This past week I met with a friend of a friend who’s looking to sell her house. As an exclusive buyer agent, I don’t list property, so wasn’t fishing for a listing. She wanted some ideas about what she could do to make her house more appealing to buyers. Eventually the conversation came around to price. I’m reluctant to give price advice to sellers. At some point, I may be on the other side of the table negotiating for a buyer of their property. I did ask if she had talked with other Realtors, what they may have recommended and what price she had in mind. Yes, she had talked with a listing agent, and that agent’s price recommendation turned out to be 25% or 30% above where I thought the property would likely sell for, but she now had that price fixed in her mind.
I wish I could say this was a rare occurrence, but unfortunately it isn’t. Sellers hear what they want to hear, and agents who thrive on getting listings prey on that. Getting listings is a competitive business, especially in a place like Sullivan County where there are over 400 Realtors and only about 1,000 sales a year. You do the numbers. A common technique for some listing agents is to engage in superficial price flattery, dangling the sugarplum of a high sales price in front of sellers to encourage them to list with them.
In fairness, sometimes the number doesn’t come from the listing agent, but from the seller. "So, Ms. Seller, what do you want to get for your house?" the smiling agent with listing agreement and pen in hand asks. "We want $475,000," says the seller, sitting in her Laz-Y-Boy lounger in the middle of her panelled and drop ceilinged living room looking out at the view of the passing trucks on Route 17B. "Excuse me, did you say $475,000?" asks the listing agent, shouting over the din of the passing trucks. "Yes. So and so’s house just sold for that, and casinos are coming." "I’d recommend a price slightly lower than that, but if that’s what you want, we can certainly try," says the agent, writing in the number and passing the listing agreement and pen over to Ms. Seller.
This scenario happens over and over and over again. Listing agents rationalize taking overpriced listings by saying, "Look, if I don’t take it at that price, somebody else will." Of course somebody will, but that doesn’t mean the house will get sold. The belief in taking an overpriced listing is that, in a month or so with no activity, the agent will come back and work the seller down to a more realistic price. At least, that’s the theory.
But does that really happen? I took a look at the 583 houses that have been on the market here longer than 180 days. By the way, that’s 57% of the total inventory of 1,022 single family houses. The shocking statistic is that of those 583 market laggers, 250 (or 43%) have had no price reductions (and even price increases) during their time on market, and an additional 162 (28%) have had price reductions of less than 10%.
That means that among houses that have been on the market longer than six months, only 29% have had a significant price reduction of 10% or more!
Now, price is only one part of the marketing equation — albeit a very important one. Price reductions, in and of themselves, may still not be sufficient to move a dog. And some unique properties do require a longer time on the market to find the right buyer. But when 71% of houses with lengthy time on market have had price increases, or no or just modest price reductions, something is wrong. While sellers are certainly complicit, some of the blame rests firmly at the feet of listing agents who aren’t doing their job.
Listing agents need to be basing price recommendations on a good market analysis and comparable sales. They need to be regularly giving their sellers feedback on the market reaction to their property. I am frankly shocked at how few listing agents call me after a showing to ask for the buyer’s feedback so they can pass it on to the seller. I give kudos in this regard to a handful of brokers and agents who do this — Diane Deutsch and Tony Ritter at Preferred Homes and Properties, Myrna Ginsburg, the whole crew at Freda Real Estate, Diane Silver, Ronnie Murphy and Jay Sparr at Yeager, Fred Williams at Malek, Loretta Duarte at Coldwell Banker and Ellen Schwartz at McKean Real Estate White Lake. There are others, of course, but these are the ones that come to mind.
There are also many agents that view the pricing of property as a very serious matter. The best listing agents will often make a first appointment to see the house but won’t discuss pricing at that meeting. They come back for a second appointment to discuss pricing — after they’ve had a chance to review comparable sales and other competing properties on the market. At Freda Real Estate in Callicoon, an agent will often ask to bring back a few other agents from the office to get their thoughts on a property before making a price recommendation.
Some agents are better than others at practicing "tough love" with sellers. I have great respect for agents that turn down listings because they think the seller’s price expectations are grossly inflated. If you look at the most successful brokerages in Sullivan County, they typically are the ones that engage in appropriate pricing, and work with sellers to adjust pricing based on buyer feedback. Of course, their success gives them the flexibility to do that. If you’re busy, you don’t want to waste your time with unrealistically priced listings just to build your book. If you’re not busy, what the hell — you don’t have much to lose and if you throw enough stuff at the wall, something might stick.
Sellers who truly want to sell need to become more informed consumers. They need to look beyond smiling agents dangling flattering prices. Its the experienced ‘tough love’ professionals, who recommend realistic pricing and tell you to clean the toys off the front lawn and get the house painted, who are going to get your house sold.