Falling Equities … Are Realtors to Blame?

Real Estate agents are largely responsible for the massive housing inventories of the past two years.

That bears repeating.

Real Estate agents are largely responsible for the massive housing inventories of the past two years.

This is a conclusion that does not please me to reach, but my conclusion nonetheless after continuing to see overpriced home after overpriced home hit the market.  You can blame banks or non-paying homeowners for the glut of foreclosure inventory, but guess what?  Bank owned homes sell.  By and large, they are priced appropriately and adjusted regularly until they sell.  Compare this to the unrealistic seller/listing agent tandem with the home down the street that enters the marketplace grossly overpriced, and just sits there while the days on the market pile up without mercy.

You can blame the banks again for the short sale listings that take forever to work their way off the market because of all the bureaucracy and idiocy involved.  In many instances, I would agree with you, but I find ample fault with the listing agents who do not take the time to learn the process and requirements involved for the institution(s) that hold the lien(s) against the property.  Even though many banks seemingly select the files they will actually review via a no holds barred game of inebriated backgammon on the first of every month, too many agents simply throw a short sale listing on the market at a completely unrealistic price (compared to what the bank will be willing to accept) and hope that they can make it stick.  Buyers get frustrated with the process after several months of inaction and often exit the transaction before getting a response from the bank.  Even if the home eventually sells prior to the looming trustee’s sale, it has contributed to the bloated inventory level for months instead of weeks.  Some banks will not negotiate with a seller at all until an offer is in hand, but that doesn’t mean that the agent can’t have all of the documentation lined up in advance.  Many short sale listing agents that I have encountered have been a bit lacking in the communication department as well.  Buyers are more likely to hang around and wait for a response if they are receiving regular feedback and updates from the seller’s side of the table as to the progress with the bank.  A phone call or an email update every week or two would go a long way to keeping some of these deals together and clearing out these negative equity weeds that are choking out the resale lawn.

Inventory levels have dropped considerably in the last couple of months, but we have a long way to go before we reach a nice healthy balance of buyers and sellers.  While everyone is currently focused on stimulating demand, we professionals bear a large portion of the responsibility for the supply.  Every time an agent in our ranks takes a listing for 100k over the property’s current value, or even 10k for that matter, he/she is contributing to the stasis that has plagued our Valley since the equity and credit bubbles burst in 2007.

We all want your business, and are generally eager to please.  As such, it can be a temptation to tell a prospective client what they want to hear when it comes to the value of their house.  Less charitably, it can also be a temptation to “buy the listing” by quoting an unrealistic price to sway a seller to list the home with us versus the agent quoting a considerably lower asking price.  A good agent will ensure you command a top of market price for your home, but not a one of us has a secret stash of magic beans that will grow the value of your digs above and beyond what a buyer will be willing to pay. We can advise you as to how to make your home more market ready, and how to improve its value, but we can’t fit a $750,000 peg into a $500,000 hole.

Ray and I vow to give it to you straight.  It does neither party, nor the market, any favors to cram yet another overpriced listing into the protesting pair of lycra pants that is the MLS.  Nope, no more glazed doughnuts on our watch.  It’s time for an industry-wide low glycemic carb / high saleability diet.

As I tell my clients when we sit down to review the data, I would rather tick you off with my evaluation up front than 6 months down the line when your home hasn’t sold.  Better to lose business truthfully than be complicit in the further swelling of our hemorrhaging housing market.

A home should be priced accurately, or it should not be priced at all.

We don’t list homes to practice.  We list them to sell.

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  • Patrick

    That`s great, I totally agree with you, That`s the way it should be.

    In a perfect World.

    Paul, We don`t live in a perfect World. We live in a HOT freaking Desert, with crazy people, who call themselves Realtors.

    Let`s say Lizzie Borden Real Estate, want`s to sell houses. Lizzie knows what the seller wants…Mo MONEY. So she talks them into the over priced listing.

    Now Lizzie is no dummy, she knows it 30% overpriced.

    She starts to hack away at her seller to lower the sale price, but the seller wont budge.

    The seller is still delusional from the listing presentation. Sometimes know has the crime scene.

    Lizzie puts down the blackberry, and figures that she will just strangle the seller with the 1 year listing contract. After all Lizzie is use to getting away with murder.

    Your not gonna stop the problem Paul. Lizzie & Larry Borden are out there, and they are sharping up there “discounts” & “rebates”.

    They`re skewing the comps. They`re preparing to drive a wooden stake into another unsuspecting sellers front lawn.

    Happens everyday.

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Paul Slaybaugh is here to sell houses and chew bubble gum. He's all out of bubble gum. More About Me >>>

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