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Question: I was fortunate to get a couple of listings quickly during my first few months in the business. Unfortunately, neither has sold, and there's not been a whole lot of action on either one of them. Although I'm learning a lot, I'm beginning to wonder if I took overpriced listings. Any guidance on how to get people to list at realistic prices?
Answer: Father Flanagan, the founder of Nebraska's famed Boys Town, maintained that: "there's no such thing as a bad boy". Some real estate agents subscribe to the Father Flanagan theory of selling real estate, in that they believe: "there's no such thing as a bad listing".
As much as I admire a positive and benevolent attitude, and although I firmly believe that creative marketing can work wonders in moving just about any property, I'm afraid I have to come down on the side of those brokers who maintain that time spent servicing grossly overpriced listings is extremely unproductive and exceedingly frustrating for everyone, most assuredly including the sellers. As a newcomer, you've got a couple of challenges.
First, you have to develop your expertise to the point where you actually know with confidence what an overpriced listing really is. Then, you need to cultivate your skill in working with prospective clients so they select an asking price that will result in an expeditious sale at a fair price for them, the buyers, and a well deserved payday for you.
During your first year or so you will need to perfect your listing talents. Crucial to that is the competitive market analysis (CMA) that you will prepare for each potential listing. Get as much help as you can from the old pros in your office and try to get at least one of them to check the first few you do closely. If you can, get one of them to visit the property with you. That will not only help you, but it will impress the property owners that your office takes the whole process very seriously.
After a few months, you are going to be able to quickly arrive at a fairly accurate market range for just about any property you encounter. You will still do the formal research to validate your initial opinion, but you will get very good at pricing properties.
The key then becomes to present your findings to the homeowners in a way that permits them to make the most reasoned choice for their circumstance. The critical word here is: motivation. If the property owners are highly motivated to sell (new job in new area and they need the money to buy a house there), chances are excellent that they will select a price in the low end of the range and will be cooperative and reasonable during the selling process.
If they are not motivated (if they don't get their price they will be more than happy to remain put), the likelihood is that they will list high and be fairly inflexible in their negotiations. No matter what the motivation, you and your broker may still wish to take the listing, but at least you will be forewarned. You can, of course, always turn it down.
Philosophies differ somewhat on how the listing agent should handle the listing presentation as far as pricing the property is concerned. A former real estate licensing student of mine, who was an elementary school teacher, later became one of the most successful agents in our local area. She said her approach was to educate the sellers as best she could on current market conditions, concentrating on similar homes that had recently sold. She then presented a CMA with her estimated range of current market value of their home. “At that point it was up to the sellers to decide upon a specific asking price that reflected their situation.”
If your listings are not selling, pricing is, indeed, the most likely culprit - "properly priced is practically sold" is how one old timer broker I know puts it. But there may also be other reasons. Make sure that the owners have been given guidance on "staging the property" (cleaning, painting, sprucing up), and that you are marketing creatively and aggressively. Go for a price reduction as soon as practical, but be prepared to justify it and soothe bruised and tender feelings.
Should you take a listing that you know is overpriced? Your broker will have guidance for you on that, but typically during your first few months in the business you would probably take a listing at just about any price. That's not unreasonable, since you will, as you point out, get good experience out it.
In the best of all possible worlds, however, you would get that experience and get paid for it at the same time. I subscribe strongly to the theory: "A Happy Realtor is a Well Paid Realtor."
Best Regards, Ken Edwards