Every day, I scan the MLS System looking for good new listings for my buyer clients. And, while I’m at it, I notice the listings that just sit there, day after day, and never sell.
Perhaps this is obvious, but there’s only one reason a listing doesn’t sell; it’s overpriced.
Even a completely destroyed house will sell for land value if priced accurately. If not, it’ll sit there. Most of the time, anyway (sprinkle a little foreshadowing here).
Sometimes, I’ll look at a new listing and laugh out loud because it’s so overpriced! And it’s not at all unusual for me to see properties priced 10%-20% over.
99% of these overpriced properties eventually go through the painful process of repeatedly dropping their price until they sell. But the sale price is inevitably far lower than if the listing agent had priced it correctly in the first place.
To be clear, these listing agents are not overpricing on purpose. Pricing accurately is hard, and it requires a highly skilled and experienced agent to get it right. Unfortunately, we’re not all highly skilled and experienced.
Now, let’s talk about the rare exception when an overpriced property actually does sell. I notice the new listing and think to myself, “Oh, that’ll never sell!” But then, within a few days, suddenly, it pops up, “SOLD!”.
Do you know what I do every time I see this happen? I check the buyer’s agent’s name, and, sure enough, around 75% of the time, the listing agent has double-ended the deal!
This makes me sad because I feel so sorry for those poor, naïve buyers. Why did they choose to deal directly with the listing agent?
There are two main reasons:
1. They made the critical mistake of assuming that if a property is listed for a certain price, it must be worth that price. Nothing could be further from the truth! Inexperienced or lazy listing agents make terrible mistakes with pricing all the time.
2. For some inexplicable reason, these buyers thought they’d get a better deal by working directly with the listing agent. But the opposite is true almost every time. The listing agent’s loyalty is always with their sellers, and their #1 priority is to sell for the highest price possible. Buyers who think they “got a deal” are almost always dead wrong.
I said that 75% of the time when I see a listing sell for a ridiculously high price, it was double-ended. So what about the other 25%?
Almost always, the buyers’ agents were inexperienced and/or more concerned about collecting their next commission cheque than ensuring their clients get a good property at a fair price.
Thankfully these agents are only a tiny minority. There is a multitude of skilled, knowledgeable, high-integrity real estate agents who genuinely care about delivering excellent results to every client they have. As a buyer, having this type of agent on your team is your most important asset.
Please never EVER buy a property directly from the listing agent!
- Ted