Buyers and their agents
I don't have much (any, actually) sympathy for home owners whose house doesn't sell when they set their own price. And I lack much empathy for those sellers' agents who, against their better judgement, took the over-priced listing in the hope they could get the seller to see reason somewhere before the listing expired (especially because I've done the same thing myself but, I hope, no longer). We can all make mistakes in pricing a house but that's what price cuts are for. The owner who stubbornly refuses to hear what the market is telling him deserves what he gets, in my opinion.
But I do feel sorry for those sellers who take the (bad) advice of an agent and continue to do so in the face of marketplace condemnation. I suspect that these folks decide that they have to trust someone and if they trusted their agent to begin with, why abandon him or her now?
Because that trust is misplaced, I suggest. I've seen situations where sellers just wanted out, either because of a job transfer or retirement, yet grossly overpriced their house because their agent told them to do so. That agent, in turn, keeps the price too high, probably through false pride, but who knows? Maybe it's actual malice. Worse still is when the agent persuades the poor saps to put more money into the house that won't sell so that they can not sell it at a still higher price. It's a losing strategy but one I see employed all over town. The result: the newly purchased retirement home sits vacant while the would-be sellers sit in and maintain a house they no longer want. I don't understand this because nobody wins in this game - the sellers remain stuck and the agent remains unpaid. So why is it done? Beats me - I've already guessed it's because of either pride or malice but perhaps I'm missing something here. Feel free to hazard your own guess or impart your knowledge.
1 year ago
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6 comments:
I have no idea why the brokers do what they do, but as far the owners are concerned I think it comes down to Loss aversion.
Most people hate to take a loss, and once they have a value to their home they just can't take less than that amount for it. Its too painful.
Thats why I don't get the concept of over pricing ALL your homes because if everyone has to take a price cut you are going to, on average, have unhappy customers.
Maybe in Greenwich, at the high end, traders and hedge fund guys are use to taking loses so it doesn't effect them as much as the average person but you would think it would take a toll on your clients.
Could it be a combination of hubris and conflict of interest on the part of real estate agents?
Hubris because they (agents) have the misguided impression that they set the market through their pricing advice and conflict of interest because maintaining high prices is believed to be in the agents' best interest (which is misguided as selling homes and getting any fee, even reduced ones, should be).
Of course, in the end the market sets its own clearing price, but that doesn't stop some people (both home owners and agents) from ignoring the facts and pricing their homes too high.
Retired IB'er
There is one agent in town who, in my opinion, consistently over-prices with impunity; sellers stay with this person however many years it takes to move the property. But that agent's the exception: agents who try to duplicate that amazing feat lose the listing after six months or a year, often to another agent who also tells the seller what he or she wants to hear. Sure that's odd and unproductive behavior but it's how it's done. But not by all of us.
(these sometimes get out of order, depending on when my mail server decides to deliver).
Hubris I'll buy - lots of it in town and certainly not restricted to the traders. But distorted, or misguided self interest? I'm doubtful, because we agents are rather fond of pointing out that it is the market, not us, that determines prices. Of course, only some of us believe that, so you could be right.
As for the merits of overpricing when it's so obviously against both seller and agent's interest, I can only point out that even a cursory study of economics (that would be me) reveals that people often get it completely wrong. What I did study: philosophy, history and law, convinced me long ago that the economists were onto something.
So, Chris - in an attempt to bring reason to this troubled time for spec builders and clueless real estate agents, I would be interested in your view of where you think the market is for some of the spec houses currently listed in the area. As an example, since you have highlighted that Mariani has several properties on the market and none seem to be moving at their current listings, how about performing a public service and telling us where you think each of them should sell in today's market. Perhaps your insight as to value would break the logjam between scared buyers and sellers (and their agents) who are in denial. I, for one, would find your insight and approach to valuing these properties very informative and could serve as a benchmark for how participants discuss real estate in the region. At the least, it would be entertaining to see whether your assessment is close to where the market clears for these properties.
I don't know (if I did, I'd be running for King). So much depends on the financial strength of these builders. If they can hang on, I'd guess they might get 50% - 65% of their original asking prices. If the properties end up with the banks, and then dumped on the market, it'll be a free fall because, as one Bad Monor sells for peanuts, it will drag the others down with it - picture a succession of skaters all drowning as each one tries to rescue the others.
I do know that I'm seeing some spec houses already marked down 50% and others 35%. Will the rest follow? It will be interesting to find out.
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