Over-priced listings. Whether you are a home buyer or an agent, I am sure you have seen them. As an agent, you do all you can to promote the listing and get offers for your seller. As a buyer, you may dismiss the listing out of hand or it may not even come up in your home search since it is out of your price range! In general, there is usually some room for negotiation in listing price, but if a home is priced 8, 9 and 10% and more above market value, an agent and a buyer will wonder if the seller really wants to sell their home.
Unfortunately for the seller who prices their home like this, they cut down the buyer pool to about 0 and may be wasting their time trying to sell their home. If a buyer is looking for a 2 bedroom condo, and the market price for one is about $400,000, and the buyer sets their home search parameters for a home up to about $420,000, the over-priced listing at $450,000 will not even appear on the buyer’s radar. An agent may be aware of the home, but will most likely dismiss it and not point it out to their buyer. They may think to themselves that the seller won’t consider a fair offer or they may tell themselves to wait and see if the price gets reduced before showing it to their client. Real estate is about numbers; the more showings and eyes on the home, the more likely an offer will be presented. This demonstrates why an over-priced home will sit and sit: no eyes equals no showings equals no offers equals no sale.
However, a savvy buyer or agent should not necessarily dismiss the over-priced listing in all cases. If the home meets all the buyer criteria, and the agent and buyer think it may be a good fit (other than price), it may make sense to write an offer even if the likelihood of acceptance is not very high. In my opinion and in my experience, it is not always a waste of time to do so.
A seller like this will probably have had their home sit on the market for months. Time is not on their side. They may be motivated but just don’t want to reduce their list price. A smart agent will have a conversation with the other agent to get some insight on the listing. They will present a fair offer and show recent sales data to help back up their offer to the seller. They may have to be patient, persistent and professional, but it could work; I have made it work for my buyer.
You may not get your offer accepted, but it is definitely worth the time and effort. You most likely will have no competing offers (super in a seller’s market for a nice home) and you may be writing the offer at just the right time when the seller is willing to listen. If you are a buyer, don’t hesitate to ask your agent to write the offer and insist they do so even if they argue against it. As an agent who has a buyer who can not find a home, consider the over-priced listing as shadow inventory that no one else has access to.