BRUCE A. TAYLOR
Market has changed
Bay State real estate brokers have learned to say “no, thanks.”
With a larger supply of for-sale homes and the buyer pool shrinking because of stricter lending standards, some local Realtors are refusing to work with sellers who won’t take their advice on pricing or other matters.
“Smart agents know that in any market there are times to pass on a listing, but these days it is being put into practice more and more,” said Inez Steele, executive director of The Realty Guild, an association of independent real estate offices in New England.
Some brokers say they are turning away homeowners who push for asking prices that don’t reflect market conditions. In many cases, the homeowner will search for another agent who will list the property at their desired asking price.
Agents sometimes agree to list the property at a high price with the condition that the homeowner lowers the price after three or four weeks if it doesn’t draw offers.
“While that sounds like a good compromise, it really doesn’t do the seller a service. It’s much more advantageous to list a property at the right price to begin with,” explained Bruce A. Taylor, president of ERA Key Realty Services, a Whitinsville-based firm with eight offices in Central Massachusetts.
Three or four years ago, when the inventory of for-sale homes was much smaller and properties were selling within weeks and sometimes days, agents were more willing to list residences at $10,000 to $20,000 higher than they recommended. Taylor said agents and sellers often were surprised when the homes sold at the higher price.
“That’s changed,” Taylor said. “We’re not surprised with homes selling at higher prices anymore.”
Instead, he noted, overpriced properties won’t sell, forcing homeowners to slash their prices.
Accurate pricing has become even more of a concern for sellers in recent months as buyers are having a tougher time securing financing. Lenders are tightening practices – requiring borrowers to have higher down payments, for example – and some lenders are cutting back on the types of loan products they offer. A number of mortgage companies, particularly firms offering riskier subprime loans, have shut down this summer.
In the meantime, prices statewide have been declining. The median price for single-family homes sold through July of this year was $317,000, down 4.7 percent from a year earlier, according to statistics from The Warren Group, Banker & Tradesman’s publisher.
“It’s important for sellers and their Realtors to recognize the existing market and price things appropriately so buyers are willing to step up to the table,” said Doug Azarian, president of the Massachusetts Association of Realtors.
Azarian, who owns a real estate firm in Falmouth, said successful agents are realizing that they have to turn down listings when the sellers insist on a price that doesn’t reflect the market. Azarian did just that when the owner of a waterfront property in Falmouth wanted to list the property for $100,000 more than Azarian recommended.
The home initially had been listed for $1.4 million with another agent. When the home didn’t sell after about four months, the seller sought Azarian’s help. Azarian suggested a price range of $1 million to $1.1 million, but the seller hired another broker who listed it for $1.2 million. The home hasn’t sold yet.
Taylor, of ERA Key Realty, said he’s hearing similar stories from agents in his offices that have walked away from overpriced listings.
“It’s a waste of our time and it’s a waste of the sellers’ time,” said Taylor. “People get disappointed with us if we don’t sell their property when they list with us. We would rather have the reputation of being a successful marketer than an unsuccessful marketer.”
‘Pristine Prices’
Industry sources say sellers who test the market and don’t have to sell are usually the ones who refuse to budge on price. Frustrated that their homes aren’t selling, some homeowners are pulling their properties off the market and that’s ultimately helping to draw down inventory.
The Massachusetts Association of Realtors recently reported that the number of single-family homes listed for sale declined in July. There were 37,314 homes listed for sale in July 2007, 12 percent fewer than the same month last year. According to MAR, that translated to 8.6 months of supply, down from 10.6 months of supply a year earlier. The inventory was much lower than September 2006, when the inventory peaked at 15-month supply.
Lynn broker Annmarie Jonah said her company turned away about 20 home listings in late May and June.
Jonah said one transaction that pushed her office to start declining listings involved a Lynn home that her office originally listed for $589,000. The home price eventually was reduced to $529,000 and a buyer made an offer at the price, but the lender refused it because the homeowner owed more than that. The home eventually was foreclosed on, according to Jonah.
“We had reached a place where we needed to explain to sellers the cost of taking on listings [that were priced too high],” said Jonah, owner of Annmarie Jonah Realtors.
But in the last few months, she added, sellers seem to have “gotten the message” and are either listing their homes at a reasonable price or reducing their asking prices.
“Buyers want the best house at the best price. Only the most pristine houses at the most pristine prices are selling,” she said.
Sometimes it’s clear to agents that they can’t help sellers.
Paul Rege, who manages Kelley & Rege Properties in Milton, said his office will refuse a listing if the seller purchased the property within the last year or two with a low down payment or 100 percent financing and doesn’t want to lose money from the sale.
“What we do is try to evaluate where the client wants to be and what their goal is. If it’s a case where we can’t obtain that goal, we turn the listing down,” said Rege.
Karen Almeida, who manages the Mattapoisett office of Jack Conway & Co., said her office declined to list about a dozen properties this year because of pricing.
In one case, her office recommended listing a small two-bedroom home in Mattapoisett for $165,000, but the seller went to another broker who listed the home for $239,900. The home price was reduced to $210,000 and then after sitting unsold went into foreclosure, according to Almeida. The home sold for $120,000 a few months ago.
“We would not have listed it at $239,900,” Almeida said.
Almeida’s office has averaged about 110 listings at any given time in the last few years. “We had the luxury of being able to be a bit pickier with listings. I think agents that aren’t as busy tend to take the overpriced listing and are working harder to get them sold,” she said.
Rick Connors, an agent at Higgins Group Realtors in Lexington, said he and his partner have seen some sellers go to other agents who were willing to list their properties at higher prices.
“We want them to get as much money as possible for their home, but we have to explain to them that if they push the price too high, they may end up getting less,” he said.
Last year, Connors noted, it seemed like he was encountering more sellers who resisted advice on pricing. Nowadays, both sellers and buyers are becoming more reasonable with their expectations, he said.
“Our time is valuable,” he said, “and we have to deal with realistic expectations of the sellers and the buyers. And they have to realistic of what can be done for them.”
