I talked to one of my ex-Sellers today. He said: "The condo is yours, if you want to sell it Mirela!" "Thanks Joe, but you'd have to reduce it by about $100,000", I said. This actually occurred earlier today.
I have let go of all the overpriced listings and I've asked my sellers to just keep them off the market unless they really need to sell, in which case they need to price them correctly. My company has a property management division and many of my clients have opted to take that route for now.
My Associate, Sharon Alters, put it best: "An appraiser friend of mine was telling a fellow Realtor and me yesterday that it is her opinion and she's right - that if the people who do not have to sell now get their homes off the market, then the inventory will drop, demand will rise, prices will stabilize and voila! they may be able to sell in a couple of years. Right now is not for the faint-hearted seller."
I refuse to contribute to the housing glut! It makes no sense for our Seller Clients, since we all know the pricing that will get the property sold: today's price (based on recent comparable sales, including short sales, foreclosures and REO's) minus 3-5%! That's right! That's the new formula for getting it sold in today's deluged market.
Shrink the inventory and you'll increase the demand. Why not? This is not a novel idea, it's simple Economy 101!
I too have been working on my sellers to reduce or go off the market. I also have turned
down many listing. It just doesn't make sense in this market to sell unless they have to.
We are also seeing less homes come on the market.
Fair warning to all of you: comment on my blogs and you run the risk of ending up IN my blogs... I've done it several times before. And why not? The extraordinary professionals here on AR should be duly noted!
Thank you Sharon for the contribution that inspired this blog. I've been studying our local statistics which are currently indicating a trend for the not so serious sellers to opt out of this market. Our inventories have been shrinking in several communities for the first time in two years...
When the oceanfront market went bonkers in 2005 I've actually heard agents blaming me for the rapid price increase. That is crazy, or so I thought. Since that one was pinned on me, I'd insist on this current trend being attributed to my efforts also!
You are preaching to the choir! Inventory needs to be reduced before we will ever get out of this mess. Many Sellers seem to think that market conditions applies to everyone but them.
Wayne: That was excellent:
Inventory needs to be reduced before we will ever get out of this mess.
Many Sellers seem to think that market conditions applies to everyone but them.
Sandy: Great minds think alike. Good job! Now for rest of us 117,401 members: get busy refusing overpriced listings!
Oops, I mean 117,400; three agents are already on the program!
Hear! Hear! You are so absolutely right! I've not gotten lots of listings this past year, because I was adamant about what I thought the home couldn't sell for. So far, none of the listings I didn't get sold, so it could be I was right. (oops - there was one listing I didn't get that did sell but they didn't not choose me because of price...)
I think there are agents out there that don't realize that they are not serving the client by taking the listing from someone who isn't in a 'have to' sell situation.
I'm glad to see Mirela exerting so much influence in her market that she can set the pricing :> Maybe I'll come visit for some coaching and get this market turned around on the other coast :D
Lynn: That's right! I'm a legend in my own imagination!
Preposterous as it sounds, some agents actually said such silly things (probably because I outbid them on many occasions; BTW, outbidding is not always about the price).
Don't get too excited about the coaching; I'm in constant need of it myself! In this market, as soon as I discover something that works, they almost immediately change the rules...
I think I will be doing some housecleaning! I have several listings that are having NO activity, and sellers unwiling to come to terms with the market value!
You are right Mirela! I am still shocked how many sellers "test the market" in this market! It doesn't help the problem if real estate agents continue to take overpriced listings.
Patricia: Marketing a property properly is very expensive. No good agent will bother with it unless it's priced correctly.
To Sellers everywhere: If an Agent agrees to list your property for a lot higher price than other professional agents have indicated, beware! That agent will most likely have no experience, little knowledge and they have no idea what they are doing. Beggars can't be choosy...
To put a property on the marke simply to have the annoyance of showing it makes no sense. Your property can either be rented, thus garnering you income, or it can be sold, but only if you price it correctly. Too many sellers have illusions that their property will sell and then lose the property through foreclosure. In SC we have deficiency judgments and if you lose your property that's only the beginning of your problems... Now, more than ever, you need to work with the best agent money can buy, not the cheapest agent... 2% of nothing is still NOTHING!!!
Pat: Worthless listings, uncooperative clients and other time drainers should be summarily dismissed. The time dealing with those could better be spent on realistic sellers and cooperative clients. You'll also be happier AND make a lot more money that way!
It may not be a novel idea, but it is a sensible one. We have an interesting phenomenon going on around here. Over all, we're still in a buyers' market but our absorption rate in some areas is less than 4 months, which should make it a sellers' market. However, well-priced homes do go into multiple offer situations frequently. Buyers are looking for deals and jumping on them when they find them.
Christine, that is unique and remarkable! Absorption rates of 4 months? I haven't seen that since... Now I can't even remember!
Well priced listings go into multiple offer situations here as well. They are usually bank owned properties with the banks becoming more and more nervous about holding way too many of these properties.
That's how I garnered that wonderful oceanfront unit for my buyer client that I just wrote about a blog ago. He ended up with an amazing deal. We just closed on it yesterday.
The other two closings we had today were both distressed properties: one was a short sale and the other one a bank owned property. So far this week we've had four closings and ALL of them have been either short sales, or REO's.
Next week is the Horry County Foreclosure sale. Last one had over 225 properties in it. When it was all done the Master in Equity asked: "Are there any more properties left in Horry County?" It was funny, albeit a bit chilly...
Sandy: I don't know how I missed your comment (it was the first one, that's why).
Congratulations on being correct with your clients! We need more agents like you!
It's remarkable to note a trend of reduced inventory in several of the markets noted here. I look forward to hearing from other agents about the condition of the inventory in their respective markets!
I'm going to bed now. I should have been snoring just about now. (Do I snore? I hope not!)
Great point. I am glad that someone had the courage to express it-Dinah
Tell it how it is, do not candy coat anythign in this market .
Great points!
best to you and yours.
I also tell my clients this is a terrible time to sell but a great time to buy. What the elect to do is their decision however as I can't take responsibility for that.
Mirela, I just dropped some of my sellers & have a few more to go. I refuse to take what I refer to as OPT's=Over Priced Turkey's (I guess that's NY talk). I've noticed in the last few weeks that the total listings for each day have been greatly reduced. That is a GREAT thing to help change the course of this market as you said.
Mirela, what an honor to inspire a blog and to be quoted by you! Thanks! You are one of my favorite bloggers here so it's a double honor.
It is my hope that as overpriced homes expire, they will stay off the market. Now if all us agents will be pro-active in getting reductions or handing the listing back to the Sellers, then we'll start to see our markets moving again.
We also multiple offers on properly priced properties, proving that the ARE buyers out there, but they are smart enough to know a good price and an inflated price.
Also, you're not alone - my husband and I have been accused of single-handedly bringing down waterfront prices in our area. Well, the properties sold, didn't they? And the ones that agents and sellers thought were worth more.....well, they're still sitting...
that is Sound advice for sure. Reduced inventory will also create a sence of urgency among our buyers. and reduce the confusion many buyers have when there are too many choices.
I just wish more agents have the guts to say no to a listing that they know wont sell. I have walked into many listings in the past year and could tell before I even walked in that they were 100k over priced... In some cases 25% -35% too high, which is not very good for the listing agents reputation.
HiMirela,
I just refuse to take a listing that is overpriced. It will just sit there and that doesn't do anyone any good. I am looking for sales not listings.
Many of our Listers have granted price reductions as the market falls. This is the only way to keep activity up and buyers interested.
For those that want a price highest them the market offers we suggest they wait. If that isn't acceptable we suggest they seek out another Agent.
I agree completely. We have are in the process in our office of losing a glut of overpriced listings, and I can't see that it is anything but a good thing.
Wishfull thinking but a great idea but how many sellers can wait?
Wishfull thinking but a great idea but how many sellers can wait?
It would be nice if nobody ever took a new overpriced listing but that is not the nature of people or the business. Good post!
Sounds like a good plan! Now if sellers will follow the advice.
I fired a client because there were way too many short sales and defaults in the area that they just couldn't compete, so I told them how to reinvent the wheel for their building so it would hold it's own until they really needed to sell.
Chicago experienced that last week with inventory with a nice reduction due to listings be taken off and it closed the difference with the solds - where supply and demand looked alot better on the charts!
There are sellers that can wait and estates that could be held off the market. I had clients who wanted (not needed) to sell a few years back but the area was saturated with the same style of building. So, I told my seller that we would watch the inventory every day and when the right time would come, that's when we would go on. Believe it or not, in one weekend eight similar properties went under contract, so I put that listing on higher then the others because I figured that there had to be leftover buyers that missed with that number in that small community and we went under contract in two days. BTW, "those were the days my friend" song is play right now in my head. Wishful thinking.
I got a call today from a prospective client...my first question was "do you HAVE to sell?" Because, if not, then DON'T!
Awesome post!
This truly is economics 101. All of my sellers that don't HAVE to sell right now, I strongly encourage them to wait. I think we all need to do something like this, instead of waiting around for the market to turn, lets force it to!
Thanks,
Brendan Winans
How true, Mirela! We have branched off into property management too this year and it actually has taken off quite well. Overpriced listings, even if they sell, will not appraise...
Mirela, you are so right. Overpriced listings just DO NOT sell in this market.
Iv'e been telling my buyers for a while now that the only people REALING selling are the people who HAVE to sell. Unfortunately even those sellers are still having a hard time being realistic. When we show them comps and numbers on the market to convince them to lower their price, they simply refuse to call us back or respond to emails! What are we to do?
It's absolutely pointless to take an over-priced listing. I'll test the top for a few days if my seller insists, but if they are not willing to take a market-priced offer, they just plain aren't going to sell!
Mirela- My community is guilty as charged. Because we are a retirement community and most sellers do not have to sell, those properties are stagnating the inventory. The properties that are selling are priced right and there are very few!
Mirela, If it's not a short sale or an REO chances are it's an over priced listing in my market. Very few sellers have any equity at all. I quit looking foir them. I like your style!!!
Mirela -
Well said, and I've been doing my part to help the economy.
The flaw in this formula, however, is that there are many eager-beaver, if not desparate, real estate practitioners that would be happy to take any business, at any price.
These folks take the listing, and it sits, unsold. If they happen to come to their senses three weeks from now, however - I guess the agent with the Listing Agreement gets paid!
That's too bad!
But it's a chance we quality Realtors have to take - you gain nothing, in my opinion, from signing an overpriced listing!
Right?
DEAN & DEAN'S TEAM CHICAGO
Of course you're right but will they listen, heck no! But if we as agents wouldjust not list them then we would control the market and make i thappen. I with you and pretty much doing the same thing.
Dean, unreasonable sellers will most likely not become reasonable within 3 months... It's up to us to educate the consumer. We could re-blog this post. You are welcome to copy and paste into your websites, along with the comments here. This is what the consumer needs.
Unfortunately many sellers just bury their heads in the sand. They don't listen to me, then they come to me the week before the foreclosure sale asking for help, and of course, it's too late then.
They are not in a good situation. That much we know. It's just a question of choosing the lesser of two evils: bring money to closing & get it sold, or foreclose and destroy your credit AND have a deficiency judgment chasing after you forever and liens put on other properties that you own, or having your wages garnished. The stakes are high here... People don't realize just how serious this can be...
You're right. Be straightforward with your customer and realistic about market values. It's a winning combinatin.
I've revisited every one of my listings the last few weeks and there have been changes to many of them (including cancellations). It was time. Thanks for the great post -
I agree with broker Bryant and the original poster. People just don't have any equity to stand on right now and some markets are still seing housing values going up which is just forestalling the obvious price decreases that need to occur. Sellers don't want to mark down hence why they are waiting it out. This is especially true of affluent homeowners who want to seek a good return for their investment.
When I started in this business over 20 years ago (that's right: I started at nine!!!) I decided that I would work it the way I worked my other past businesses: If I couldn't help the client, I would not waste their time or mine.
The market has gone down and up and every which way, but my credo has held this ship steady through it all. When clients try to tell me how to do my job, perhaps they should best do the job themselves. You don't go to the doctor and then tell him how to treat you, do you?
I tell them the price and the time frame for getting the job done and they can go with me or not. To this day, I have not lost any business this way, nor any sleep over it. Many of them come back when the agent who took their listing at the wrong price can't sell it. Lately, by the time they make it back in my care, the prices have dropped even further.
Today I made a stand with one of my clients. It was do or die time. Pull the trigger or stop wasting our time. They pulled the trigger... I am a mother, and somehow by being firm and standing my ground we can move forward. I would NEVER allow one of my clients to make a financial mistake. I always put them first. Because I do that, I can be quite forceful when they are leaning towards a bad decision. I have refused to write offers or take listings. If I can't be proud of my performance, there is no sense in doing this job; I can do many other things to make money!
This fierce determination has garnered me a very loyal following. I love my job and I strongly reccomend this modus operandi to any agent! Put your time into educating yourself about everything to do with your Real Estate practice and your market! Make yourself the asset any smart Buyer or Seller needs!
The market will be whatever it will be. All you can do is interpret it accurately...
One point I want to underline is the benefit in this market for any buyer who is buying UP.
The move up buyer is well served by this market.
Here is my explanation:
If the market is down 20% and your client is selling a $100,000 home and buying a $300,000 home, your buyer would be well advised to sell NOW. Here is why:
That $100,000 home at 20% off is $80,000. The client losses $20,000.
That $300,000 home at 20%off is $240,000. The client MAKES $60,000
The $60,000 that he makes by buying in this market minus the $20,000 that he loses by selling in this market is $40,000. Your client is now $40,000 ahead by selling and buying in this market. Not too shabby...
Once you attract your clients' attention to this, you'll have their full cooperation. People have myopic vision. They can only focus on what they lose. Counting pennies is never the smart way to go... You have to look at the whole trajectory to understand the opportunity of this remarkable market!
Evening Mirela, Makes too much sense ! Now if we can continue to educate our sellers of this notion !
It makes sense. I have two multis which are very pricy but it is hard to say if they are over priced. They are right on the beach and there are NO comparables. None. I was thinking of letting them go because they will not come down, but now I have an investor wh might be buying them BOTH next week!
Mirela, I agree with you completely as I have been telling my sellers the same thing since January. I never thought about it shrinking the inventory just the fact the seller couldn't compete with the REOs on price.
Mirela,
I've been saying this for the last few years now.... in my market we have about q 4-5 yr supply of condos and town homes and about a 2-3 yrs supply in single family homes. The inventory will never catch up unless HO's remove their homes if they really don't need to sell and so we can clear out all the toxic loans in foreclosure and short sales first then sell.
Unfortunately too many sellers are over priced for the market
I had a lady call today to discuss when to list her condo - I told her to wait!!!
Well put post! There are too many overpriced homes for today's market!
I'm not taking any more over-priced listings. But there are plenty of agents that will. Of course, after they spend all of their money and go out of business, we'll still be standing.
I'm with you. NO moe over priced listings. There is no point to it. I have no desire to LIST houses, I want to SELL houses.
Overpriced listings will eat away at your profit.
We have turned down 6 this week. It's hard to do, because when this market turns around, and it will, he who has the inventory will be sitting in a pretty sweet position.
We have do decide how overpriced they are and if there's a chance in Obama they will might sell.
Have a great weekend.
Love it! Overpriced listings are a huge liability right now. The bottom line must speak and it's says loud and clear "Don't take an overpriced listing AKA an unmotivated seller" in this market!
Best idea I've heard in months! If sellers don't have to sell their homes and feel comfortable renting them out for 12 - 18 months, I think it is a great idea. When there is limited inventory, it is amazing what it does for the home values. I work in a small neighborhood and there are only a handful of homes in each price range (from $200K - $1.0M) -- and they are selling between 96 - 98% of the list price!
*** I've also joined the club and let go of two over-priced listings this month.
I have a listing appointment Saturday evening with a client. I sold her this home about 5 years ago and she now wants to move closer to her clinic. Hopefully she is going to be doing a move up and I can show her how it will benefit her in this market. But if she is considering a lateral move, she will not be happy with what I have to tell her. Great to read this!
Mirela... this is a great way to reduce the inventory for sure... this could really help each market area
I'm in agreement with ya! Sellers are still thinking it was a few years ago and they think they can make huge profits off that house they bought 5 years ago... even though they know it's a "buyers market" out there. I just can't afford to take on those over-priced listings... not a smart move for my business (and it's really not in their best interest right now either).
Good post as usual Mirela!
Bob
Really like this post! It's good plain common sense -- reduce the inventory, and voila! and loved the subdivision photo! Just heard today that a listing I didn't get 4 months ago -- they thought my suggested range was too low, was taken off the market and the owner is going to rent it. Have been telling potential sellers that they have three choices - Price it realistically, or wait if you don't have to sell, or rent it. I don't want to spend time and money - both are resources to be managed -- on a property I KNOW won't sell!
That's my greatest concern---the sellers who are waiting will all put their homes on the market as soon as things turn better and then we'll be awash in more inventory.
Mirela - I agree with you 100%. I certainly don't want any more listings than I have already, just sitting on the market! I've turned down 2 listings and had 2 go to management companies in the past week. I know it's going to get better but let's help it along!
It really is a waste of our time and our money if we take listings that are overpriced...we could be using that time and money for clients who are buying or who have to sell....and we could be using that time to market ourselves...taking overpriced listings means we are working for free or paying to take them.
I like you! I like your site and comments! Now if only the Sellers really got it! :)
Mirela, we believe that you are right one the money. How does it make sense to keep a listing that no one is looking at? We just talked with most of our sellers and either they have dropped the price or have taken them off the market. Great post.