Grossly Overpriced Property…The Kiss of Death

If you’re a real seller, this is NOT the market to grossly overprice your property.  Surprisingly though, I would have to say that as many as 50% of the marketing presentations I have done in the past couple of months have been with sellers who are terribly unrealistic with their asking prices.  And for those who stubbornly suggest pricing above what I believe the market will bear, I say ‘best of luck to you."  I also walk out the door wishing I could say, "I look forward to hearing from you in 5 or 6 months when you become more realistic," but I tastefully refrain. 

Just this morning I learned that the owner of a prewar 3BR property chose to list with one of my colleagues who priced his home at $1,000,000 more than what I and another agent at a third competing firm determined to be the value.  That’s right!  Both I and an experienced agent from another very large and reputable firm (she is currently representing another property in the same building that isn’t selling) independently priced the home at $3,495,000.  The agent who received the privilege of "attempting" to sell this home priced it at $4,495,000.  I’m sure that you’re asking yourself right now, "How can that be?"  The answer is that sellers sometimes (certainly not always) hear what they want to hear.  I’m just surprised that this gentleman, with a real estate background, was deaf to the more realistic data supporting a lower asking price.  But it’s hard to let go of the possibility of $1,000,000 more in your pocket!

All of that said, I often explain to new brokers that it is better to be the second broker who actually sells the home than simply the one who "wins" the initial round of marketing presentations.  Having been in the Manhattan residential real estate business for 16 years, i remember the days when property was on the market for 2 years before a buyer would surface.  It takes a lot of time and money to market a property for 6 months only to have a seller hire another agent after that 6 month term who likely reduces the price and sells shortly thereafter.  I know because I have been on both sides of this phenomenon.  In the past 3-6 months, I have had multiple sellers reach out to secure my services after not hiring me initially.  On every occasion, I was able to effect a sale for an excellent price in a reasonably short period of time (a couple of times we sold after our first day on the market after another agent had marketed for 6 months).

So for the sellers out there who refuse to listen to what the market is telling you about the value of your home, you may find yourself interviewing brokers in another 5 or 6 months.  If so, just be mindful that market conditions will not likely be what they are today and you may regret not listening to the market earlier.

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5 Responses to Grossly Overpriced Property…The Kiss of Death

  1. avatar Noah says:

    so true Doug. There are agents out there whose business model is to assure the seller that their marketing services are so advanced and so creative that if they work with them they can get a price so far above market value.
    Unfortunately, sellers only goal is to get the highest and best price possible, and if 3 brokers come in and 1 broker lies out their a$$ putting a # out there that is so far from reality, they will likely succeed in their business model which is…
    GET THE LISTING –> GET THE BUYERS FOR OTHER PROPERTIES –> WORK ON PRICE CUTS IN 3-4 WEEKS
    What a honest, ethical model! I just wonder if the seller is aware of the this common trick that they so often fall for.

  2. I’m going to passively keep an eye on this particular listing to watch price movement. The funny thing about this price point is that not too many people are showing up without an agent and if they do, what’s the likelihood they want to work with the seller’s agent who is clueless about the market? So inefficient, our market is. I sound like Yoda!

  3. But save yourself the expense you will. (My attempt at sounding like Yoda).
    It’s sad to say but the truth of the matter is, you’re probably better of saving yourself the expense of marketing a grossly overpriced listing (then again you know your market best)… Maybe you’ll catch it when it’s ready to be sold at the right price.

  4. Nice Yoda Ricardo!
    Precisely my point. I would rather be the second broker who sells a property than the one selected to market an overpriced property…always.

  5. avatar JC says:

    A guy who is selling his apartment showed me a book recently, I don’t know what the title was but it was something like “House Selling for Dummies” or “Idiots Guide to Selling a House”. In it they claim the best way to pick a broker is to ask many of them to value your property and go with the one who comes back with the highest number. 🙂

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