Why Does a Realtor List a House They Know is Priced Too High? (2024)

563 Shares

Why Does a Realtor List a House They Know is Priced Too High? (1)Over the years, some people have asked me why real estate agents take overpriced listings.

If you are not working in the industry, it is probably hard to figure out why anyone would consider this an intelligent practice.

This is one of the dirty little secrets within the business.

A surprising number of real estate agents out there will attempt to sell overpriced properties for owners, even when the agent knows the home is priced too high.

These real estate agents will accept these overpriced homes even though it goes against the basic principles of ethical practices.

By doing so, they hurt their reputation, mislead sellers, and create a hassle for their peers. So why do they do it?

Reasons a Real Estate Agent Will Overprice a Home

There are a few common reasons why:

  • They are not skilled in the art of correctly pricing a home. Placing value on a property comes from years of experience. Some are good at it, and others are not!
  • The agent may use far too simplistic valuation methods like calculating price per square foot that do not work in determining accurate market values.
  • The real estate agent does not possess the skills to beat another agent they are up against in an interview, so they resort to telling the owner “what they want to hear.” They are playing on human nature – we all want and believe our homes are better than the next. In this case, they intentionally mislead the seller on the home’s market value.
  • The Realtor uses the overpriced home to get buyer clients from their marketing activities. They then sell these customers and pick up a different home. This is extremely common and one of the biggest reasons Realtors take homes priced too high!
  • The seller is unwilling to face the reality that their home is not worth what they think it should be priced. The agent doesn’t have the fortitude to turn them down.

These are the five most common reasons real estate agents take overprice listings. Below, I will give you an in-depth overview of each situation so you understand why a Realtor would consider taking an overpriced home.

Sellers need to understand the consequences of pricing too high, including losing potential profit. From three decades of experience, properties that are priced correctly out of the gate always sell for more money.

Overpriced Listings – The Temptation

Why Does a Realtor List a House They Know is Priced Too High? (2)Real estate agents are people, and people are known to make decisions that do not always make sense.

Even with proper training and education in the realities of real estate transactions, some Realtors can’t help themselves when they see the temptation of a potential client.

These agents will say whatever is necessary to get a homeowner to work with them, even quoting prices that have nothing to do with reality.

It only takes a few Realtors doing this to convince a seller their home is worth more than it is.

Real estate is a very competitive industry.

Unfortunately, this creates an environment where Real Estate agents do whatever they can to ensure they win, including giving sellers pie-in-the-sky numbers.

Remember, Real Estate is a commission-based business, so if an agent loses the interview, they come away with nothing but a sense of disappointment.

This alone can cause real estate agents to make destitute decisions, including their noses growing like Pinocchio’s.

One-Upping The Competition

If a seller interviews three agents, the first agent may quote a price that reaches a little high but is at least in the ballpark of what the house is worth.

But then the following real estate agent interviewed, knowing they are up against other agents, wants to outdo the first agent, so they quote an even higher price.

By the time the third agent is interviewed, the price of the home has reached an unrealistic level.

Telling Sellers What They Want To Hear

Sometimes, the problem starts with the seller. An agent may walk into a situation where the seller is sure that his home is worth far more than it is.

The homeowner may think they should, too, because his neighbor’s house sold for a certain amount. Never mind that the other house was fully renovated, on a much larger lot, and is in far better condition.

Other times, the seller has looked at an online home value estimator like Zillow or Redfin, and they believe the inflated value. Some may have even read articles warning how off the Zillow value estimates are compared to the actual value.

A reputable agent will tell it to the seller like it is and deal with the consequences – like missing out on the listing. But not all Realtors have the experience, the willpower, or sometimes the integrity to be honest with this kind of homeowner.

They know how to determine a home’s value, but they can’t resist having another listing when push comes to shove.

A Lack Of Integrity

Not every Realtor who takes on overpriced listings is a terrible person. However, the reality is that specific Real Estate agents suffer from a lack of integrity. Real Estate agents are human, and it is not difficult to reach the point where you can call yourself a Realtor.

To become a Realtor, you need to follow a strict code of ethics. Part of that code means you can’t deceive a home seller.

Being a good Real Estate agent is hard work, but not every agent is willing to do that. Some are happy to say anything to get a client, even if the customer suffers.

What Are The Benefits Of Taking An Overpriced Listing?

An overpriced listing will rarely sell. Real estate agents know this. So why do specific agents accept and even encourage such listings?

Advertising

Why Does a Realtor List a House They Know is Priced Too High? (3)The real estate agent does not have to sell the home to benefit from taking on the listing. As soon as the agent accepts the listing, they can put a sign in the home’s yard for sale.

The agent’s number, email, and website will be on this sign. Maybe even a picture. Depending on where the home is located, many potential clients will view this little billboard.

This helps get business elsewhere. It makes the phone ring for the agent. Do they need your home to sell? No!

Open Houses

Some sellers expect an open house even though they are one of the biggest wastes of time for the owner.

The kind of agent that takes on an overpriced listing will likely encourage an open house since it allows another opportunity for them to meet with potential clients.

Even though an open house is one of the least effective avenues for selling a home, an agent who needs clients will push to have them. Trust me, they are not doing it because they believe some dope will be coming in willing to pay the asking price.

The agent knows no one walking through the home door who doesn’t already have an agent will likely purchase it.

But they may be interested in buying another home, and the agent will have other listings to steer the buyer towards.

Potential sellers come to open houses, too, to get an idea of what homes are going for in their area.

The Realtor can pick up these sellers as clients as well. Open houses have always been more fruitful for a Realtor than a homeowner. Genuine buyers schedule appointments with real estate agents!

There are many reasons why showings with real estate agents are better than an open house where anyone with a pulse can appear! This is one of the dirty little secrets of the real estate industry. Open houses are entirely unnecessary to sell a home!

Fishing By Price

The reality of real estate today is most people shop for homes online. However, these buyers usually do not know a home is overpriced until they get to the house and view it in person.

The Real Estate Agent can also place an ad in the newspaper or a magazine that leaves out the address of the overpriced listing. Buyers ready to buy a home for the price in the paper may call the agent. These buyers are ideal clients – people will spend money on a house, sometimes a lot of money.

The Realtor then only needs to steer these callers toward their other listings or even another agent in a similar price range – listings they will want to buy.

The Realtor Still Wants To Sell The House

When the Realtor accepts an overpriced listing, in the back of their mind, there is the understanding that, eventually, the home will sell if the owner drops the price. If the agent waits long enough, a commission will be coming.

They will need to work a little harder for it to happen. This kind of agent will spend much time badgering the seller for price reductions every week. Remember that this was their strategy to get the listing, so they are used to it.

Unfortunately, the outcome will probably be bad for the homeowner. Homes on the market for an extended period often get a bad reputation. Extended days on the market are the seller’s enemy.

Buyers assume that something is wrong with such homes, and when they finally make an offer, it is low. The agent is prepared to make much less money than initially quoted, but the seller is not.

Bad Agent Reputation

Why Does a Realtor List a House They Know is Priced Too High? (4)Some agents have a well-deserved reputation for being unprofessional. Those real estate agents who constantly take overpriced listings become well-known in their community.

As you can imagine, sellers who hire these agents often get saddled with the real estate public thinking their home is overpriced. It is called guilt by association.

Real estate agents should not take overpriced listings, but they do. Sellers should educate themselves on the realities of home pricing and seek out only reputable real estate agents.

Failing to do so is almost always costly in the long run.

Consequences For The Seller

So what are the consequences for the seller or overpricing a home? The seller can always drop their price, right? No big deal, right? Wrong! As mentioned above, homes on the market for an extended period become stigmatized.

It is a fact homes priced incorrectly out of the gate sell for less than those that are correctly priced. You can see what happens with overpriced homes by reading this comprehensive article.

This leads to the question of how to know your home is overpriced. Some everyday things can be readily observed with homes priced higher than they should be.

Recognizing your mistake as soon as possible and making necessary adjustments is essential. Incorrect pricing is one of the most significant home seller mistakes that are hard to overcome.

Nothing will prevent a home sale from happening more than an improper price.

Hopefully, by now, you understand that working with a real estate agent who will take an overpriced listing is never wise!

The Damages Overpricing a Home Causes Sellers

Overpricing a home can lead to several issues for sellers. Here’s a list outlining these problems:

  • Prolonged Market Time: Homes priced too high may stay on the market longer than average. This leads to a stale listing that could deter potential buyers.
  • Limited Buyer Interest: Overpriced homes often fail to attract attention in a competitive market, reducing the number of potential buyers.
  • Reduced Showings: Fewer buyers will likely schedule showings, leading to less foot traffic and fewer opportunities to sell the home.
  • Unfavorable Comparisons: When buyers compare an overpriced home to others in the same price range offering more value, it can make it seem less appealing.
  • Difficulty in Appraisals: Even if a buyer agrees to a high price, the home may not appraise at the agreed-upon value. This can potentially cause financing to fall through.
  • Increased Selling Costs: The longer a home remains on the market, the more the seller incurs in carrying costs, such as mortgage payments, utilities, and maintenance.
  • Negotiation Disadvantages: Buyers may perceive sellers of overpriced homes as unrealistic or difficult to negotiate with. This can lead to lower offers.
  • Missed Opportunities: Sellers might miss out on buyers searching within a specific price range that the home could have fallen into if priced correctly.
  • Damaged Reputation: Real estate agents and buyers may view the property negatively. It makes it harder to sell the current home, potentially affecting the seller’s future real estate dealings.
  • Potential for Market Shifts: If the market cools or shifts to favor buyers, an overpriced home will be even less likely to sell, potentially leading to a price reduction below market value to attract interest.

Addressing the correct price point from the beginning avoids these pitfalls and ensures a smoother, faster selling process.

Additional Helpful Home Pricing Articles

Use these additional articles to make intelligent decisions when selling your home. The biggest mistake that can be made when selling a home is to overprice it. Pricing your home wrong out of the gate can cost you thousands of dollars in your pocket!

About the Author: Bill Gassett, a nationally recognized leader in his field, provided information on why real estate agents take overpriced listings. He is an expert in mortgages, financing, moving, home improvement, and general real estate.

Learn moreabout Bill Gassett and the publications he has been featured in. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-625-0191. Bill has helped people move in and out of Metrowest towns for the last 38+ years.

Are you thinking of selling your home? I am passionate about real estate and love sharing my marketing expertise!

I service Real Estate Sales in the following Metrowest MA towns: Ashland, Bellingham, Douglas, Framingham, Franklin, Grafton, Holliston, Hopkinton, Hopedale, Medway, Mendon, Milford, Millbury, Millville, Natick, Northborough, Northbridge, Shrewsbury, Southborough, Sutton, Wayland, Westborough, Whitinsville, Worcester, Upton, and Uxbridge MA.

563 Shares

Why Does a Realtor List a House They Know is Priced Too High? (2024)

FAQs

Why Does a Realtor List a House They Know is Priced Too High? ›

Overpriced Listings – The Temptation

What is the result of listing an overpriced property? ›

If the home is overpriced, it won't take long for potential buyers to lose interest. By the time the price drops, a majority of buyers are lost.

How do you know if a house is priced too high? ›

If a home hasn't received any offers despite several open houses and months of being listed, it could be a telltale sign that the homeowner has priced the house far higher than potential home buyers – or the market – think the home is worth.

What happens if a house is overpriced? ›

If a house is overpriced, and a buyer is willing to pay that price, these are big risks because the house still has to appraise. Overpriced houses typically appraise for less, and you'll be forced to either lower the price anyway, or put your house back up for sale after the buyer goes to find another house.

What happens if you list your home too high? ›

1. Squander the Early Days. Listings get the most showings in the first 30 days of being on the market. If a home is priced too high, buyers may choose to ignore it or put it in a “wait and see category.” The longer the home sits unsold, though, the more negatively it is viewed.

Why do agents take overpriced listings? ›

The Realtor uses the overpriced home to get buyer clients from their marketing activities. They then sell these customers and pick up a different home. This is extremely common and one of the biggest reasons Realtors take homes priced too high!

Why do some sellers overprice their homes? ›

Room to Negotiate

This is a big reason many sellers want to overprice. They know what their house is worth but they think leaving negotiating room will get them to the price they want.

What increases house price the most? ›

10 quicker wins for adding value before selling
  1. Redecorate. ...
  2. Fix superficial defects. ...
  3. The front door. ...
  4. Declutter. ...
  5. Heating and lighting. ...
  6. Garden appeal. ...
  7. Create a driveway / off-road parking. ...
  8. Look smart and be energy efficient.

How to make an offer on an overpriced house? ›

How to Make an Offer on a House That Is Overpriced
  1. Hire an Experienced Real Estate Agent.
  2. Find Out if the Home Is Really Overpriced.
  3. Present Evidence to Show That the Home Is Overpriced.
  4. Know Your Seller.
  5. Make Your Offer as Appealing as Possible.
  6. Be Ready to Negotiate Back and Forth.
  7. Be Ready to Walk Away.
  8. The Bottom Line.
Feb 12, 2021

Can you offer 20k less on a house? ›

“The rule I've always followed is to never go more than 25% below the listed price,” he says. “Chances are, after fees, commission, and sentimental value, the sellers are already hurting. If you dip below that point, they may disregard your offer entirely.”

How much do sellers usually come down on a house? ›

If your initial price was close to fair market value, a more incremental drop could do the trick — anything from 0.5 percent to 3 percent. Overall, it's best to determine ahead of time the absolute lowest price you're willing to accept, so that you can make price adjustments as necessary within that range.

How do you know if a house is too expensive for you? ›

It is quite possible that if your mortgage payment ranges up to 30-35% of your income, you will still be alright. But if 40% of your household income goes to pay your mortgage, then you could be in really big trouble. This isn't always the case, but it is often the case.

How to know if a house is a good deal? ›

  1. Check Recent Sale Prices. ...
  2. Check Out Comparable Properties. ...
  3. Look at Unsold Comparables. ...
  4. Consider Current Market Conditions. ...
  5. Be Wary of for-Sale-by-Owner Properties. ...
  6. Consider Potential Appreciation. ...
  7. Ask Your Real Estate Agent. ...
  8. Ask Yourself: Does the Price Feel Fair?

Why can overpricing your house cost you? ›

The Downside of Overpricing Your House

Your asking price serves as the initial impression for potential buyers. Setting it too high can deter interest, even in a hot market. Buyers are savvy and reluctant to overpay, particularly amidst rising home prices and mortgage rates.

Under what circ*mstances should you absolutely not buy a house? ›

If it's a stretch to afford the monthly payments

If your total housing costs will exceed around 25% to 30% of your income, you should not move forward with buying that property. Otherwise, you could devote so much of your money to housing that you can't afford: Retirement savings. Saving for college for your kids.

What hurts house resale value? ›

Putting off maintenance or neglecting to do it at all can lead to lower property values because they can lead to expensive repairs later. A small leak in the plumbing may not seem like a big deal at first, but over time it can cause structural damage, high water bills, or mold.

What are the ramifications of taking an overpriced listing? ›

If your home is immediately identified as being overpriced, agents will dismiss the property. As a result reigniting interest may take drastic measures (i.e. massive price reductions) and you might end up lower than where you could have been if you had priced the property right the first time.

What is the effect of overpriced? ›

When your products are overpriced, customers will take more time to decide whether to purchase or move on to other brands. Even if they end up buying from you, the net effect of a longer sales cycle is likely to outweigh the benefits of the higher margin.

What's a potential consequence of overpricing a property? ›

One of the most immediate consequences of overpricing your home is an extended time on the market. Potential buyers are well-informed and often work with real estate agents who use market data to assess property values.

What is the result of a listing licensee telling a buyer that a property is overpriced in an effort to get the buyer to write an offer? ›

What is the result of a listing licensee telling a buyer that a property is overpriced in an effort to get the buyer to write an offer? The listing licensee creates a multiple representation relationship.

Top Articles
How To Keep Your Money Safe While Traveling | Bankrate
Flexi answers - Do gas particles move faster than liquid particles?
Milkhater05 Of
W B Crumel Funeral Home Obituaries
Butte Jail Roster Butte Mt
How Much Is Vivica Fox Worth
Dragon's Dogma Duskmoon Tower
Are Pharmacy Open On Sunday
Academic Calendar Biola
Log in or sign up to view
Joann Ally Employee Portal
10000 Divided By 5
Sophia Turner Derek Deso Instagram
Five Guys Calorie Calculator
Walmart Neighborhood Market Gas Price
Portland Walmart closures attract national attention; Wheeler, Texas Gov. Greg Abbott spar
Downloahub
Forest | Definition, Ecology, Types, Trees, Examples, & Facts
Jinx Bl Chapter 26
Naval Academy Baseball Roster
Fast X Showtimes Near Evo Cinemas Creekside 14
Israel Tripadvisor Forum
Calamity Shadow Fish
Kayak Parts Amazon
Theatervoorstellingen in Roosendaal, het complete aanbod.
Craigslist Hunting Land For Lease In Ga
Poskes Parts
T&J Agnes Theaters
Wgu Admissions Login
Drury Plaza Hotel New Orleans
Bella Isabella 1425
Buzzn Dispensary
City Md Flatbush Junction
Gargoyle Name Generator
Madden 23 Browns Theme Team
Tyrone Unblocked Games Bitlife
Sam's Club Near Me Gas Price
Shs Games 1V1 Lol
Borderlands 2 Mechromancer Leveling Build
Infinity Pool Showtimes Near Maya Cinemas Bakersfield
Tu Pulga Online Utah
Crandon Skyward
55Th And Kedzie Elite Staffing
Eurorack Cases & Skiffs
Accident On 40 East Today
What Time Does Walmart Auto Center Open
Voertuigen Geluiden - Pretlettertjes
2045 Union Ave SE, Grand Rapids, MI 49507 | Estately 🧡 | MLS# 24048395
Perolamartinezts
Dark Pictures Wiki
Right Wrist Itching Superstition
Opsahl Kostel Funeral Home & Crematory Yankton
Latest Posts
Article information

Author: Van Hayes

Last Updated:

Views: 6762

Rating: 4.6 / 5 (66 voted)

Reviews: 89% of readers found this page helpful

Author information

Name: Van Hayes

Birthday: 1994-06-07

Address: 2004 Kling Rapid, New Destiny, MT 64658-2367

Phone: +512425013758

Job: National Farming Director

Hobby: Reading, Polo, Genealogy, amateur radio, Scouting, Stand-up comedy, Cryptography

Introduction: My name is Van Hayes, I am a thankful, friendly, smiling, calm, powerful, fine, enthusiastic person who loves writing and wants to share my knowledge and understanding with you.