Beating Competition More Important Than Comp Data
by Inman News
Thinking of listing your home for sale? Don’t be surprised if you’re in for a little “tough love.”
Though they may claim they’re in the minority within the industry, some real estate agents say they’re finding themselves talking increasingly bluntly to clients, advising them that it’s time — maybe way past time — to get real about pricing.
That is, they’re telling home sellers from the get-go, even at the risk of losing the listing, that “experimenting” with their dream price would be a waste of everybody’s time because the generally slow market just won’t bear it.
It’s an attitude that is recognizable in the form of Mike Aubrey, the North Potomac, Md., agent who each week tries to knock some pricing sobriety into sellers on HGTV’s “Real Estate Intervention.” Coming across as part real estate therapist, part hard-boiled cop, Aubrey walks the owners of languishing listings through just-sold comparable properties and active listings in an effort to convince them that they’re asking just too darned much.
“I don’t sugar-coat anything,” says Aubrey, an agent with RE/MAX Metropolitan Realty. “I don’t tell people what they want to hear. I tell them what they have to hear.”
Apparently, there’s room in the marketplace for that message, as recent polls suggest that agents and sellers continue to be on two different planets when it comes to pricing.
In a third-quarter pricing survey by HomeGain.com, for example, 73 percent of home sellers said they believed their homes were worth more than their agents’ recommended listing price, up from 69 percent in the second quarter.
When sellers start high “just to see what happens” (an oft-expressed wish of buyers presenting lowball offers) — and then lowering the listing price later typically gains sellers little and may even hurt them, said Florida broker Joe Manausa.
“The reality is, the people who are going to make a buying decision may have already been in the market for six months,” he said. “If you hit the market overpriced, 90 to 95 percent are going to eliminate it (from consideration) right away” because they already have their notions of an appropriate price.
“(Starting out too high) is not only a waste of time, but you stigmatize your property,” said Manausa, president of Century 21 First Realty in Tallahassee. “People wonder why nobody bought it, why it’s been on the market so long.”
Raleigh, N.C., agent Linda Craft said she and clients agree on a listing strategy at their initial meeting.
“I don’t list properties anymore, I list sellers — and we have to have a business plan,” Craft said. “In this market, time is not your friend. So we discuss how we’re going to give it two to three weeks (at an initial price), and if your home doesn’t have an offer, you need to drop the price.
“If it’s had no showings at all, you’ll drop it by 10 percent,” said Craft. “If you’ve had showings but no offers, drop it 4 to 6 percent.”
Norwalk, Conn., agent Paul Hughes said he employs a similar timetable.
“This is a plan you should have at the listing presentation,” said Hughes, an agent with Prudential Connecticut Realty who started informational Web site and blog ToughLoveRealEstate.com (his motto: “Times are tough. We’re tougher”) to teach consumers how the market works.
Sometimes, he said, he has turned down listings if he and the homeowner are miles apart on pricing expectations.
“I explain, ‘I’m giving you the best documentation of why I believe (a price is appropriate),’ ” Hughes said. “I tell them, ‘If you’re really bent on overpricing it to start, you might be better off working with somebody else.’ It’s hard to say no, but there’s great power in saying no.”
Craft said her market has rendered obsolete the old rule of thumb of relying on closed, comparable sales from the past six months to set a price. Generally, she said, she considers closed comps only from the past 90 days.
“You have to know the sold data — that’s part of the equation,” said Manausa. But recent conditions in his market have made him rely less on it. Instead, he says, sellers should price to beat the competition — everything comparable that’s on the market right now.
“If the sold comps from the past six months, which may have gone under contract eight months ago, put the house at $200,000, but you have seven on the market for $180,000, who cares about the sold comps?” he said.
“If you accidentally price it too low, you’re going to have interest in your property and we can get it bid back up to a higher price,” Manausa said. But that approach doesn’t always go over well at listing presentations, he added.
“A lot of times we get passed up,” the broker said. “And there may be 100,000 agents who disagree with it. But I tell my agents, it’s downright willful negligence when we take a listing that’s higher than the market can bear.”