Overpriced listings are quite common in commercial real estate sales or leasing. The client for whatever reason has chosen to market their property at an inflated price or rent. The agent or broker has then taken on the listing in an attempt to find a buyer or tenant.
Now it should be said that there are levels of a property being ‘overpriced’. Some properties may be acceptably close to the market price whilst others can be well away from reality. Property buyers and tenants know the market and will not usually sway from the established benchmarks of price and rent.
The agent always has the choice of whether to take on or walk away from the listing that is overpriced. That said, the marketing process of a high priced listing can waste a lot of time and effort on the part of the agent.
Consider these facts:
- The first 3 or 4 weeks of any marketing campaign are critical to getting enquiries and inspections under way. An overpriced listing will kill that momentum.
- An agent that takes on a listing of this type can in the process damage their image as an industry professional.
- Servicing a client in this listing situation is just as intense as that of a good listing at the right price. Where will you devote your efforts?
- Some agents will take on a listing just to have it under some control, thinking that the client can be ‘conditioned’ to prevailing market conditions over time. If you do this, you should believe that the client will listen to reason and that you can get the required evidence to solve the problem.
- Get comparable market information of other local properties that have been sold or leased in the last 12 months. Break that information into an analysis of improvements, services, and amenities. Add to that the locational factors and the differences in building age and layout.
- Take the client to see properties that have been sold or leased. Stand out front of those properties rather than just show the client a photograph. Show them the differences in location and precinct.
- Show the client the facts of ‘time on market’ that apply to the listings in your area today.
- Get some of your buyer or tenant prospects to inspect the property with you before you go to market on the overpriced listing. Record their observations and comments on your mobile telephone for use in the next meeting with the client.
- Choose a method of sale or lease that suits the property type and market conditions. In the case of a sale, use a method of sale that lets the buyers put in a price or offer.
- If a property is well overpriced and the client is not receptive to reality of the market, it may pay you to take on the listing in an ‘open listing process’. In that way you do not have to devote too much effort to the marketing and inspection process.
So the message here is that an overpriced listing can waste a lot of your time and effort as an agent. Be prepared to walk away from those listings where the client is beyond the realms of market pricing reality.
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