“Buying a Listing”, what sellers need to know about this practice

It’s really common for a potential home seller to feel their home is worth more than it really is for a number of reasons:

  • Sentimental value
  • Work/money they have put into the home that the market, frankly, doesn’t care about
  • What they paid for it before the market slid off a cliff
  • Features they feel set it apart that are actually niche features and turn offs to potential buyers¬†(for instance, pools in Portland are not widely considered a bonus, the majority of buyers consider them a problem)
  • Perceived features that are common with competing homes in the area
  • And of course, every seller wants to get as much for their home as possible, often, without regard for the reality of the current market

There are a number of other reasons, but these are the ones I see the most often.

I myself generally will not take an over-priced listing in most circumstances (there are exceptions from time to time) and the reason why is simple. If I list your home for $450,000 when I know it should be listed at $400,000 to get the attention of buyers and generate an offer, what’s going to happen to our relationship over the course of that homes time on the market? It’s going to decline, you, the seller, are going to think I stink as an agent. Eventually you’ll fire me and I’ll certainly never get a referral from you. Where as if I simply decline to take the listing, you (briefly!) wouldn’t exactly be thrilled with me of course and may even respect me for the honesty, but you wouldn’t have built up weeks or months worth of negative feelings towards me which certainly destroys any chance I would have of doing business with you in the future and again, would guarantee I would never receive a referral from you.

The other reason I won’t do it is simple as well, I simply cannot spend my time and resources on a listing that isn’t going to sell because it’s over-priced. It would be like spending time and resources trying to sell X product that is priced higher than a plentiful selection of competing products that are just as good or better for less money…it doesn’t make sense.

That’s me, pretty simple. There are however many Realtors out there that will do what we in the industry call “buying a listing”; that is, they will gladly and happily take an over-priced listing knowing it’s over-priced. There are a few reasons and motivations for doing so.

I knew a Realtor a while back that did this constantly, she had a ridiculous number of listings and almost all of them were over priced and thus weren’t selling. But there was a method to her madness, she was taking all of these listings in the same area and as a result, between the for sale signs on the homes and the directional signs all over the place¬†pointing people to her listings, the area was inundated with her name and number. She appeared to be the go to gal to sell a home in that area. From that, she would get listings at reasonable prices that would sell, but at the expense of all the others that didn’t. Free advertising was the name of the game for her.

Another reason Realtors will do this is they want to get your home listed, under contract – period. Once it’s listed and under contract they can then work, slowly, over time, to get you to lower the price to a level that will sell. Sometimes successfully, sometimes not. When they are sitting with you at your kitchen table they have a very small window of opportunity to try to get the listing at the right price and if they realize that won’t happen, they move onto “just get the listing and worry about price reductions later”. It works for a lot of Realtors.

Another very common reason is the agent is new, or has no business to speak of and is desperate to get someone to sign anything, even an over-priced listing contract.

As a seller, be aware of a Realtor that initially feels the list price you want is to high, then agrees to list it for that with no discussion about a price reduction schedule; it could result in months worth of headaches and stress.

~Scott McDonald

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