We get a significant amount of email from both our main website and this blog. A lot of it is junk from people trying to sell us something no real estate agent can live without. Some of it is the always enjoyed, "help me sell/buy a house" type of thing. The bulk of it is questions about the Phoenix real estate market, or general real estate questions.
Occasionally we get "commentary" from the non-real estate professional. I always like to get these types of emails as it allows me to gain some insight into the consumer's head. Here is one that came yesterday:
As I see it, "Bob" (by the way, the email he left is non-functional. Otherwise I wouldn't have posted it) is really making three points in his brief commentary…
Point 1: The market in Phoenix has still got a long ways to go down. I'm not going to get into a debate defining "a long ways". Bob is certainly entitled to his opinion. I don't know if he has any data to back this up, or if it's just a gut feeling he has. There IS data that shows inventory may be leveling off (though it needs to come down, not just level off), that supports home price declines are leveling off, and sales are up slightly in some parts of town. It is decidedly a buyer's market — but that does not necessarily mean it is a bad time to sell, or a good time to buy.
Point 2: Realtors are not being honest with sellers. Hmmm… I don't personally know any Realtors that are intentionally dishonest with sellers. However, with 47,000+ licensed agents in the Phoenix metro area I'd be kidding myself if I thought none of them were dishonest.
I do know there are plenty of agents out there that will tell a seller whatever they want to hear in order to secure a listing. And there are plenty of sellers out there with unrealistic expectations as to what their home is worth. Combine these two and what you get is a plethora of overpriced listings. My personal record is a prospect that insisted their $420K home should sell for $600K. Despite being presented with a boatload of data that demonstrated otherwise and despite long talks about both the positive and negative aspects of their home and the market, they insisted on listing their home at 43% more than what the market would support. We didn't take the listing. A couple of weeks later another agent listed it — at $605K. That home will rot into the ground before it sells at that price.
Given the number of overpriced listings we see, it is apparent that too many agents are not educating their sellers. Too many sellers appear to be "chasing the market", taking a "we can always reduce the price later" mentality. Problem is, they wind up chasing a whole line of other sellers. I understand that every seller wants to get every dollar they can in the sale of their home. But too many wind up with zero dollars because their overpriced home languishes on the market week after week. It is the agents job to educate their clients. This needs to be done before the listing agreement is signed. Don't take a listing thinking, "the seller will see and then lower the price".
Point 3: Realtors (and by my extrapolation, sellers) can change the market dynamics and end the housing downturn. Realtors and sellers with a thorough understanding of the current market can affect market dynamics, but "get the decline over and done with"? I don't think so. There are far too many factors that effect the real estate market that agents and sellers have zero control over. Interest rates, the availability of funding, population and economic growth, the job market and other such factors play a critical role in a real estate market. To say if agents would just be honest with sellers that it would end the housing decline is a gross misstatement.
Educating buyers and sellers is probably the most important thing a real estate professional can do. The average person buys or sells a home once every seven or so years. A real estate agent is deeply involved in buying and selling real estate every day. Real estate consumers can help in this education process by working with skilled and experienced agents and following their agents advice. By all means, challenge your agent, make sure you fully understand what they are trying to teach you but work together to get the job done. Just don't expect to end the housing downturn all on your own.
"Bob", thanks for visiting the site and giving us a little peek into your thoughts and feelings.
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Brian Miller 07.07.07 at 7:50 am
Jay,
You did a great job of reading “between the lines” of Bob’s email. When first reading his message, I found myself sighing and shaking my head at another consumer who feels we agents are are to make zillions of dollars at the expense of others. Thanks for a well written rebuttal…Brian Miller
Sam Chapman 07.07.07 at 1:22 pm
Jay - great post. My favorite part is one thing that I stress over a lot of the rest - educating people. It doesn’t matter if they are buyers or sellers. Buyers, especially from outside your area, need information on anything from commute times to schools to shopping… Sellers need to be educated on the realities of what it really takes to sell a house.
Charleston Real Estate Blog 07.08.07 at 4:54 am
Jay, what a great post with wonderful information for buyers, sellers and real estate professionals.
Jay - The Phoenix Real Estate Guy 07.08.07 at 7:42 am
Thanks guys. When I first read that email I thought, “Bubblehead… blame the Realtor for everything.” Then I realized that yeah, he may be a “bubblehead”, but it’s how he feels, and there are a lot of people out there that feel this way. And he’s got a point in that there are a LOT of unrealistic sellers out there and we as real estate professionals are not doing a very good job of educating the consumer.
Tim Wallace My Arizona Home Team 07.10.07 at 5:42 pm
Well, Jay, I must applaud you as well. Conventional wisdom says listings create leads and leads produce clients when effectively followed up. However, taking a listing at any price the seller wants is bad business. In my opinion to not be straight forward with a seller about their home’s value is a violation of our fiduciary duties to the client. We are not representing their best interests by taking the listing at any price. You’re right, that house that was worth $400K+ being listed at over $600K will rot before it sells at that price.
So, good response to Bob as well as your other thoughts.