"Well, no big deal. That's fine with me,", I thought.
After listening to the voice mail, I realized that I had just lost a potential listing, and I was really happy about it. In fact, I am generally pleased when another agent takes a horribly overpriced home. I'm not pleased because I like seeing people suffer. Instead, I am happy that I have saved myself a lot of headaches.
I had a listing appointment last night, and I made a 
general comment to the sellers that I think bears repeating here:
Never choose a listing agent based exclusively on the listing price that they give you. They may be willing to list the home at a much higher price than other agents, but that will not make the market value of your home change at all.
Simply put, listing agents don't magically create additional market value by virtue of their advertising methods, or their good name in the community, or by any other method.
When listing a home, one of the key factors to consider (especially today) is whether or not it will appraise at the desired price. "Will a licensed third-party appraiser be able to justify this price?" If not, then the buyer can't get a loan for that amount! This will remove 95%+ of the eligible buyers, since cash buyers seem to be in short supply at the moment.
Here's a quick definition of "market value":
Market value is determined by the price that a ready, willing and able buyer will pay for a home. Period.
As Realtors, we all have access to the same basic data from the MLS system. With that in mind, we can all see the same comparable sales for every home in the area. We may differ on fine points, such as the perceived value of upgrades, location, and so forth.
When I am listing a home, unlike some agents out there, I want the home to actually SELL at some point, so I price it accordingly. Underpricing? Hardly. Market pricing? Absolutely!
In my entire real estate career, I haven't seen a time when the pricing was more important than it is today. With pressure from current economic factors, and the underlying related anxiety, home buyers want to make sure that they don't make the same types of price-related mistakes that were made over the past few years.
Price the home correctly if you want it to sell. I cannot state it more clearly than that. If a listing agent seems overly willing to go with whatever price you want for the house without any supporting data, be suspicious. Otherwise, you may end up wasting a lot of time and energy.
Thanks for reading!
Photo courtesy of The Rocketeer.
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.....that will not make the market value of your home change at all.
I had an appointment today....and discussed other alternatives rather than selling this particular home. Some just can't believe that they will not make back what they bought it for in 06. In this case we moved on to another property they own.
Bottom line is what you stated ...and what most of us preach.....
Market value is determined by the price that a ready, willing and able buyer will pay for a home. Period.
Jason- Why would I or you or any agent want an overpriced listing that is not going to sell? I don't get it, never did. A lot of pricing depends on the price range of the house too. In the luxury market it is sometimes an art to discover the right price and we have several times priced the properties higher than the last listing agent, and sold the home. In that market it is more about perception and the amount that the buyer is going to barter over and that depends on which country they are coming from since over one quarter of our buyers are International buyers in Florida.
We have lost some listings because we would not price it where the seller wanted it to be priced. That happened not too long ago, had an investor who took a beating, is building 14 condos, he wanted 600Kfor each of them, they are only worth 375K in this market. He thought we would be drooling to list them all, but we said, what good would it do us to take the listings. Nice feather but not worth a darn if they don't sell!
You are all so correct I do not want to be a inventory agent I want to be a listing agent. Properties that are not correctly priced cost everyone time money and aggravation. Do it right from the beginning.
Jason,
We're in a world where a Rhodes Scholar questions the meaning of "IS" and you except the masses to under stand the meaning of "market price?"
The same people think you're calling them stupid when you said ignorant!
Do your 4 or schould I say 3 & 8/9ths kids a faivor: home school!
Bill
Jason,
I couldn't have written you blog any better! i agree with you 100%. You saved yourself a lot of frustration. Especially when you stated " I haven't seen a time when the pricing was more important than it is today"
The home would probably never appraise in this market! I have seen more and more homes getting 2nd or even 3rd appraisals or BPO's in an escrow period here in California.
You did yourself a favor my friend.
Sincerely,
Temple Stratton
p.s. I love the picture!!
Jason - This has happen to me lately, sellers are not happy with the information provided. Yes we don't determine the market price our presentation is going to be based on actual stats. Then months or years later you will see the house languishing on the market and the sale price will be much less than if they had listed it at a reasonable price and get a quicker offer.
You know it, and we know it. We've all faced this challenge. But some sellers won't listen, and won't budge.
So keep telling them. Then tell them again. And tell them again. And again. And yet again.
Jason: I agree with you in substance. However, it is the best policy to tell people what choices they should and shouldn't make when you first meet them? Might it be preferable to explain how a rational choice regarding a listing price could best be reached without resorting to directives? Just postulatin'
Bill - We DO homeschool our kids! Always have -
Matt - It works really well, frankly. I figure that this is my career, and I have been immersed in real estate full-time for 12 years every day. It's my profession, not theirs. It's not presented in an offensive manner - just additional food for thought before we part ways at the end of the appointment.
Right you are, Jason - the listing agent does NOT determine the market price! But isn't this another one of those myths that the public still has about listing agents???
Jason, great post. The listing price is determined as you put it by what an able and willing buyer is willing to pay. It is far better to walk away from than to be struggling with an overpriced listing! We have actually walked away from several listings in the past year or so rather than take the overpriced listing. It is difficult, but it is the right thing to do!
I spent a lot of time with one couple, showing them comps and going over the market. They said, "it sounds like you don't want this listing." I told them I would love the listing, but not at the price they said they wanted/needed. They found someone willing to list it 25% over market value. I've watched them chase the market down. It's currently 10% below the listing price I suggested and still hasn't sold. The listing is stale and they now need to create a "bargain" to stir interest in the house.
BTW, How's the baby watch?
Hi Jason- Great post! I let my listing clients know I am like the messenger for the buyer & the current market. I price for competition(current inventory). I just lost out on a listing where the other agent suggested a listed price 30% higher than I suggested. Go figure.
This is the absolute truth Jason. This happens all the time. I have a post just busting to get written involving an estate sale listing that an agent up here"bought" with an above market value. The family was so confused in the end they almost lost a great buyer after a second listing agent came in and got them to come down in price for a new listing on the property. Stay tuned for that one it's a doozy.
Jason, I lost one too recently because they did not like/agree with my recommended list price. I always have a moment of angst when I think I should have done a better job on my presentation but then I know that for some sellers it would not make any difference.
"In my entire real estate career, I haven't seen a time when the pricing was more important than it is today."
I could not agree more. and I want to add they I have never seen a time where doing the comps and arriving at an asking price was so easy. no more guesswork. The sales data is it.
This is something that sellers so clearly do not understand. When one Realtor comes in $50,000 higher, they believe that she knows "something" more than the others. Or they "want" to believe it.
My partner is a top 10 agent in Illinois. She frequently takes listings that haven't sold by telling the client the truth....that their home is over priced and that the current realtor is doing them a disservice. Good stuff bud.
Taking over priced listings has never been a really good idea, it's your money wasted on the marketing.
Hmm, this listing determines (sorta) the listing price as if my prospective seller is unreasonable in what they want to sell their home for, I'm outta here! :)
We just pass on the ones that are "smarter" than us. I am not a collecter, I sell!!!
Marilyn - The baby is due to arrive this month (the latest date would be April 25th). We are 3 days from our due date, so we'll see when she decides to make her grand appearance.
I really get irked when a listing agent asks a seller, "What price do you want to list your home at?" and then they do it.
If the agent is not professional enough to do the market analysis, explain the basis for the recommended listing price, etc. .... well, maybe they shouldn't be listing properties. Just my opinion.
Well, I told my clients (featured in the Darth Vadar blog) that we can either be ahead of the market, or chase it down. If we chase it, they will triple or even quadruple their time on the market, and still end up at my original idea of a list price. Needless to say, we are on a break. Sad. But I encouraged them to shop around. And of they choose to find another Realtor willing to list at their price, then God-speed. They still haven't found one. Maybe my phone will ring by the end of the week... Cheers,
Amy
It is a rough concept for sellers to grasp. But, once they do get it then the home usually moves. The sad part is that it sometimes takes a six months to a year at the wrong price before the homeowner comes to grip with the true current market value of their home.
Hey, Jason: I accepted your linked in invitation but then the invitations kept coming and coming and coming. I couldn't get it to turn off -- until I took out the battery. Wondering if there was a virus somewhere in the linked in apparatus. Do you know?
Jason,
Despite the housing market realities today there still are plenty of sellers who live in a make-believe world when it comes to accurate pricing. And then they wonder why the property fails to move.
Great graphic.
I wish I had the power to control the market pricing. I would own a small island if I did, say Hawaii. lol....