"Over-priced" Houses That Don't Sell

As I wander through the various message boards, I often read about people’s frustration regarding “over-priced houses that can’t possibly sell”.  To a buyer who likes the house, and is waiting for the price to be within reason, this can be very frustrating.

What they fail to understand is that every house that is for sale, is not necessarily going to be sold by the current owner. 

1) Divorce – Often in a divorce, one of the spouses is offered an option to buy out the other spouse.  In a market like this one, sometimes the agreed upon price must be tested.  Say the spouse who is leaving wants the buyout price to be $600,000. Let’s say they bought it for $400,000 and put $100,000 worth of improvements into it.   They put it on market for $$599,000 and keep reducing the price to $519,000.  Then it goes off market (this is a real case) and it never comes back on market.

Meanwhile, a buyer has been watching it, who wanted to buy it for $485,000.  He’s been watching it for 7 months.  He feels “used” and frustrated that it went off market before it hit an asking price of $499,950 .

Once the value was proven to be $400,000 plus $100,000 at best, the two spouses agree on the “buyout” amount, and one of them gets to stay in it.  It was only ON MARKET to prove to one of the spouses that the price of $600,000 was unrealistic.

2) Passive Aggressive – saying YES and meaning NO.  Husband and wife have a fight and the wife calls an agent to list the house, planning to get a divorce when the house sells.  Husband signs the listing paperwork at a price at which he knows it won’t sell.  He appears to be cooperating with the sale, and blames the market for the wife’s failed plans 🙂  They make up at some point, take the house off the market, and live “happily” ever after…until the next fight.

3) “Mom, you HAVE TO move” – Well meaning children tell Mom she’s too old to live in that big house all by herself.  She’s tired of hearing it, and agrees to put the house up for sale.  High price and awkward showing instructions.  “Can only be shown with listing agent present’ or “Can only be shown on weekdays from 10 a.m. to 4 p.m. and not on weekends”.

Sometimes these homes are on market from April through October, every year, year after year, with the price increasing every year.  Kids wonder why Mom’s house won’t sell, but they stop bugging her about her need to sell it.

4) Short Sale – Bank approves a sale price of $450,000.  House sits on market at $450,000.  No offers.  Owner can’t lower it below what bank has indicated they will take.  Bank won’t reduce the amount they will take, because they have an appraisal at $450,000.  House sits on market until someone buys it at foreclosure.  Some owners keep reducing it every couple of weeks, but mls says they can’t offer it at a “fake” price not ratified by the Bank…big Catch 22.

So when you look at the inventory of homes for sale, understand that they will not all be reduced to a price at which they will sell.  Often you will not get the real story about the seller’s motivation.

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ARDELL is a Managing Broker with Better Properties METRO King County. ARDELL was named one of the Most Influential Real Estate Bloggers in the U.S. by Inman News and has 33+ years experience in Real Estate up and down both Coasts, representing both buyers and sellers of homes in Seattle and on The Eastside. email: ardelld@gmail.com cell: 206-910-1000

22 thoughts on “"Over-priced" Houses That Don't Sell

  1. I don’t understand buyers who get frustrated by this. If you like the home make an offer and if it doesn’t stick move on. There are so many homes on the market with more coming and prices are consistently falling. Just be patient and don’t get hung up on the ones with weird owner circumstances, just move on to the next object to watch or make an offer on. I wouldn’t make any offers this year but hey if you feel lucky knock yourself out.

  2. I suspect we ran into #1 this weekend, and I’m pissed. As a buyer, I find it borderline unethical; it cruelly toys with people’s emotions and may have an impact on how a buyer chooses to handle other legitimate opportunities.

    Don’t list a house if it’s not really for sale.

  3. Easier said than done, tj. Especially for couples. Even with all the inventory, it isn’t often easy for a husband and wife to agree on a house. When they finally do, it makes it hard on the “sensible” spouse to say no, unless the price is X. Usually one of the two really wants it by then. I don’t like to be “sexist” about it, but more often it’s the wife who wants the house and the husband is waiting for the “sensible price”. The woman then blames the husband when the house goes off market and they have no chance of getting it at all and they have to start all over again.

    Are you married?

  4. biliruben,

    There’s no way to change it, because sometimes the house has to go on market. Sometimes in a divorce, the person gets to live in the house (sometimes for free) until it sells (low motivation). Legally it has to be on market as part of the divorce process.

    We’ve seen a #3 that we suspect is a lonely lady who likes having company once in a while 🙂 It’s more like a “make me move” price.

    Regarding your experience, how much less than the asking price did you offer? Technically all houses on market MUST sell IF you offer full price, but not if you don’t. They are “for sale” at the asking price. Were you maybe just too far under it? Or did it disappear while you were deciding whether or not to make an offer?

  5. Divorce situations can be nasty.

    I’d add another one, which is the seller just buying time. Sometimes in bankruptcy the court will allow time to sell, but the debtor doesn’t really want to sell. Usually there are clues. The first one of those I ran into as an agent was a $1,000,000+ property listed repeatedly by an agent with a large firm, but it had no pictures (only a sketch drawing of the house as the main picture). At the time I was thinking: “For 3% of $1,000,000+ you could afford a $200.00 camera. Months later I was talking to a bankruptcy attorney I know about a case he was working on (representing a creditor) and put two and two together. If I had to guess, the agent was a friend of the debtor.

    The agent was lucky in that she hadn’t referenced the bankruptcy on the listing, and as I recall I don’t think she was approved by the court, so if someone had come by to buy, she could have ended up owing a commission to the buyer’s agent.

  6. I see the same comments too Ardell. It must be very disappointing for the potential home buyer that is watching their dream home in hopes that it will eventually fall into their targeted price range.

    I generally encourage a buyer that is “Reduction Sitting” to make the offer at their targeted price rather than risk it selling to another buyer or expiring before it gets there. Of course even a good buyer agent can’t force a seller to accept a low offer, but if the buyer’s targeted price is both realistic and defensible at least I have something to work with for my client.

    Even in this market there are still sellers that insist on pricing it “a little high”. As agents we know this is a foolish tactic but some sellers apparently insist upon it.

    I’ve run into #3 recently, lovely lady but her home will never sell. I think that’s just how she wants it. 🙂

  7. I wasn’t expecting that answer, Biliruben. You offered full price and what? They took it off market? Was it already off market when you made the offer?

    If an owner puts a property in the mls, they promise to pay the agent(s) if a buyer makes an offer. If it’s less than asking price, then the seller has an out.

    I really wasn’t expecting that someone would offer full price, and not get the house. What happened? They just said no and after took it off the market?

  8. Yup. I don’t want to go into any more details here, in case they are reading, but it was active on the market.

    So she owes the 6% to the agents, even if they don’t sell? Or they have to accept our offer?

  9. Our offer didn’t have any contingencies. We’ve already sold our house. We hadn’t waived inspection, but it was a straight-up, clean offer.

  10. I don’t want you to tell us anything about the house that would reveal who you or the sellers are, but something is very fishy here. This is worse than the examples in my post! Did you have an agent? Were you trying to buy without one? What did they respond? Is it one of those where you wanted the listing agent to give you the buyer agent fee?

    You submitted an offer and what? No reply? House was pulled from market? House is still on market, but they won’t sell it to you? We’re all aghast!

  11. Yes. No. They decided not to sell. No. They changed their mind. We asked that they pull it from the market, and… they have, I now see. No other offers were submitted, to our knowledge. Nothing odd or hinky about this transaction, other than they decided not to sell. I’m assuming because they had #1 in mind all along, but I can’t be sure. They have still left the door open, so we’ll see. My guess is they just wanted to establish a market price, but they priced it too well – at least I obviously thought so.

  12. biliruben,

    That is very unusual and dangerous for a seller. What if you were a “protected class”? How would they prove it wasn’t discrimination? Are the agents angry? If not, this sounds very odd indeed.

  13. myrtle beach condos,

    This is a growing dilemma. On the one hand, owners that don’t lower their price, will not likely get an offer. On the other hand, if they keep lowering…there is no guarantee that the bank will accept that price, especially if it is appraisning for higher than that price.

    Our mls has issued a warning to agents that they cannot entice buyers with prices that banks will not accept. As Kary brought up, once it is in the mls, the buyer agent is also involved as to commission earned. It’s messy any way you slice it, and we have no good answers for this problem at present.

  14. I’m an athiest. Is that a protected class? If not, it should be! 😉

    How about Arab?

    The agents appear to be taking their explanation, which I won’t go into here, at face value. And they could certainly be right. Myself, I looked for the most likely explanation, which coincidentally you just so happened to reinforce above. After it occurred to me, I was curious whether this happened with any frequency, and your post responded “yes” in a remarkably timely fashion!

    The listing agent appeared to be selling in good faith, from what I could tell. I don’t know if they are angry, but I’m guessing probably a little, particularly if they suspect what I suspect, given that they both lost a tidy payday and are out some time and money.

  15. I won’t probe any further as to what “their explanation” was. I have had a situation where a young couple was in financial trouble and didn’t tell their parents. He had lost his job. I urged them to tell their parents before I put up the sign and put it in the mls, but they wanted to handle their problem themselves. A few days after it went on market, the parents found out and helped them and I was very happy to take it off market. Luckily it was quick and there were no buyers.

    But that was in the last recession 🙂 and clearly is not very common.

    We are all sad for you, biliruben. You have been looking for a long time. Your wife must be very sad. I hope it works out for you and that they at least were sorry to have troubled you, and apologized.

  16. Thanks, Ardell.

    The listing agent was apologetic, and it could very well turn out for the best.

    Your post just hit so close to the mark, that I thought I’d share.

    Last house hunt, it took 4 offers, so maybe the next will be the charm!

  17. Yes Ardell I’m married with two kids as well. My wife wants to own a home as do I but I’m very,very lucky, she’s a smart cookie and understands that even if you think one home is perfect there will always be a better one down the road. It’s more about if you can stand to wait than about missing the “dream home”. And that yields true double in a market with declining prices. She was also surprisingly the one who came to me this time around and suggested that we extend our rental for one more year when it expires in late spring. Did I mention she’s hot as well? As I said, I’m a very lucky man. If you don;t think you can be happy in a rental with wife and kids, think again. It has nothing to do with owning or renting. Take it from a 40 year old with epxerience from both. Financial health is multiples more important than owning a home for marital peace.

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