A price INCREASE? Really? You’re INCREASING the price of your listing?
The root of the problem is with the sellers, but the blame can squarely be put on the professionals, ie. the Realtors themselves…
Buyers in today’s real estate market are so savvy.
In fact, I don’t think they’ve ever been this smart, and this well-informed.
On Thursday morning, I was set to go show four condos to a client in the west end, and he emailed me the following:
“They raised the price at 123 XX Street from $399K to $419K, can you believe it? This is one for your blog!”
He’s right. On both accounts…
I’ve been writing about this a lot lately – sellers who decide that they didn’t get “their price” on the first go-around, so they raise their price in search of fool’s gold.
It never works. Trust me. I mean, how could it?
And consider that my client emailed me with the information. That is how well-informed buyers are in today’s market. They know exactly what’s going on, and they refuse to be fooled. They’ll turn their back on pricing shenanigans as quickly as I will, and I’m very quick!
On Thursday morning, I decided I was going to pick a fight. I called the listing agent for this unit that I was about to go and show, and naturally, the call went directly to voicemail. He called me back later, from his small “boutique” brokerage, and I simply said, “I’m trying to wrap my head around the price increase for the unit I’m about to go and show.”
He seemed to have his answer well-prepared. “The current price better reflects fair market value for the property, as the previous price reflected a price that would solicit multiple offers. Our seller is more comfortable with the current price.”
Right. Well, I’d be more comfortable with one-hundred-trillion-dollars for my condo, but that’s not the point.
The point is that you had listed a condo at $399,000 that did NOT sell. And for whatever reason, you decided that your new “strategy” would be to further alienate and push away potential buyers by increasing the price of the property.
It’s like a bully who offers up some candy in his hand to a smaller child, and when the child reaches out, the bully pulls it back and says, “Na, Na, can’t have that!”
Most buyers simply say, “Ah, okay, well nevermind then – let’s just skip it.”
Is that the result you’re aiming for with a price increase? Because if it’s not, then you’d better reconsider your actions.
We’ve seen this a lot lately in areas like Riverdale & Leslieville when houses are listed low to solicit multiple offers, have no success, and then the sellers re-list at a higher price. But more frustrating is when they go high-low-high, ie. they list at $999,000 and don’t sell, so they reduce to $879,000 and hold back offers (which they don’t get), and then re-list again at $989,000.
Hey – it’s a free market, sellers can do whatever they want! But do they really expect to sell their properties with this type of behaviour?
When it comes to condos, I think the logic is even more flawed. When an agent says to me, “This property was priced for multiples,” I think that’s downright silly. The condo market has cooled since the spring, I think we all know that, right? I don’t think we’re on the edge of disaster, but I’ll admit that prices have levelled off, AND that inventory has increased and the climate has changed.
So how then do we “price a condo for multiples?” What does this mean?
I’m of the mindset that NO condo can be priced for multiples, because the insane demand is no longer there. I suppose if you priced a $400,000 condo at $299,000, then it would be “priced for multiples,” but I’m not convinced that strategy would work because buyers are too smart, and because buyers would ask themselves, “What’s the real price here? They’re listed at $299K, but do they want? What will they take? And what will stop them from terminating the listing and coming out at $400,000 again?”
As a seller, you’re only accomplishing one thing: you’re turning buyers away.
But as a Realtor, you’re even more to blame, and this is where I might expose some of my colleagues…
There are 35,000 Realtors working in the GTA, and I think 15,000 could probably handle the load.
Many of these Realtors are truly “professionals” by definition, and many of them have no value whatsoever.
Many of these Realtors also forego the idea of “building a business” and rather they look for any deal, anywhere, in order to pay their rent next month.
I’m convinced that these are the Realtors who will take any listing, at any price, regardless of whether it makes sense, and they’re the ones that are primarily responsible for the pricing games.
A child does not tell a parent what to do, so why then does a crazy seller with illusions of grandeur tell a real estate professional how to list a house, then raise the price when it’s not selling?
If you’re a Realtor with little business and/or experience, and you have the opportunity to take a $500,000 condo and list it at $579,900 with a hold-back on offers, you probably take that listing.
But a professional would not.
I raised this point at my weekly office meeting on Monday. I told my colleagues, “Walk out.”
That’s it – walk out. If you find a seller who has a $900,000 house in the Beaches who wants to list at $1,199,000, then simply turn around, and walk out. It’s not worth your time, and it throws the market out of whack.
But many Realtors “hope” that they’ll get the magical offer for 130% of fair market value, or that they’ll talk their seller down into several price reductions.
These are the same Realtors that let their clients play pricing games. No professional would ever let their client re-list at $949,000 when the house didn’t get a single offer at $849,000. It just doesn’t make sense.
So I challenge all Realtors to simply WAKE UP!
Act like a professional. Act like you have value in this industry. Show your experience and your knowledge.
Don’t just take that $299,000 condo listing with a tenant who has three dogs and list it at $379,900 because you “have nothing else to work on right now.” Do your job! Show the seller what the property is really worth! Bring them the comparable sales. Explain the value of staging, cleaning, and painting. Break down the financial ramifications of moving out the tenant, prettying up the unit, and selling it in better condition while eating two months carrying cost.
Too many Realtors are making moves that defy all logic, and I as I write this, my colleague is calling me to point me back to a house I’ve talked about before…
Listed at $999,000 with a hold back on offers, it was re-listed with another brokerage for $949,000, then re-listed at $879,000 with a hold-back on offers, then re-listed for $929,000.
Well, today they re-listed at $999,000. Yes – really! My colleague called me just now and said, “You won’t believe what the F*****s at XXX Street just did!”
That house was on the market at $929,000 for three weeks with no sale, so why did they RAISE the price to $999,000? They were on the market in April at $999,000 with no sale, so what makes them think they can get that price now?
I fault the Realtor for this.
The seller is delusional – I understand. But the Realtor should walk away from this mess, and stop dreaming about the day that the house sells and they get a cheque with their name on it.
Some Realtors think of their time as a sunk cost. “I’ve spent two months on this already, I’m not walking away now.” Well what if you spent another four months on it, and it still didn’t amount to a sale?
I’ve said it before and I’ll say it again: you can’t sell a $20-bill for $26.50, no matter how hard you try.
So when a potential seller asks you to do exactly that, why would you agree?
For those people who are new to my blog, I hope you follow my logic here, and don’t conclude, “Soooo……David is saying that he won’t work hard and get me a good price for my house?” That’s not what I’m saying.
I’m saying that just as a parent tells a child, “No, Bobby, you can’t bring the toaster into the bathtub with you,” a Realtor must have the guts to tell his or her seller, “We didn’t get a single offer for this house at $799,000, so re-listing tomorrow at $879,000 is a terrible idea, and a complete and utter waste of our time.”
That’s it, folks!
Realtors are to blame for this mess, not the sellers.
You can’t blame a blind person for walking into a wall if you’re standing idly by and doing nothing to stop it…