Missoula, MT

Last week’s team meeting produced an interesting tale of ‘overpricing woe’. The parents of one of my associates listed their house in mid-2006 at $590,000. The inaccurate list price was determined by their real estate agent, and the property sat on market for nearly 2 years, suffering a price drop of almost $200K. By the time my co-worker’s family unloaded the property, they had to settle for only $400,000; this unpleasant situation could’ve been avoided if only it had initially hit the market in the correct price range.

Overpriced listings are, unfortunately, a common practice in real estate. Some agents overprice their listings thinking they have provided themselves with “wiggle room” when it comes time to negotiate. Other agents price too high because they are either in agreement with the seller’s over-inflated valuation, or they are “buying the listing”: an unethical practice I will expound on later in this post.

Overpricing a listing for the sake of “wiggle room” may seem like a good idea, but in the end it will only serve to hamper your selling efforts. High priced homes do not yield as many inquiries as listings that are priced competitively; the lack of offers usually leads to several price reductions and a lengthier term on market, two factors that serve to erode the integrity of your listing. Savvy buyers will shy away from ‘lemons’ that have sat for months on end, only moving in for the kill when the agent has reduced the price by half of its original value.

Sometimes homes are priced too high for no other reason than the agent-seller team is in agreement. The trick in this situation is being able to look at a property objectively, as a buyer would see it. The seller’s viewpoint is obviously biased, but rightfully so since he/she has large sums of money invested in the property. Oftentimes valuations of a home are inflated due to upgrades the seller has performed. Sadly, buyers tend to not see the value in these upgrades, opting instead to modify the home themselves and therefore considering any upgrades the current owner has performed nothing more than the offering that’s on the table. Overpricing your listing based on current homeowner upgrades has the potential to lead to the unpleasant situation where the homeowner realizes that they spent more money on upgrades than they will ever see at the time of closing.

Unethical agents will sometimes attempt what is called “buying the listing”. This happens when the agent enters into a listing presentation with a purposefully over-inflated CMA. Of course, since homeowners oftentimes (through no fault of their own) have inflated valuations of their property, the ‘shady’ CMA aligns with the seller’s wishes and the agent has effectively bought himself a client by knowingly catering to their unawareness. Sometimes agents enter into these situations with the intention of talking down the seller at a later date; this, also, is not a good idea since your initially over-inflated price will undermine any chance the agent has of cashing in on the “New Listing Hype”.

You will get no argument from me that this is a touchy situation. No agent has ever won a listing by strong-arming their clients and ordering them around like green recruits. But, the question becomes: at what point are you catering too much to the seller that you are, in fact, sabotaging the transaction? It is the responsibility of the agent to draw on their industry expertise to protect their clients from low-ball offers, high-priced listings, and any physical harm incurred at the negotiation table. They are not only investing in your expertise, but ultimately placing their future in your hands. It is the duty of the agent to live up to those expectations.

Yesterday there was a 12 home Realtor lunch tour on the south side of Missoula. All of the houses were larger/newer homes in newer subdivisions, priced between $350,000 - $600,000. For those of you unfamiliar with our market, that's probably what you'd consider the "top end" right now, there's higher priced stuff, but these are mostly large homes with 4+ bedrooms, newer, big lots as high as 2 acres, etc.

After completing the tour it was sobering what is going on in our "top end" market, the general disconnect between agents and sellers, and how people still don't realize the changing national market. A few observations:

- Not a single house was priced within 10% of it's market value.

- Of the 4 most expensive homes only 1 had a yard, the rest had an acre of weeds or dried out dirt/clay. I figured some were foreclosures, none were, and in two cases the agents pretended to be shocked that I'd dare ask such a question.

- Only a few agents had the confidence that they were going to get a price reduction or work done on the house to improve it's appearance.

While the lower price range of our market is flying by, the top end crawls at a much slower pace, and agents are failing to help their sellers recognize that. In one house that was probably $100,000 over-priced the agent said she wasn't going to pass our feedback along b/c she was afraid of what her clients reaction would be! In another house that might've been $150,000 too high priced, the agent said that her clients would, "probably go that low." Well then, REDUCE IT! I don't usually search $150,000 over what my clients are approved for, and I doubt many other buyer's agents do so as well.

Someone help me, when did we go from being the professionals in our market that helped our seller clients get their house sold, to someone who will just appease their seller clients and not tell them what they need to hear? Come on people, if your sellers need to sell, and are willing to be priced within their actual fair market range, get it done. How on earth are you going to sell a house that's $100,000 over priced (at least), ugh.

The best advice I could give any seller's agent; if the seller wants to horribly over price the house, or bases their opinion on an old appraisal compared to your market advice, walk away - don't take the listing. Badly over-priced listings are probably the 2nd or 3rd biggest time wasters in this business (behind working with extreme low-ball bargain hunters, and selling short-sale houses).

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Rent To Own Homes, LLC

www.50statesrent2own.com

www.activerain.com/blogs/peteolsen01

A recent sign order resulted in our supplier mistakenly printing over 30 extra sign riders.

Acknowledging the mistake, our supplier offered to dispose of them at no charge, a courteous gesture...

...but in today's economic and environmental climate...

...how could we just throw away 30ish perfectly good signs? Instead, we returned the signs, and asked our provider to simply re-label them when the time comes for the next order.

Fantastic! An environmentally-friendly, all-around 'green' solution to a potentially wasteful problem! Goomzee also reduces paper waste by delivering listing information to homebuyers via text message. In fact, I even get 'THE LOOK' from co-workers when I print something onto hardcopy. It's exciting to work for a company that does its part for the environment.

In what areas are you taking steps to 'Go Green'?

I am moving! True, packing, hauling, sorting, and paying 1st Month's Rent is not at all enjoyable, but a new place to live in is like taking a new lease on life. Sadly, I have to be out of my current residence by the end of this week, and I haven't even started packing...Hello Procrastination, my old friend.

No matter. What I'm missing in terms of packing/sorting joy, I'm more than making up for in terms of networking. On Wednesday I set up an appointment to take a walk-through of a condo up in the South Hills of Missoula. Slightly off the beaten path, a bit of a struggle for my little Nissan to get to, but a great place nonetheless. What surprised me when I got there was the real estate agent standing expectantly in the front lawn, clipboard hugged to her chest and her eyes scanning the entrance to the one-way cul-de-sac. You see, I had responded to a Craig's List Advertisement for this condo, and therefore wasn't expecting it to be an agent- listed property. As I opened the door and stepped into the street, I was thinking to myself that this agent must realize the marketing value inherent in a good online presence, a trait exclusive to tech-savvy agents. This was my 'in'.

We took a quick run-through of the single-floor rental and got right to business talking about fees and utilities and whether or not my 4-foot red-tailed boa Susie could claim a corner of the condo. Business was over as quickly as it began, and soon a lull in the conversation proffered me my shot at the door. Taking my opportunity, I stood up and threw my shades back on, reached for my wallet, and asked her, "How's business for ya? We've noticed a bit of an uptick in the market lately..."

This was it, the moment of truth. At this point I had let her know that I am somehow connected with real estate through some sort of official capacity. Now it was on me to make or break the connection; I slowly extended my hand, offering her a crisp, clean new business card.

"That's for you," I suavely grinned.

I could see her breath catch in her throat, a slight hand tremble, a lean against the counter as she took the card, flipped it over a few times, and ultimately tucked it safely into the clipboard. As she accepted the card and glanced at its modest black lettering, a wave of accomplishment washed over me: I had just handed out my first business card in a professional setting.

So I may have embellished a bit on her reaction, but it was still an exciting moment in my week. Until last Wednesday, I had not had any face-to-face networking on a business level. Sure, I've handed out biz cards here and there, but my mom and my roommates are not viable business contacts. The interaction I had with the agent at the condo was the first time I've met with somebody under the Goomzee banner, the first time I talked shop with an agent in the field, and the first time I unloaded a biz card to someone who will actually read it (hopefully).

So now I know what it's all about: F2F (face2face). I trudge through my daily blog rounds, sift through the Twitter noise, and take pains to keep my company's Facebook page updated, and now I know why: so I can convert my online interactions into living, breathing, face-to-face relationships.

I hope everyone had a great time networking at NAR's Midyear; don't forget to keep it up when you get back home! Happy Selling!!