I’m up at 5am these days working the expireds. I keep seeing example after example of listings that are following the market down and the seller, in this California market, is losing some big bucks.
When I look at the MLS history, I see:
If the price had been set somewhere between the 60-day & 100-day price, the escrow would be closed in eight out of ten cases and the owners would be on to the next phase of life with more money in their pocket than they are going to get now.
Instead, many are going to do one of three things:
As professional Realtors, we do not serve the best interests of our clients if we do not understand our market, keep abreast of the trends, and have the hard talk with them when taking a listing in a transitional market moving down.
Here’s an example:
If the house had been listed around 1.3 in June, we might have seen an offer. Chances are if the sellers need to sell, they are going to see the price deteriorate even more.
We all know the temptation to list at the sellers utility price instead of what we believe the market price is to get the listing. I don’t think that is necessarily wrong, but the seller needs to know up front, that if there is no action in 2 to 3 weeks The Price Needs to Be Reduced and it needs to be reduced to lead the market down, not follow it.
Imagine that $100K was yours. How hard would you want your Realtor to fight you to keep it in your pocket?
If you are facing similar situations in your market here a couple of things I recommend:
HarperMees & Associates - brings a synergy of skills and talents together that adds unique value and reduces hassles for our client. Client-Focused Team Support.
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Welcome to what it has been likein Florida! Seems the sluggish market has finally found its way to your neck of the woods. In order to sell they will have to be lowest price in their market. For us it started before June and only recently have the lower end homes been moving. I wish you luck and keep a watchful eye on the market daily!
The hard part is competing with agents who don't care about market value. They just want a sign in the yard, and pray for a miracle.
Allison - The market here has been like this for over a year. Some haven't taken the blinders off for a while
David - The better pray that angry sellers don't start badmouthing them
Excellent analysis.
If a seller doesn't understand the TRENDS in the market today, they are very likely to sit for quite a while.
In this market we make it a point to explain to sellers the pitfalls in chasing the market. Better to price a little more aggressively and negotiate than chase declining prices. 5 AM? Our MLS doesn't display expired listings until 9 AM.
Great post and great analysis.
In metro Atlanta, we have been in a Buyer's market for at least 3 years and have approximately 10 months of inventory. We also have a very large expired (and FSBO) market.
Educating Sellers is key and if they are not aggressive in their pricing strategy, they are going to be sitting on the market and helping to sell the competition.
Happy Holidays.
Laurie
It makes you wonder... where would the client price their home with an agent on Day 1 if they knew they would have to increase the agent's commission by .5% for every 5% price reduction that became necessary to actually get a sale for their home?
Let me play the role of the skeptical consumer for a second, one that thinks a real estate agent only wants to force the price lower to make their job easier. This is a prevalent thinking by the way. If I am that consumer, I believe that if you price my house below the market, it should be easier to sell, meaning you work less and your motivation is to work less and get your money fast. That same consumer already believes your commission is too high, typically. How do you convince me on day 1, as the skeptical consumer, that doing this is best for me?
Jeff - Great question and that is exactly where the stats on market trends and history come in. You couple that with a few real examples from the MLS to make as good a case as you can. If the seller insists on an unrealistic price, you agree upon the seller agreeing to lowering the price if there is no action in the market in the first couple of weeks.
We are there to help them sell their house at a realistic price and in a reasonable amount of time. If they are not wanting that, then we pass. We want their business, but we do not want inventory sitting around costing them and us money and aggravation.
Ah those skeptical consumers - the three of us are sitting around the fire with Egg Nog while the money just flows into the bank. I tell you this is better than MLM!