Over Priced Listings
Barrington REALTORS® and real estate agents that accept over priced listings throw caution to the wind, REALTOR® Ethics are being ignored and the fiduciary duties of an agent to a client are not being upheld, the agent can be found to be negligent in a court of law.
Why would any agent want to list an overpriced property? Throwing caution to the wind more or less screams they could care less about a seller or his property, there has to be some underlying reason they would sign a listing or marketing agreement with a client.
- Some agents are encouraged to take a listing and ask for a price change later on, or several!
- An agent may like having signs in the ground to appear busy and important.
- The world of the internet and lots of listings might bring an agent more buyer leads.
- The agent might be doing the seller a favor. Perhaps a seller needs their home listed to get a deal on a new home somewhere else.
- The agent may not know the area or has not done any sort of comparative analysis.
I am sure they are other reasons but I thought we were in the business of helping sellers sell a home. Isn’t that the primary function of a listing agent? I thought so.
Here in Illinois I remember one of the tips to remember all our fiduciary duties to our clients. The acronym is COALD and to remember it all I have to think about is being cold. Or having a cold. So what does it stand for?
The first is an important one for this subject. A listing agent must exercise reasonable skill and care while transacting the business entrusted to him or her by the principle. So a principle – seller – is entitled to expect that any listing agent, no matter how long they have been in business uses their skill and knowledge to provide that care. I would hope any agent has some level of skill when estimated house values. Seriously that’s our job and if an agent does not have that skill they should be knocking on their brokers door for some training and mentoring!
Perhaps this is why newbie agents find it hard to get listings, because their skills have yet to be developed. Perhaps also a good idea for sellers to select a seasoned agent?
Regardless the law of real estate in Illinois literally states the skill and care must be used in determining an appropriate listing price for a property seller.
Enter obedience. The seller is the principle and his agent must do as the principle instructs. One could argue that if the seller wants to over price the agent should do as they are told, right? Wrong! Prior to signing any agreement there is no client relationship and the agent at this point does not have to do what the seller wants. This is the point in time when we use our skill and care and essentially walk away from a listing price that is just too high for the current market to bear, or at least that’s the right thing to do, both legally and ethically.
The other parts of COALD don’t really come into play at this point, no agreement yet, no agency relationship exists.
First what is a REALTOR®. Simple we are members of an association, the National Association of REALTOR® and we agree as a member to abide by their Code of Ethics. Not only that we also have to refresh our knowledge every four years as part of continuing education. Here’s where our Ethics address the issue.
Standard of Practice 1-3
REALTORS®, in attempting to secure a listing, shall not deliberately mislead the owner as to market value.
The vernacular is “Buying a listing!” In other words tell the seller what he wants to hear, pander to his emotions or attachment to the property. The idea being to secure the listing. Well you tell me, how is that not misleading a seller?
Of course the poop (sorry) hits the fan a little way down the road because the property doesn’t sell and the principle scratches his head and frustration sets in. What can the agent do in response to the question WHY? Ask for a price cut. An another and maybe another. I don’t know if there’s a better way to make home sellers angry, it’s sure a great way to add to the concept that all REALTOSR® are awful.
So How Can We Get The Price Right?
Here in the Barrington area it isn’t easy because we have very few cookie cutter homes. Many are semi custom or custom. Yet plucking a number from the sky or doing as the seller wants is a set up for failure and a poor relationship. All homes must pass the three sale test. First a buyer must see the value, second his agent must be able to show the buyer client what comparables have sold for to give the buyer a price range. Last the dreaded appraiser must provide a valuation. Even cash buyers are in the habit of paying for their own appraisals, they’ve been bitten in a declining market and they won’t throw caution to the wind when it comes to their money!
As agents we need to learn our market, and that means studying it all the time. There’s no better way to establish a current home price than watching listings and sales, writing market reports and basically getting the stats.
I have no objection to pricing a home at the high end of a price range, especially if the home is spectacular, as prices start to rise, there’s nothing wrong with pushing the envelope a little and I do mean a little. However I won’t pander to a sellers emotional attachment to a number because aside from all the above, it wastes my time, energy and marketing dollars. Sadly there will be other REALTORS® waiting in line to do what I just said no to! More sadly the property won’t sell. A vicious circle right?
Let me know if I can help with your home sale or a home that didn’t sell.