Overpriced Listings on the Sullivan MLS

As we wind our way into spring, inventory on the local Sullivan County MLS has increased by almost 25%.

Spring is historically a time when people put their homes on the market. Our area is driven by (or at least heavily influenced by) the second home buyer market. And the theory is that second home buyers look in the spring, in hopes to have a house to enjoy that summer. I am not certain that is the case. I deal with second home buyer clients throughout the year.

It seems I may get more calls on new inventory in the spring, but that is from buyers I have been working with for some time how are looking for the perfect house for them. I suppose it is the chicken or the egg argument; Does the spring inventory swell happen because of the buyers or the sellers? Who knows, at any rate spring is the time to browse the new listings.

And like any year, you get the overpriced listings–homes that come on the market that appear twenty percent or so above market. Some are real head scratchers. With the market being soft over the last six or seven years, there was a tendency to see less of that.  Sellers became a bit resigned to what the market was,  and I think were a bit more realistic on what their homes were worth.

Well that trend seems to be changing back to pre Lehman Brothers. Locally I think the specter of the arriving casino has made dollars signs dance in some sellers heads. At every single listing appointment I have been on the last six or so months, the seller has brought up the casino has a possible reason that their home may be worth more. I am a bit more skeptical. I honestly do not know what the casino will do to home prices here in Sullivan County, but I doubt it will make prices jump 20-30% twenty-five miles plus away from the site.

I “lost” three listings this spring when my opinion of value was not agreed with. I know I have talked about this before, but recommending a correct price point is the hardest (and most important) task that a real estate agent has in the selling process. It is an inexact science–that is what makes it so difficult.

It is inexact, but there is a process to try to narrow down what a home’s worth is. And I try to follow that process pretty closely to at least get a “neighborhood” or ballpark value.

Again I have said it before, but national studies have shown that on average, the majority home sellers think their home is worth about 10-15% more than market value. Why? I won’t can get into the whole psychology of “home” and what that entails, but the cliff notes are a home is a very personal thing–a feeling. Human nature dictates that mine may be a bit better than yours. And that thinking (even if it is a bit subconscious) along with a hope that the sale will actually put a few extra bucks in your pocket, is what drives some of this fantasy.

In the past I have relented, and listed a home for higher than what I knew it was worth. And in a few cases that has worked out for me. The home sat on the market for a year or so, and then we dropped the price and was able to sell it. However for the majority of those times it did not work out for me.

What ends up happening with an overpriced listing is after a few months the seller becomes a bit impatient. However the delusion of their homes worth doesn’t seem to waver. The issue becomes the broker, and what can he (or she) be doing more of to sell the home. Suddenly my marketing techniques are being questioned. Suggestions on spot advertising in various media outlets start pouring in. A sister or a friend had an agent who advertised in such and such magazine, and viola, they sold their house in weeks.  The relationship slowly becomes frayed. The kiss of death is unreturned calls the last two months or so of the listing agreement. Being the first listing agent on an over-priced listing is a tough spot to be in. Expectations are rarely met.

Not even Big Tom Callahan can sell an overpriced listing. And we all know he can sell a ketchup popsicle to a women in white gloves.

There is an old real estate quote that says, “It’s best to be the first born, the second spouse and the third agent.”  And although a little tongue and cheek, it’s true. Seller fatigue sometimes is a necessary component in the process. And expectations need to be tempered. In the last thirty days on the Sullivan County Multiple Listing Service, 43 homes sold, and 157 expired. And those numbers are right in line with 2014. Only one in three homes that are listed here in Sullivan County will sell.

So this year I was a bit more firm on my listing appointments. I showed up with hard evidence to support my recommended price point. All my comparable data was from Sullivan County, and most were from the same or a neighboring township. (I am not going to use a comp. that is in Fremont township for a subject property in Thompson.) Lenders generally request comparable properties be within a ten mile radius. However in a rural area like Sullivan County, that can be difficult. Therefore I relax some of the search criteria.

At any rate, in these three cases, my presentation and explanation was apparently not believed. However I am going up against cold hard cash–the money that these sellers REALLY want to make on their homes. That is a powerful opponent. I am sure the agent’s who got the listings did not need to be nearly as convincing as I.

So I will keep an eye on these listings over the summer and see if they sell. If they do I will be proven wrong, and will have to rethink my pricing strategy.

I did get a few new listing to add to my inventory however. I am excited about those and hopefully I will get them sold quickly. These are homes that I think are priced well in today’s market.