Caught!! How Toronto Real Estate Agents Spin The Overpriced Listing Web

July 20th, 2008 Categories: Home Sellers, News Wire

I like spiders. In fact, I’m quite the fan of their work. Just check out those webs, and you can see the work of an artist, an architect, a mathematician and an engineer. That’s a LOT of talent in such an itsy bitsy package.

But the thing that really impresses me is that the spider never (well, rarely) gets caught in its own web. Spiders know exactly how they must spin and move about their webs in order not to entangle themselves; they move deftly, rarely making a wrong move as they go about their day.

But what, if anything, do spiders have to do with the Toronto real estate market?

Toronto Real Estate Market Excess Inventory

As I just reported in my mid-month performance report, we now sit with 25% more listings than last year at this time. That translates to 27,317 listings, compared to 21,777. Clearly, this is not a market that will be kind to overpriced listings.

So why in today’s market do we see the overpriced listing, the one that traps sellers and agents in its powerful web? How do good agents find themselves in this situation, not quite knowing how they got to that sticky place and, even worse, seemingly unable to extricate themselves and their sellers?

Toronto Real Estate Agents
Can Avoid Overpriced Listings

Allow me to spin my thoughts on the matter. To begin, this is not about those agents who deliberately overprice in order to dazzle and get the listing, and then immediately proceed to hammer down the price. My thinking on this is that there are 25,000+ agents working in the Toronto real estate market, and if some sellers prefer to work with those agents that is, of course, their prerogative.

This is also not about agents who agree to take the overpriced listing of a motivated seller with the understanding that the price will be adjusted to the agent’s recommended price within a week or two. We all know that some sellers just have to test the market in order to get it out of their system. We also know that they run the risk of getting behind the market, but I’m sure that’s been fully explained.

This is about agents who, often unknowingly, trigger a chain of actions and behaviours that result in the overpriced listing. At the end of the day, they become caught in a tight web of their own making

How does this happen? And more importantly, is an overpriced listing in your future? It just might be, if you recognize the following seven perils. One for every day of the listing week.

You Over-Invest In The Lead. This typically happens when there is a long lead-up to the actual listing. You’ve spent months, even a year or two, drip, drip, dripping on the lead, doing everything you can do in order to be uppermost in mind when that happy moment to list arrives. However, when that time comes, you’re also a little bit crazed as it’s not easy work to consistently ~~spam~~ drip with the fresh and the relevant. You can also over-invest in a shorter time frame when you feel you have profoundly clicked with a lead and that they are also into you (or so you think).
You Are Thrown Off Balance. You have invested time and effort in the lead, and you feel that you have clearly shown your value. The sellers are ready to list and, be honest, you’ve allowed yourself a bit of an expectation. And then they drop the c-bomb on you: that’s right, you’re in Competition. You know that being in competition is a fact of life in this business; however, this time it throws you. Does it make you a little too willing to accommodate on price? We’ll see.
You Mis-Read The Competition. You’re an ethical agent; you never disparage other agents. However, you are comfortable with leveraging your strengths (and so you should!); it’s just that in this case you leverage against an assumed or non-existent weakness, you know, the one thing that’s going to come back to bite you big time. My favourite example is the out-of-area agent versus the local expert. Now, I’m all for sellers using the local expert. I’m a local expert! But I tread very respectfully around this issue (and the new agent, the old-school agent, etc.). Because you never know the results these agents who are currently selling in the neighbourhood will produce. For all you know, while you’re on the listing presentation, the out-of-area agent could be driving up to the house across the street in their BMW to snap on the Sold rider. In due time you just might be defending your performance against the results of this out-of-area/new/old-school agent. In can be difficult to have that price reduction conversation when you have secured the listing and priced from a position of strength that doesn’t quite play out. I’m just saying.
You Over-Identify With The Listing. Congratulations, you’ve secured the listing. Most agents work very hard on behalf of their clients to ensure the house is market-ready. But rather than act as a project manager, bringing together the necessary trades, etc., some agents can become a little too … immersed … in the process. To the point where they’re doing most, if not all, of the work. Painting, cleaning, de-cluttering, yard work, staging and so on. If you’re willing to do this work, is there any harm? Yes, it dilutes your true role AND you run the risk of losing your perspective regarding the house. Especially with respect to pricing. When you and your sellers are over the moon with the results of your hard work, who’s going to be the objective, neutral party? Who’s going to be the bearer of less than great news?
You Drink The Kool-Aid. You’re a little off balance (see item #2) and your judgment is clouded (see item #4). One of two things happens with respect to pricing. You recommend a competitive listing price backed by solid market comparables. They counter, you capitulate. Or, you recommend a price that the sellers have been floating and that you didn’t address as overpriced in the early days. A price that you know will test the market, telling yourself yes, there just might be a shot at it if the right buyers come through. Because you’ve all worked so hard to make this happen and your clients have become your friends. Oh, dear.
You Tune Out Good Feedback. When you’ve gone rogue on a listing, respected colleagues can be very insightful with respect to pricing. They are the true objective, neutral parties. They have nothing to lose. So why are you avoiding their feedback? Or, when you do ask, are you a little defensive or argumentative? It’s not like they’re going to bludgeon you with their opinion, but if you can’t accept feedback from knowledgeable people, who exactly is going to be able to reach you?
You Do Everything But The One Thing You Must Do. You can’t deny the house sits unsold. Because there it sits. Unsold. But rather than have a brutal price reduction conversation, you do everything else that has no hope of getting that house sold given the existing price. I give you examples, in no particular order: ~~vigils~~ open houses every weekend, four–colour ads in local newspapers that get tossed in recycle bins, use of automated feedback systems that are structured to provide no useful information, expensive on-line video tours, a steady re-list of the property to set the DOM to zero. Because no agent ever thinks to check the history for that property!

Toronto Real Estate Agents
Break Free Of The Web

Yes, of course you can break free. It’s not painless, but the only way to do it is to be their agent (not their friend or cohort!). Accept that you have to have the price reduction conversation before your sellers get any further behind the market. There are no strategies that will make an overpriced listing more attractive to buyers, other than setting a price that is competitive in today’s Toronto real estate market.

There’s no need to fear spiders when you buy or sell with Lauren. Call me at 416–550–6991.