While you want a good book of listings, sometimes it is best to turn a listing down. To save yourself the headache of getting a property that will not sell, be sure to fully explore these three challenges with prospective clients.
1. Is the property marketable?
Not all property marketing obstacles can be solved by simply reducing the asking price. Here are a few obstacles that can affect marketability and your decision to take the listing.
Listing before the challenges are solved
If sellers insist on having their property listed immediately, be sure to think it through. Delaying the date a property is brought to market can allow time to solve challenges. Increased days on market has an inverse relationship with optimal selling price which hurts the seller, and he longer time on market can unnecessarily exhaust the agent and broker’s time and marketing budget.
Location and condition challenges outside your expertise
Some properties have obstacles that need to be overcome in order to bring about a successful closing. Weigh the selling points against the obstacles to determine whether or not you are qualified to handle this transaction.
When making this assessment consider not only the neighborhood location, but also any needed repairs, zoning or deed restrictions, and any nearby environmental hazards that might complicate a sale.
If you perform your upfront due diligence and find that the property has special needs outside your area of expertise, advise the property owner to start calling in the appropriate experts.
True story: Property owners held a large parcel of land as a retirement investment for several years and paid five figures in property taxes each year. When the owners determined the time was right to sell it, it was discovered the property failed to pass the environmental tests necessary to obtain subdivision or building permits. The value decreased to a few hundred dollars.
2. Does the seller have the authority and capacity to sell the property?
Before you take the listing, make sure you know who the “real” seller is. To ascertain this, ask questions:
- Who is the titleholder and who has the right to execute the listing and sales contracts?
- With a divorced or divorcing couple, who will be the legal decision maker? Or if both parties must sign, is there cooperation and what will your role be?
- If the titleholder is deceased, what recording changes need to take place in order for you to have a valid listing contract? Is there an executor or multiple family members who will jointly participate? And, Are there any liens on the property that will prevent a title transfer?
True story: A seller contracted with a broker to list a property after the agent performed due diligence including pulling preliminary title and tax records. The title was held by John Smith, Sr. and the agent also met his wife and their small child, John Smith, Jr. The agent successfully marketed the property. At closing, it surfaced that there were three generations of John Smiths, and the true title holder was the father of the individual who executed both the listing contract and sales contract. The true John Smith, Sr. attended closing to sign the documents, much to the surprise of everyone involved.
3. Is the seller motivated?
A seller shows that he or she is motivated by accepting and working with market conditions. Beyond the most common gauge of realistic pricing, there are many other clues about a seller’s motivation.
To determine whether a seller is motivated, ask:
- What are the show instructions and flexibility of the seller?
A seller who restricts the availability and demands substantial advance notice is telling you their motivation level is low.
- Is the seller interested in your suggestions for staging and presenting the property?
- Is the seller willing to embrace and take action and heed your advice?
If your counseling appointments are too much of a debate, you may want to rethink the listing.
True story: A seller was eager to see a property listed in MLS. The seller wanted no sign, no broker open house, no public open house, and pictures of only the exterior. Showings were difficult to schedule, with it always being “a poor time.” Ultimately, the agent learned that the MLS listing sheet was being used as evidence in a family court case to demonstrate the property owner’s intent to sell because expenses needed to be reduced. Long after the listing expired, the property owner still resided in the same property.
Bonus: Should you ever take an overpriced listing?
That depends on other barometers of the property owner’s desire to sell. If the other factors point to serious intent, price may become flexible with more data within a reasonable time frame. The major question to ask here is: Will the seller commit to evaluation of results of showings and competitive properties movement in the market with a price adjustment as a consideration?
In my business, any of these circumstances are indicators that I should not take a listing. Comment below and tell us yours.