If you go back to your high school or college economics class you may remember that the price of anything is determined by supply and demand. The law of demand states that when a market demands a high quantity of a good or service, the price of the good or service will be high. When the market demands a low quantity the prices will be low.
This model holds true in the real estate market as well. So to set a bottom in the market we need more demand or lower supplies. Realtors do their best to increase demand but one thing that we can do for sure is to get rid of our overpriced listings.
Get rid of your overpriced listings.
We won’t see the real estate market bottom out until the number of properties currently for sale is reduced. The biggest thing that we can do as Realtors is to not renew our overpriced listings and don’t take any more.
One of the biggest challenges when working with a buyer is not only finding them a property they like but finding one that they like with a realistic seller. After all of the horrible news about the real estate market and the recession there are still so many overpriced properties out there.
I haven’t done any formal analysis but I would bet that in any particular neighborhood you will find 25% to 50% of the homes for sale have no chance of selling because of their asking price. If we could get rid of a good portion of these overpriced listings we will be that much closer to finding a bottom.
Why do Realtors take overpriced listings?
1) They are poor at valuing property. If this is the case then get an appraisal or have a fellow Realtor help you out.
2) They take a listing at an average price and it becomes overpriced quickly as the market moved quickly to the downside. When prices are declining it is easy to chase the market down. Thousands of people are doing that now. You have to get in front of the market Here is Sarasota, Florida you have to be the sunflower in a field of weeds.
3) They have nothing to do and need something to work on. Aren’t there better things to do than service an overpriced listing? Go to the beach, hit the gym, have lunch with friends, go find realistic sellers. Bogging yourself down with listing that won’t sell might burn you out.
4) Their client begged them to take it. I have been there before and some of the best advice you can give is the honest truth that their property will not sell at that price and they are just wasting their time. I politely explain to them that overpriced listings are liabilities that cost me time and money and keep me from working with people who are serious about selling. Most of them respect that.
5) They figured the seller would eventually wise up. If you service your seller well and take away all of their objections hopefully they will realize that it is all about price and not about the number of open houses you have done. Some sellers just need to try the higher asking price for 30 days.
I will be the first to admit that I have some overpriced listings. The sellers of my overpriced listings will hopefully see the light. That process can take time. If it becomes apparent that they will not become realistic I will not renew their listing.
Can you imagine if thousands of Realtors across the country got rid of their overpriced listings and quit taking more? Inventories would decrease. When that news got out many of the fence sitting buyers would wake up and act. Demand would increase which would decrease supplies even more. Instead of talking about foreclosures the nightly news and your local newspapers would report more sales which would increase confidence and thus more sales. The market would begin to turn around and we would be that much closer to normalcy. So think twice when your overpriced listings are up for renewal or have a chance to take an overpriced listing. If we all did this the bottom might get here sooner than you think.
Marc Rasmussen | Michael Saunders & Co. | Sarasota | FL |