Agents: How do you not waste your time with an unrealistic seller

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Agents: How do you not waste your time with an unrealistic seller

Eric H.
Real Estate Solutions Provider · Baltimore, MD · Member since 2014 · 571 posts · 452 votes

Greetings BP Fam,

Seller wants $375k walk away (after commission and fees), doesn't want to offer buyer any subsidy. Sold comps identify $300k is more realistic, other sellers are offering buyer help.

Caveat: desirable area of harford county, md. Not many homes come up for sale in this area (found 4 good comps, 1.5 mile radius, 3 sold in august '15, 1 in december '14) and 0 foreclosures in the past 4 years (is scarcity a reason to justify higher price?)

Is it worth my time to work with a seller that's not willing to come down on price to be competitive with what's in market? Should I just enter into a listing agreement with seller and see what happens?

Thanks in advance!

Sincerely,

E. Harris

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Russell BrazilBusiness Member
Moderator
Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
10y

If they want an unrealistic price, I am honest with them that their house will not sell at that price. I give them a choice then on the cost of the marketing. If they want me to do my standard marketing with professional photography and professional flyers, then can pay for that and get reimbursed when the house sells. If I am going to spend money marketing the property (It usually costs me between $500-$1,000 out of pocket) then I need to list it at a realistic price. Either way Im more than happy to throw it up on the MLS as that has no cost to me.


Usually if you tell a seller honestly what they can get for their house, they understand. They may not be willing to move for that lower price though. So you throw it on the MLS with pictures youve taken instead of using a professional photographer. If you are honest with them in the beginning though, they wont be upset when it sells.

The key though is dont just walk away....because at some point the market will catch up to the price they want, and then they may be willing to list it at the market value of the home.  Being an agent is about having relationships, so just maintain that relationship when the property doesnt sell at their unrealistic price, and properly set their expectations throughout the whole process.

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  • Percy N.
    Developer · Philadelphia, PA · Member since 2015 · 2k+ posts · 904 votes
    10y
    If you don't believe the price is realistic, you owe it to the seller not to sign if it means it will not get a 100% effort from your end.
    0Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    10y

    If they want an unrealistic price, I am honest with them that their house will not sell at that price. I give them a choice then on the cost of the marketing. If they want me to do my standard marketing with professional photography and professional flyers, then can pay for that and get reimbursed when the house sells. If I am going to spend money marketing the property (It usually costs me between $500-$1,000 out of pocket) then I need to list it at a realistic price. Either way Im more than happy to throw it up on the MLS as that has no cost to me.


    Usually if you tell a seller honestly what they can get for their house, they understand. They may not be willing to move for that lower price though. So you throw it on the MLS with pictures youve taken instead of using a professional photographer. If you are honest with them in the beginning though, they wont be upset when it sells.

    The key though is dont just walk away....because at some point the market will catch up to the price they want, and then they may be willing to list it at the market value of the home.  Being an agent is about having relationships, so just maintain that relationship when the property doesnt sell at their unrealistic price, and properly set their expectations throughout the whole process.

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  • Leigh C
    Brooksville, FL · Member since 2012 · 429 posts · 220 votes
    10y

    Always take the listing.  Time (and their life events) typically will put pressure on them to lower the price and thus sell.   Typically you pick up buyers to transfer to a buyer's agent from listings anyways.    

    A good listing agent carries 20-40 properties at a time.    You won't sell more than half them.

    1Reply
  • Maggie L.
    Property Manager · Saint Louis, MO · Member since 2015 · 186 posts · 76 votes
    10y

    I'd echo Russell's advice to take the listing, but make them pay up front.  You've given them your analysis and backed it up with comps, listing price is ultimately their decision.  Hopefully the invested time and money will cause them to change their minds on the price, but at the very least it's getting your name out there to compensate for your time.  

    2Reply
  • Brett SynickyPro Member
    Solo 401k and SDIRA Consultant · Orange, CA · Member since 2013 · 873 posts · 498 votes
    10y

    ONLY take the listing if they HAVE to sell.  Or take it either way and leverage it to get more business. 

    0Reply
  • Eric H.
    OP
    Real Estate Solutions Provider · Baltimore, MD · Member since 2014 · 571 posts · 452 votes
    10y

    @Percy N.

    @Russell Brazil

    @Leigh C

    @Maggie L.

    @Brett Synicky

    All good points guys. Thanks for the prompt responses. I am a new agent and taking the listing will prove to be beneficial to help me escape the land of obscurity ;-) Russell what type of marketing are you doing for $500-$1000?

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  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    10y

    @Eric H. Photography and pamphlets are about $350, sentrilock access is $100 a listing.  So thats $450 before I even start getting into anything. Somtimes Im going to do some landscaping, or painting. Somtimes Im going to have a broker open house with a $100 gift card drawing for agents that show up.  Id say I almost always hit at least $500 spent on a listing

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  • Eric H.
    OP
    Real Estate Solutions Provider · Baltimore, MD · Member since 2014 · 571 posts · 452 votes
    10y

    @Russell Brazil Wow! Great ideas. I was under the impression you couldn't do anything as the agent (painting, landscaping) to help sell the house. Is this true? Can you make improvements (updating bath or kitchen) too?

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  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    10y

    Sure as long as the owners consent, which I can't imagine why they wouldnt. Obviously the price of the listing will dictate how much I spend. A million dollar listing is going to get me to spend a lot more money than a $100k listing. Agents in my office typically do quite a bit to get houses sold, but it is a pretty competitive office environment.

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  • Fred Heller
    Real Estate Agent/Property Management · Houston, TX · Member since 2014 · 1k+ posts · 827 votes
    10y

    I'm going to respectfully disagree with the other posts and say that you should probably not accept the listing. 

    For this guy to walk away with $375K you're going to have to sell the house for over $400K. If you know the realistic price is $300K all you're going to do is spin your wheels and the house will not sell.

    2Reply
  • Renee Cato
    Professional · Atlanta, GA · Member since 2015 · 85 posts · 15 votes
    10y

    I'm with @Fred Heller.  The seller is not motivated and you'd be wasting time.  If the listing doesn't sell, the seller looks at you as incompetent and perhaps run your name in the mud...even though you explained the price is too high, etc. All those talks are somehow forgotten. 🤔

    @Eric H., I would, however, keep in touch and nurture the relationship. 😉

    0Reply
  • James Wise
    Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
    10y

    Two schools of thought on this one.

    1. Explain it's overpriced and do not take the listing as it is unreasonably priced.

    2. Explain it's overpriced but do take the listing as the seller may reduce after "testing" the market.

    I don't think there is always a right or wrong answer here. Lots of variables and pro's and con's with each choice.

    As a brand new agent I would lean towards taking it. It gets your name out there. Buyers will call you and you show them that house if it does not work on that house maybe you can work with them as a buyer agent on the next house.

    Sellers who know it's overpriced to begin with may come down after reality hits and they have not received any offers. Sometimes they won't and will blame you even though you explained what it was worth in the beginning.

    As a busy agent I would lean towards not taking it until the seller is ready to list at a sellable price. With enough marketing and a solid track record the phone will never stop ringing and there is no time to waste on dreamers.

    1Reply
  • Rick H.
    Lender · Greater LA/Orange County area, CA · Member since 2012 · 3k+ posts · 3k+ votes
    10y

    When you sign a listing agreement with a seller, you'd better be clear about their motivation to sell and the price and terms that reflect current market conditions.

    Since you really cannot talk people into doing something that they do not want to do, else risk post-sale problems, your job in seller is, in part, managing expectations of your seller (and finding a buyer ready, willing and able to perform).

    If you thought you properly qualified and vetted your seller up front, your time is the big factor. Does this seller respect your time, priorities and schedule? 

    Can you be a better negotiator using strategies like 'your price, my terms or your terms, my price' or similar techniques?

    If you are doing a good job in all aspects of marketing (from your plan's checklist) then it's ok to de-emphasize the listing or fire the client, if that's acceptable to you and your broker.

    1Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Eric H. alludes to  go through the transaction to get esxperince working with a seller ( albeit an unrealistic one) but regardless they get experience and maybe the seller gets real .

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  • Jeff B.
    Buy & Hold Owner · Redlands, CA · Member since 2015 · 5k+ posts · 2k+ votes
    10y

    hmm;  I would have the heart to heart discussion about bad expectations, poisoning the well with a bad price, the impact of DOM ever increasing.   Then express your support with the caveat:

    • Full marketing effort costs me time and effort and if you can't see the validity of my expert advice, then I will make the placement in the MLS but not expend more time and effort. (perhaps get a signature of this conversation of adverse marketing)
    • If we can agree on the FM Price, you will get the best marketing I can provide.
    0Reply
  • Teresa F.
    Residential Real Estate Broker · Clinton, MD · Member since 2008 · 297 posts · 178 votes
    10y

    Hi Eric,  Congratulations on your license!  So seller gets to set the price, you have provided comps and told him that his price point is out of range.  You may want to ask why he wants to sell.  If he needs to move (at some point soon) he will probably get much more flexible.  Also, if you list the property and it has no shows, he may be more willing to lower the price.  I would follow 

    @Russell Brazil and take some pictures and put it on the MLS. Keep your client informed and, if appropriate, discuss a game plan for lowering the price. Best, Teresa

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  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    10y

    Hi Eric,

    A few things.

    1. I didn't hear you mention how properties were being closed. FHA, Conventional, cash??

    If someone pays cash an appraisal doesn't matter as much. If this is an exceptional piece of land and property someone might overpay cash for it just due to market sentiment and limited product on the market.

    If most buyers are financing then the sellers will probably not  be able to sell.

    2. How much is the market moving up every month? 1%, flat, declining? With a seller reduction and the market increasing the gap will get smaller over time making a deal likely to happen.

    3. WHY are they selling? Strong motivators are key. Death, divorce, family growing, job relocation, health problems, facing foreclosure, etc. Even if they want to start a little over market then a strong motivator will force them to take action over time or face bad consequences.

    If someone is "testing the market" that doesn't motivate. They have a weak reason for moving and if it doesn't work out they will stay put. Make sure and get price reductions built into the listing agreement when it is signed and not later. This way you can tell the seller "We tried your price for one week and the market has spoken." Now it's time with a reduction to sell the property.

    As an agent you are in the business of SELLING properties and not LISTING them. Listing them costs you a lot of money with no return but a drag on time and a bunch of complaining from sellers. It also gives you a bad rap and reputation with other brokers/agents not to even show your properties because you take overpriced listing all the time so no chance of a deal is even possible.  I disagree with others who said list 20 properties to sell 10. Yes not all will sell but you do not want to list 20 to sell 10. The other 10 the sellers will complain it's your fault. They will take away time from the motivated sellers who allow you to close more deals and make more money.

    It's just like real estate investing. If you have some good properties and own some dogs then the cash flow from the good properties is eaten up by the dogs and it's almost a wash. Instead focus on properly priced listings to sell and close a high percentage of them. Not all will sell but you can improve your ratio by weeding out what you do not want.   

    4. Is this area urban, suburban, or rural? 1.5 miles is a long or short distance depending where it is located. If you are hard pressed to find sold's close by some MLS's allow property tax searches. You can take an area and click on properties and I have found off market private sales comps that way not on MLS.

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  • Eric H.
    OP
    Real Estate Solutions Provider · Baltimore, MD · Member since 2014 · 571 posts · 452 votes
    10y

    Thank you all for chiming in!!! So much experience on this thread.....I respect all of your viewpoints. Will keep you posted on how it works out.

    2Reply
  • Fred Heller
    Real Estate Agent/Property Management · Houston, TX · Member since 2014 · 1k+ posts · 827 votes
    10y

    The other thing to consider is that if you take the listing and find a buyer willing to pay that price, the deal could fall through if it's financed. If the appraisal doesn't match the sale price the buyer will have to come up with the difference on top of the down payment and closing costs.

    Been there, done that. Bought the shirt and wore it out.

    0Reply
  • Jacqueline Carrington
    Investor · Corona, CA · Member since 2014 · 746 posts · 372 votes
    10y

    I wouldn't take an overpriced listing just for the sake of taking a listing. I want to spend my time and efforts on properties that are competitively priced based on the market. Price reductions are only an indication to buyers and other agents that the property is overpriced and that the listing agent probably doesn't know how to effectively price property.

    0Reply
  • Matthew Paul
    Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes
    10y

    Or another flip side , you are a new agent , maybe you missed something and the house is in the right price range . If you dont list it at their price , another agent will . And if it does sell you will be kicking yourself . 

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