Why A Real Estate Agent Takes an Overpriced Home Listing

by Greg Cryns

You might not expect real estate agents to accept and overpriced home listing. Yet some agents do it on a regular basis. Does it make a difference whether an agent does this or not? 

Actually, it can cause the agent to get a reputation for having homes that are worth less than they are advertised for. When 

sellers use an agent like this, they might get frustrated by getting few or no offers, which backfires on the agent. But these agents may have other reasons to take the listing besides actually selling the house.

Some agents will take an overpriced listing just to get the listing agreement. In order to convince a seller to sign with them, the agent may tell the seller the home is worth more than other agent have suggested. Sellers usually like to hear they can get more money, and despite reality, sign with the agent giving them the highest price estimate. 

Yet the seller is the one who stands to lose here. Sellers who want to believe their home is worth more than the market price are more likely to have a home that sits on the market because the comps don't justify the price. Agents provide more than just a high price, but also marketing expertise. Buyers, not sellers, determine the prices of homes, and buyers looking at comps for other homes in the neighborhood won't be fooled by a ridiculous price. 

In other cases, the seller is simply unreasonable. Some sellers do have an inflated view of their home's value, or believe their home is equal to other which sold for high prices, despite obvious differences between the homes. For example, a seller may point to a home down the street selling for $75,000 more than the agent's recommended price, but the other home had upgrades such as brand new kitchen, a larger lot, or was in better condition for example. 

What sellers don't often realize is that the agent doesn't really care if the seller's home actually sells! 

Instead, just having listings has several bonuses for the agent:

- The agent gets free advertising, by having their signs in yards, name and photo included.

- The agent will attract buyers by having listings appear on the Internet, in newspaper ads, or holding open houses in their listings. When buyers call for details, or come to an open house, it gives the agent a chance to find out more about what the buyer wants, and then show the buyer homes - other than the overpriced home.

Finally, an agent may take an overpriced listing with the hope that eventually the seller will "get real" and lower their price. As the seller sees multiple buyers come through the house and never make an offer, they may become more willing o recognize that the comps don't justify their price. Buyers can think there is a problem with a home that doesn't sell, and home on the market a long time get a reputation too. As the buyers watch a seller reduce their price, though, the buyers may think they can sit and wait for additional reductions, again, hurting the seller. 

In the end, it makes sense to price a home right the first time and to avoid unscrupulous real estate agents who take overpriced listings for their own benefit, not that of the seller. 

Greg Cryns is the owner of Flat Fee Real Estate Guide - http://www.flatfeerealestateguide.com