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Friday, Nov. 16, 2007 | Those glossy brochures tacked to the post in the front yard of a house for sale don’t grow on trees, some of the region’s real estate agents will tell you.
And with today’s gas prices, those agent-as-chauffer daytrips for choosy buyers to compare carpet colors in a house in Point Loma, to the canyon view in Poway, to freeway access in Carmel Valley, and back to Point Loma, are getting to be a little much.
With homes taking longer to sell, and buyers choosing between more homes on the market than just about ever, real estate agents are getting pickier over the clients they’ll take. In a commission-based business like real estate, some agents are learning to sniff out their next source of income, and leave behind the looky-loos. They understand that if they’re going to spend an hour on someone today, in a market where it’s a lot less likely that a deal gets done, it’s increasingly important that they spend it on the right person.
“If you’ve driven somebody around for two or three days, six to eight hours of driving around in a day, and then they decide ‘Oh, I actually don’t want to buy,’ I don’t know — how does that agent make a living?” said Sharon Crown, a Coronado-based real estate broker with Napolitano GMAC Realty.
Where it might seem counterintuitive to be picky, to turn down business at a time when the real estate related industries are bleeding jobs, it’s about developing discerning business sense for brokers like Jim Abbott, who manages a Prudential California Realty branch in his name downtown.
“You know, these listings, it does cost money to carry them, to advertise them, to work on them,” he said. “And the huge, vast majority of them are not going to sell.”
The psychology of real estate has moved to center stage in recent months, as market predictors acknowledge that emotions throw a wrench of volatility into the equation. And that emotion plays out most dramatically for sellers stubbornly married to a lofty price, said Adam Rappoport, broker and co-owner of G&R Realty.
“The common line you always hear is, ‘We think someone will fall in love with this house like we did,’ and pay the price we’re asking,” he said. “That doesn’t happen anymore. … In this day and age, at least most Realtors are trying to portray a more accurate view of the market, and sellers are still in denial.”
But the buyers approaching agents these days are increasingly aware of the market conditions, Rappoport said.
“What I have now is … a different class of buyer,” he said. “It’s a very savvy group of very smart, intelligent buyers who know the market. They have me write up offers 10 to 20 percent below list. There’s no fear anymore of being insulting to the seller or the lender.”
Abbott said he and his colleagues typically spend between $1,500 and $6,000 to market a property, including costs for professional photographs, virtual tours, fliers, open houses and others. But if the price on that glossy flier makes a buyer laugh out loud?
“If a listing is overpriced and you never sell it, then you’re just out that money,” he said.
He allows his staff to commit an afternoon or a day to a potential client, see if they can find a realistic property that meets their price and location goals. If the client isn’t interested, that’s “in and of itself an answer.”
“As brokers, the one thing we control in this mix is our time,” he said. “That’s really our commodity.”
Crown said her office requires buyers be pre-approved by a lender before they house-hunt. That way, they have to be realistic about what they can afford. Where houses practically sold themselves within hours of being listed in boom times, they can take months now, even years.
It took an average of 33 days to sell a detached house in the first 10 months of 2004, according to the San Diego Association of Realtors.
In the same period this year: 65 days. And that doesn’t account for the near record number of houses still languishing, unsold, on the market. Or those who’ve let their listings expire, they get so frustrated.
Crown is also quick to discern a seller’s desperation quotient.
“If we’re not in the same ballpark, then we’re in trouble,” she said. “I ask my clients, ‘On a scale of one to 10, one being ‘I don’t care if my house sells in a year,’ and 10 being ‘I want it sold yesterday,’ where are you?’ If it’s lower than a seven, then we have to do a little more negotiating.”
There’s no one standard for an agent’s role in the transactions, and some disagree over whether to suggest (or demand) the seller list at a certain price.
“A good agent won’t price the property,” said David Cabot, president of the San Diego Association of Realtors. “A good agent will educate the client so that the client can price it right.”
And, since they don’t own the property, agents can’t force the seller to list at their price.
But, said Abbott, the brokers he would trust are the ones who present realistic prices that would net the seller the most amount of money in the current market. That should be the seller’s goal, too.
Rappoport said he doesn’t mince words.
“I’m usually quite honest with people — and some sit there at the price they want, but they come back to me in a couple of months,” he said.
He admitted there have been two homes in the last two years where he told the sellers they’d need to lower their price, and a buyer came along willing to pay what the seller was asking.
“I’m not always right,” he said. “I let them do what they want, and they got it. But that was two out of about 17 or 18. … In this market, I’d say, cut to the bone and get your money out of there.”
Ron Alpert coaches real estate agents around North America with Corcoran Consulting and Coaching, and the realistic listing acceptance is part of his training for sound business practices, he said. It’s especially important to convince a new agent to be realistic, he said.
“What they haven’t yet learned is, not all business is good business,” he said. “It costs money to have a listing.”
Alpert said it’s only marginally beneficial to accept a listing just to get your sign up in a neighborhood.
“If you’re overpriced, people are going to look at it, and they’re not going to call,” he said. “Maybe the market would firm up a little bit if all of these sellers in dreamy-dreamy land would just take their houses off the market.”
For Abbott, a veteran downtown agent, it sometimes means turning down property listings others covet.
“I’ve turned down, taken myself out of consideration for some awesome properties lately because I didn’t think that — given the pricing goals of the seller — that we would be successful in achieving those goals,” Abbott said.
“It’s always nice to have your name associated with a high-end property,” he said. “But it’s better to have your name associated with a high-end property that sells.”