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Brokers Saying 'No Thanks' to Stubborn sellers
There are brokers who will take an overpriced listing just to find potential buyers or to boast a listing in a reputable building.
Now there is a growing cadre of brokers rejecting business from inflexible sellers with unrealistic expectations, choosing to reserve advertising dollars for, and put their energy into, listings that are more appropriately priced.
"For the first time I can remember, we are actually seeing people turning down listings," said 10-year veteran Michael Signet, director of sales at Bond New York. "I think it's the start of a trend, and as the market slows, it will be more of a trend."
In the wake of the credit crisis, some sellers have not adjusted their price expectations, while buyers are waiting for a further softening of the market.
Signet said it is still wise to accept listings that are out of whack with the market in order to acquire buyers, "but, with the market having slowed down a bit and advertising costs so high, you don't want to sit with a property that is grossly overpriced, or an inflexible seller."
His brokers have been sitting on properties for a prolonged period of time and have become frustrated by steadfast sellers. He addressed the topic at the company's November monthly sales meeting.
Lisa Maysonet, a broker at Prudential Douglas Elliman, said, "Because things are taking longer to sell, you're going to be a little more selective," at least from the perspective of "veteran brokers."
"We're definitely getting a lot more selective in the homes we take for sale," she said.
That is not necessarily the case among new brokers, desperate for a listing or a lead. And not all brokers or companies reject listings.
"We don't turn away listings ever," said Neil Binder, principal and co-founder of Bellmarc Realty.
One of the problems plaguing sellers is they tend to believe that since time has elapsed, their property has appreciated.
"Many sellers have priced their properties 5 percent to 10 percent above what the values were six months ago, in the mistaken belief that it is just logic to believe that today's prices must be 10 percent higher than the last similar sale," Frederick Peters, president of Warburg Realty Partnership, said in a Real Deal survey about the Manhattan real estate market.
Roslyn Huebener, principal broker and owner of Aguayo & Huebener Realty in Brooklyn, said her company dealt with this in the fall when it got an exorbitantly priced listing.
"We didn't list it because no matter how much information we provided to the sellers, they still had a preconceived notion based on their gut feeling, their instinct, that it was worth much more," Huebener said. "My office's opinion was it wouldn't sell."
If a unit lingers on the market for more than several weeks in any market, it can go stale. That can become discouraging for the broker and the seller.
"In this market, you are less likely to be able to accomplish the impossible," she said. "Before, it might have been possible."
In an ascending market, brokers would be more inclined to accept an overpriced unit. And they might only turn it down because of legal complexities or too many unknown factors.
Talking a seller down is always challenging, requiring brokers to use comparables and psychology.
Customers think "their apartment is always special," said Kathryn Higgins, a sales agent at DJK Residential. "It's difficult to tell someone it's really special, but it's not marketable."
But some sellers just can't be talked down.
Higgins said she categorizes wishful sellers into two groups: hard-core and soft-core. The hard-core refuse to budge -- ever. The soft-core start out adamant, but after continued discussions or no offers, they become reasonable.
Brokers who take on a stubborn seller can give themselves a way out at the outset, with a stipulation that the customer agrees to drop the price if there are no offers within a set period of time.
Reid Price, a Brown Harris Stevens broker, gives his sellers a three- to four-week window, but that might change.
"Because buyers are more cautious today and there's more to choose from, perhaps it should be extended to four to six weeks, just because of the climate," said Price, a managing partner in the ID Marketing Group at Brown Harris who also handles resales.
Brokers who put an overpriced listing on the market also put their reputations on the line.
If I stand with a listing that's overpriced, I think it gives you a desperateness. No one wants to work with a desperate agent," DJK's Higgins said.
Even if buyers want an overpriced home, it does not mean they will get a mortgage because appraisers, who are more fastidious these days, may submit a lower estimate to the banks.
At the end of the day, the market sets its own price. And brokers are saying that overpriced homes are not selling.
"In this market, as in any market, accurate pricing makes the difference," said Kathy Braddock, co-founder of Braddock + Purcell, and Charles Rutenberg Realty.
And she, like a few other real estate pros, said the idea of brokers turning away overpriced listings is nothing new.
"It's the same old story," Braddock said. "You will always find 'good' brokers who will turn away a seller over inflated pricing and you will find others who will take it."