.532.6573, Northern Maine Real Estate-Aroostook County Broker (MOOERS REALTY) over 5 years ago

Joy, You are doing your job. Like you, I'd rather lose a listing opportunity to another agent than to lie and deceive a seller and ultimately buy the listing.  People with a strong conscience will understand this. Those that don't likely will not. 

Posted by Kathleen Daniels, San Jose Homes for Sale-Probate & Trust Specialist (KD Realty - 408.972.1822) over 5 years ago

Give them the market facts and if they wish to list at an unrealistic price, it's UP TO THE AGENT to accept the listing with all of the negatives that accompany an overpriced listing OR WALK AWAY.

That, option two, walk away, is clearly beyond many agent's ability.

TURN IT DOWN!  Or, in other words, let the owner give the listing to one of your competitors.

Posted by Lenn Harley, Real Estate Broker - Virginia & Maryland (Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate) over 5 years ago

I agree completely. Unfortunately it is so difficult to explain that to sellers. Would rather lose the listing.

Posted by Kelly Taylor (Keller Williams) over 5 years ago

Joy- I also think that when agents take what they know to be over-priced listings it can reflect poorly on the industry as a whole. 

Posted by Kathy Streib, Home Stager - Palm Beach County,FL -561-914-6224 (Room Service Home Staging) over 5 years ago

Walking away from an over priced listing is the equivalent of earning an extra week of vacation!

Posted by Adrian Pearsall over 5 years ago

Two words: fiduciary duty.

Posted by Holly Weatherwax, A Great Real Estate Experience ( Associate Broker, Momentum Realty) over 5 years ago

There are professionals and order takers and it depends on your definition of a professional is, isn't it? You are a fearless professional and I applaud you and others like you in this industry. We need more fearless professionals with conviction and virtue and perhaps someday we'll succeed.

Posted by Kimo Jarrett, Pro Lifestyle Solutions (WikiWiki Realty) over 5 years ago

Totally agree. I have walked away from more than one listing appointment because I was 1. not willing to take an overpriced listing when 2. the seller really was not motivated to drop the price to "reasonable" after 2 weeks to a month. Which means they were not really motivated to sell in the first place! I always tried to get it priced right to begin with but if that failed and they were willing to drop to reasonable after 2 weeks then I would consider the listing. Buyers not sellers dictate the price and the sooner we get sellers to understand this, by putting themselves in the buyers shoes, the better!

Posted by Michelle Vickers, Prompt Professional Proactive (HER Realtors Worthington 614-353-3698) over 5 years ago

Andrew - You are correct.  There are lots of good agents.  Many of them right here on AR

Kathleen-You're right.  Those with a strong conscience will get it.  Those without probably won't.

Len - I agree!

Kelly - It can be very tough to explain to sellers and some will prefer the fairytale.

Kathy - I think you are right.  It does reflect badly on the industry.

Adrian - good point.

Holly - Unfortunately, there are many people in this industry who, apparently, wouldn't recognize a fiduciary duty if it bit them in the butt.

Kimo - Thank you for the kind words.  You are correct, it is the difference between being a professional and being an order taker.

 

Posted by Joy Baker, So NH RE & Short Sale Specialist (RE/MAX Insight) over 5 years ago

Its always frustrating to lose a listing over price.  Then you watch the listing drop in price and expire.  I know when I take an overpriced listing it is never fun, even when we have the discussion I think it is overpriced they look at me as if I am doing something wrong.

Posted by Kevin Vitali, Helping Massachusetts Home Buyers and Home Sellers (EXIT Realty- Massachusetts Short Sales & Residential Sales) over 5 years ago

I totally agree, Joy! My First priority is to represent my clients and care for Their needs. I am not in the business of blowing smoke up someone's skirt. My clients know I am a straight shooter even when it hurts.

Posted by Sherri Melton, Augusta GA Homes for Sale -Search Columbia County (Keller Williams Realty Augusta Partners) over 5 years ago

You make some very valid points. Some homeowners must see for themselves, however, that they won't get the price they're dreaming of. It's not the end of the world if it starts out a little higher than you think it should be. It gives them peace of mind.

Posted by Jill Sackler, LI South Shore Real Estate - Broker Associate (Charles Rutenberg Realty Inc. 516-575-7500) over 5 years ago

I have found that sellers understand comprehensive CMAs and agree to a list price within the narrow window indicated by the sold price spread. Sellers also understand that the property must appraise for the contract price or above, if the buyer is seeking a mortgage. Prior to listing, I discuss price reduction with sellers.  In today's market, if there are no offers within a week, the house is not priced correctly.

Posted by Sharon Parisi, Dallas Homes (United Real Estate Dallas ) over 5 years ago

Hi Joy, we agree.  Tried to tell a seller that the other day.  Just because a Realtor says they can get you X$ doens't mean they intend to sell it!

Posted by Bob Miller, The Ocala Dream Team (Keller Williams Cornerstone Realty) over 5 years ago

Good for you Joy! You take your duty seriously. 

It's best to walk away from those - then go back and list them later when they become expired listings. By then the sellers might be ready to believe the truth. 

Posted by Marte Cliff, Your real estate writer (Marte Cliff Copywriting) over 5 years ago

I'm all for putting a client's needs first, but sometimes I think an agent should take an overpriced listing. You can tell them all you want how it's priced too high but sometimes they just need to see it for themselves. The seller will get a reality check about what the market is really yielding. I'm not a real estate agent, just from my own POV :)

Posted by Suzanne Otto, Your Montgomery County PA home stager (Six Twenty Designs) over 5 years ago
Our job is to advise and if a client wants to list higher than we have advised, I don't think we are misleading them. Many sellers are more concerned about under pricing in today's market than they were in a down market. They may just need more evidence from the market to tell them they are overpriced.
Posted by Aaron Hofmann, aka Mr. Smyrna Vinings (Atlanta Communities) over 5 years ago

Joy, I agree. I have a certain threshold even in the hottest of markets and I will tell the seller, "I'd rather turn you down now, than to let you down later".

Posted by Mitch Muller - Charlotte NC Real Estate, Certified Residential Specialist (ProStead Realty Charlotte, NC CRS SRES mitch@prostead.com) over 5 years ago

Reality is difficult for some sellers to hear, but well done on staying true to your word of serving your clients' best interests.

Posted by Ralph Gorgoglione, Hawaii and California Real Estate (800) 591-6121 (Maui Life Homes / Metro Life Homes) over 5 years ago

Excellent post! I wish I just had $100 for every listing I've walked away from over the years b/c someone else agreed to list a sellers home for what the SELLER thought it was worth. On the other had, as the expert in my area I've also eventually gotten some of those listings after the seller came to their senses.

Posted by Keith Whited (RE/MAX Gateway) over 5 years ago

One of the clear signs to me that a seller is going to want to list the property at a price far above its value is when they make the statement, "Well, I don't really need to sell the house."  That's the time to say, "then don't put it on the market because you will probably be wasting everyone's time and when a fair offer on your home is made, you probably will not accept it."  Too much work goes into listing and maintaining the process to take prices at inflated values.  I know that many realtors take them just to "ride them down" to a reasonable selling price but I won't do it.

Posted by Marnie Matarese, Showing you the best of Sarasota! (DWELL REAL ESTATE) over 5 years ago
That reminds me of a seller who switched agencies because he wanted to see more "can do" attitude in the listing. Well, after a year of doing that, nothing happened. The property is still for sale at an inflated price and I'm glad I am no longer trying to do the impossible.
Posted by Hella Mitschke Rothwell, Hawaii & California Real Estate Broker ((831) 626-4000) over 5 years ago

No matter what, there will always be an agent that will tell a seller what they want to hear to get their name on the sign.  I don't think that will ever change.

Posted by Karen Feltman, Relocation Specialist in Cedar Rapids, Iowa (Cedar Rapids/Iowa City, IA KW Legacy Group) over 5 years ago

We definitely have a few agents in our market known for taking overpriced listings to sit and rot while gathering buyer after buyer.

Posted by Chris Ann Cleland, Associate Broker, Bristow, VA (Long and Foster REALTORS®, Gainesville, VA) over 5 years ago

Featured in the group:   BARTENDER, MAKE IT A DOUBLE.

Posted by Chris Ann Cleland, Associate Broker, Bristow, VA (Long and Foster REALTORS®, Gainesville, VA) over 5 years ago

Dear Joy,

Most of my clients actually appreciate brutal honesty. I just show them what the market is and they can make up their own mind about what they want to do. If they have all the time in the world, maybe the market will catch up with them, but usually as soon as they find the dream home they want to move to, they start to get very reasonable about their expectations for their sale.

Posted by Dörte Engel, ABC - Annapolis, Bowie, Crofton & rest of Maryland (RE/MAX Leading Edge) over 5 years ago

Michelle - You're right the market sets the price.

Kevin-Your experience speaks to my point that no matter how many conversations you have prior to listing in which you tell the seller the price is too high, once you list it at that high price they begin to believe it's attainable and, therefore, it clearly must be YOUR fault it's not selling.

Sherri - It does hurt sometimes, doesn't it?

Jill - A little higher is one thing a lot higher is another. 

Sharon - It sounds like your market is hotter than ours here in New Hampshire.

Bob - I don't think that ever occurs to most sellers.

Marte - That is exactly what sometimes happens.

Suzanne - As you can see from many of the responses here, what all too frequently happens is the seller develops a form of amnesia and no longer remembers all of the pre-listing conversation about value.  When that happens the seller frequently decides it must be the fault of the agent...LOL.

Aaron - I agree our job is to advise.

Mitch - "I'd rather turn you down now than let you down later".  I LOVE THAT!  Can I use it in my conversations with unrealistic prospective sellers?  And, you're right, it's all about having a threshold.

Ralph - Reality can be a bitter pill. 

Keith - Thank you.  I'm sure that many of those listings do eventually come to you.

Marnie - Yup, we don't need to sell or we're not in a hurry...

Hella- And I'm sure you had many conversations with him about the inflated price before you listed it which he promptly forgot once it went on the market.

Karen - You're probably right.  It will never change.

Chris Ann - I don't think it occurs to most sellers that this is a business model for some agents.  Thanks for the feature!

 

 

Posted by Joy Baker, So NH RE & Short Sale Specialist (RE/MAX Insight) over 5 years ago

Joy. this is not an easy question for any of us...  it all depends by taking in consideration all the facts to that particular listing.. but if you have set a rules based on your own beliefs and not ever take what you perceive to be an overpriced listing. .you are self imposing limitations to your own success.. I've been proved wrong many times before .. is all about achieving a balance and float your decisions with current market conditions

Posted by Fernando Herboso - Broker for Maxus Realty Group, 301-246-0001 Serving Maryland, DC and Northern VA (Maxus Realty Group - Broker 301-246-0001) over 5 years ago

then again when values are rising it is hard to know exaxtly what buyers will pay in some markets.

Posted by Edward Gilmartin (CRE) over 5 years ago

I always run the numbers and explain what I see to sellers, but real estate is a negotiation, from your interactions with the seller and beyond.  If my sellers want to price higher than I believe and advise them, I may do it within a reasonable range, but come to an agreement that we adjust to reality within a specific timeframe and I have rarely had a problem.  My area is South Florida and now it is a seller's market, inventory is low and prices are increasing with every sale, so who is really right?  I sold two listings in one subdivision next door to each other, separated by a few months and the last one is going for $28K over the first with the same characteristics.  In normal markets and situations, agents sometimes express what sellers want to hear and get the listing, knowing the odds are the seller will lower price rather than terminate them.

Posted by Joe Pruett (Bank Plus Realty, Inc.) over 5 years ago

Hello Joy,  Great blog and so true.  I tell people I do not want a sign just in the yard, I want to sell their home. 

Posted by Will Hamm, "Where There's a Will, There's a Way!" (Hamm Homes) over 5 years ago

Well, sometimes I take overpriced listing knowing that we'll need price reductions. I tell them my price suggestion, they tell me that realtor Nancy, and realtor Joe, and neighbor Jeff, and press, and all news, and those nice postcards suggest that prices went up and inventory is low........Yep~ you got the picture:) They need the reality check.

Posted by Inna Ivchenko, Realtor® • Green • GRI • HAFA • PSC Calabasas CA (Barcode Properties) almost 5 years ago

Don't you just love those agents and neighbors?  And, don't get me started on the press and their sweeping generalizations.  Reality check is right, Inna!  Thanks for taking the time to leave a comment!

 

Posted by Joy Baker, So NH RE & Short Sale Specialist (RE/MAX Insight) almost 5 years ago

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