Comment by toomuchtodo
3 days ago
Look at days listed. Any property will sell at the right price. After 90-120 days, it obvious the price is too high and the seller is not motivated to sell. The listing realtor will try to provide market guidance and advise to cut the price if needed, but humans can be emotional and irrational. Prices take the elevator up and the stairs down.
It’ll take time, but those who must sell will, and they’ll set the downward price momentum with comps.
Given typical realtor behavior, I’m amazed any house is overpriced. Seems like they push sellers to sell below market and buyers to go above market.
I knew market prices well from doing my own property tax protests.
Our damn realtor strongly advised on a price close to $100k lower than we insisted.
House was in average condition and not recently updated. Said we were overpriced.
Multiple offers above closing on first day of listing.
Closing price was still significantly above asking.
Stupid damn realtor!
> Stupid damn realtor!
Not actually.
As a buyer, look for bad realtors and use them. Many will screw over their vendor, and you can use that to your advantage as a buyer.
Sucks to be selling and as you have learnt, you need to corral your realtor or they will do what is financially sensible for themselves.
A realtor has a strong income incentive to get property sold at any price because their income increases a lot with each sale. So they want sales volume and velocity. They also want to reduce the time they waste for each property (especially open homes) and they want to reduce risks of no sale.
Example: a $1M home with a 3% fee. They would rather sell it at $900k and get their $27k commission quickly as possible, rather than use a riskier strategy plus waste more of their time to try and sell at $1.1M to get $33k commission. If it takes them 2x the work to get a few percent more commission, their incentive is to do less work and sell 2x as many houses to get 100% more on commission.
This is from a mismatch in incentives and is well known.
The agents maximize their income by getting lots of quick sales. The seller maximizes their profit by being prepared to wait.
https://en.wikipedia.org/wiki/Principal%E2%80%93agent_proble...
Yes. I know. I wonder if they persist in asking too much because they're overly leveraged. My second paragraph.
If they were overleveraged, they’d be doing a short sale or foreclosure (if you’re underwater, a traditional sale is off the table unless you can bring the negative equity in cash to closing). Otherwise, you are spot on. Sellers who aren’t cutting prices don’t have to and can ask their “make me move” price, to your point, either because they have a low payment or low interest rate. In some cases, they turn into accidental landlords to get the cashflow instead of concede on price.