At the listing.  

That advice should be provided at the first schedule meeting and they should be provided with the market data supporting the advice. 

There will never be a shortage of unrealistic home sellers and you should not invest your time and money in those who will not take your advice.

some are not worth taking because they will never adjust their price.... the second timer should not take it unless it's at a new price....

If you cannot get through to her with comps, by showing her the competition or thumping her in the head (j/k), then I would either settle in for a long, unhappy time of it, OR ask her to release you from the listing.  Sometimes that is the shock they need - hearing from you it is a lost cause.  Overpriced listings are energy suckers and I would rather be spending my time on houses I can actually sell.  I also subscribe to the philosophy that we are doing these sellers a grave disservice by not pounding them on the fact they are overpriced.  

Hi Melissa -- this issue needs to be addressed at the listing appointment. Succinctly.  With facts.  Politely.  

If you have taken an overpriced listing without putting that fact in writing with the seller with a planned and serious price reduction strategy, you may be likely looking at an expired listing and making the job easier for the third listing agent.  Sorry to be so brutal but you clearly stated you knew it was an overpriced listing.  You may want to consider making this a Members Only question unless that is part of your strategy of letting your unrealistic seller "see the light".   

I heard an agent tell someone in my office, "I'd like to be the first girlfriend, the second wife, or the third listing agent." I thought that this was terribly funny, and quite apropos here.

I hope that your seller will see the light during your listing. While you might consider it to be $50,000 overpriced, at at list price of $800,000, your listing is only 6.25% above what you consider to be market price. In my hot Springtime market, I would take that listing any day of the week.

The time that you address the overpricing is after the listing does not attract the viewers and potential buyers that you expect considering the neighborhood and the overall market.

Good luck!

Before the listing is signed is my favorite time to approach Sellers about pricing. The practice of taking over-priced listings in the hopes of getting a reduction is seen throughout this industry. I can't recommend beginning any job where your first day begins by arguing with the BOSS!  

I would have addressed this issue before taking the listing. Evidently it isn't a motivated seller since it is the second time around and she is still stuck on her number. It is frustrating and makes an agent look bad when the listing is way overpriced. Try an broker open and tell her what all the other agents are saying about her property. My guess is it won't matter.

Ask her if she would agree to having a professional appraiser do an appraisal. She would pay for it and you would reimburse her for the cost of the appraisal at closing. Then suggest 2 or 3 good local appraisers so she would be making the choice and not think you were bringing in someone of your choice to make your case for you. Then adjust the asking price to a little over the appraised price to leave wiggle room.

I would be upfront with the client that price is the issue and when simultaneously shown by the reports of other sales, let the client know affirmatively that it is price that is precluding the sale of the property.  I would also let the client know that you will not be re-listing the property unless an adjustment is made to the price that is suitable and realistic, and then stick to it.  You should not work for nothing, which is what the seller is expecting you to do.  You must perform like the "expert" which you are and set the conditions for the use of your expert services.  In the short term it may appear like a "loss" to you but it is not in the long term - it's a win.

I tell them when we discuss the listing, too high and I simply wont take it.  I dont have the time to waste as it is my most precious commodity.   I know some agents will still take it, to market themselves.  I dont, that is how I run my business.  Good question.

This is all great advice.  I also have a hard time with this.  I go over the information at the listing appointment but there are always those who don't listen.  I eventually learn my lesson and move on.  They usually don't sell or they sell for what I told them in the first place.  Some people are kind of like your kids, they listen when others talk, but sometimes don't listen to you.

The reason Seller wants the listing overpriced is key.

In our area, statistically the selling price averages about 6% to 8% less than the list price.  So, if the Seller is willing to list high and sell at a discount, it could work.

Seller must understand that house must appraise for selling price, so comps will tell them the acceptable price.

If the Seller is mortgaged to the hilt and absolutely has to have high listing price, it could indeed be a waste of everyone's time.

Melissa Polce we all have 'sixth sense' and know at the time of signing the listing agreement that it is overprice or not!

After they complain because nobody wants to look at their home. As soon as one week after listing.  That is unless at listing when they ignore the CMA's.

I have one like this and every week I send them listings that sell in their price range and those that sell where they should be priced.  Hopefully, the light bulb will go on some time during the listing.

At the listing appointment. If it's a little overpriced we talk about a price adjustment at some predetermined point. I also explain the cons of overpricing right from the get-go.

I'm always blatantly honest about pricing.  I handle it by reviewing comparable sales and competing listings during the listing consultation and making my recommendations for list and sale price ranges.

That said, I don't think being $50k over on an $800,000 home would make or break a listing in our market.

If a seller is signficantly unrealistic about their home's value, I walk. If they are off by only a little bit, I take the listing and hope for the best.

Before you take the listing.  I know this has been said, but it can't be said enough.

Melissa, if the property is worth $800,000 and it's listed for $850,000 -  I don't think the listing price is the reason it has not sold.

Obviously I don't know that property, but that is my price range; I think something else is going on?

This is discussed at the first meeting with the comps right in front of the Seller's face.  Pointing at the comps: "This is market price, the price you can expect to sell the house."  

I would cover that at the listing presentation. I am always straightforward and honest with my opinions with my clients. If a potential client is insisting on something that is ridiculously overpriced, I would likely refuse the listing and thank them for their time. A listing like that can do more harm than good. Better to pick it up on the rebound.

Put her in the car and go out and show her the 3 Most Competative Comp's so she can personally see that the properties a Better value to the buyer!

I would like to know how much overpriced the listing is.  If you're talking about 5-10 thousand that can be overcome.  Much over that I would walk away. It all depends on location, location, location....

When there are no showings for 2 weeks!

John nailed this one!

50k on 800k is not that horrible. Especially now, when buyers are very aggressive, I'm sure you'll receive offers that you'll able to negotiate to a comfortable price for both principals.

I try and avoid this kind of trouble by getting agreement up front. If it's that overpriced, I have to think long and hard before I take the listing.

It's hard though I usually explain this from the beginning.

At the listing presentation after providing comps.

At the listing.   I make the sellers aware of the comps, what current properties are going for and the average time it takes to get something sold.  If they're stuck on their price, it's usually your choice to continue owning the listing, while gently tell the seller that similar properties are selling faster because they're more attractive.  Given enough time if the difference, like yours is 6%, it may eventually sell... 

Before I take the listing, I determine if the seller is truly motivated. That is the deciding factor. I just turned down a listing that the seller wanted to price $150k over market. He didn't need to move for 2 years, so I didn't want to battle for price reductions that entire time. ~Marisa

The issue should be addressed when the listing is being taken. I would bring as many visuals and articles that support the negative things that happen to homes that are overpriced. I have a graph that shows how much money a homeowner loses when they are "chasing the market". On the other hand, there are some homeowners that just won't listen, and there really isn't much you can do about that, except let the listing go. 

We have to be honest with sellers from the very beginning. If I'm confident the home will sell for 300-320 and the seller wants 375, the conversation goes like this: "Mr/Mrs Seller, your home has some very nice upgrades and one of the best yards in the neighborhood. I'd love to sell it at the top end of the market, around 320, in which case you'd net XXX at closing. Now if we price it at 375, you'll net zero ... because the home simply won't sell at the price in today's market. Which net works best for you?"

I think the key is to not turn the discussion into an adversarial one. Come to some agreement about how long you will list at the sellers choosen price before you will reduce the price.  In our current (ridiculous) market a home price is rejected by the market after 21 days.  If I think a seller wants to list too high, I get an agreement from them that after 21 days we will revisit the list price.  Of course we tell them the downside of overlisting and how they risk getting even less.  If they won't agree to this, I won't take the listing. 

Melissa, I agree with other answers, at the beginning. But saying that I know there are times when a seller just won't do what they need to do, and they forget what they are told, or they ignore. 

Just lay out the facts. In a nice way! But there are sellers who refuse to see the light, and they don't sell for a long, long, long time. 

At the listing appointment when they ask what they value of their home is. I'm happy to list at a different price if they disagree but I usually put something in place that states that they will drop or adjust to my price after a said time if they have no offers.

I actually just had this situation, and after presenting the evidence to my client, I advised him to get an appraisal for proof so we could put the issue to rest.

I tell these sellers that I already know who the buyer is....them!  I then ask, "Why do you need me then?  You clearly don't want to move."

I watch the fluster, wait patiently for an answer before I respond.

I then apologize for being flip but add, I don't set the price, the market does.  I explain the value I bring as a professional and leave them with the following..."If you are really determined to sell your house at this price, I will do so only if you agree to lower the price in three weeks if we don't get an offer."  If they don't agree to that, I let them know I'm only available when they are serious about selling and wish them the best of luck.  There's another realtor out there willing to take on the waiting game but it won't be me!

When they start blaming me why their property has not sold, I pull up the stats and show them a BPO/CMA. I had a property on the market for 6 months with no showings. I explained if we had no inquiries/showing within the first week, we may need to adjust the price or costs or allowances. I have gotten in my car and driven past the comps for current curb appeal photos if their curb appeal really sucks. You know what I mean. I always ask for feedback. I'm good with agents texting me feedback. I got a text from one agent, simply stated, smelled like landfill. She took couple quick shots and texted those. Went over the seller's heads. They finally got the picture so to speak. Hired people to clean up outside and inside. Finally got listed reduced price 2 weeks later and had to help with some closing costs. I was close to walking away but they also wanted to purchase another in same county. Was worse than pulling teeth but got it done. Closed on both homes 7 weeks after the cleanup. Had myself a 6 pack after that one before the husband got home!

Best to get it out there right away, no point in listing it wasting time and souring the market with the wrong price.

It is a good idea to tell the sellers at the listing appointment . 

You might just ask your client, " Do you want me to sugar coat the truth for you or would you rather I was 100% honest?''  This is a great question when you are getting the listing.  It is a better question after you have the listing.  Send your client a link to my article, "Why Don't People Buy Gas In Tryon, North Carolina" right here at AR http://activerain.com/blogsview/4568120/why-won-t-my-listing-sell-and-why-don-t-people-buy-gas-in-tryon-north-carolina-

You have failed to discover what the home owners real intent/goal is.

You presume and see only the goal of selling the house.

If the sellers real goal is 'relevance' she is getting everything expected.

If the sellers real goal is to remain in her known society, mission accomplished.

My suggestion:

#1. Identify the REAL goal and stay within that context.

#2. Find her a NEW HOME. When the pull of the new home exceeds the grip of the old, you will have a motivated seller.

Immediately, do not mince words about the price. Your seller will loose confidence with you. I tell buyers that are over pricing a property that we can try it their way for a set period and then reevaluate the situation.

we all have used the comparison that overpriced helps the competition sell but I also suggest reminding them if they are selling in a low cycle of market and buying in the same cycle , that "loss" is "gained" on the buying side. Some people get so hung op on thinking they need xxx out of the net instead of looking at the bigger picture ! 

Hi Mellissa,

I would check what has SOLD in her subdivision since she has been listed even with the first agent.  Show the sold properties to her and go over any that reduced the price before selling.  Having a detailed example of homes selling my open her eyes she is overpriced.  In the future don't take listing that are overpriced.

That is a discussion that should take place before the property is listed. If a Realtor is a true professional he/she will know where a property should be priced for it to be salable. WE have a very tightly priced market here in Northern Virginia and most homes sell very close to list price - or they don't sell at all. For homes under $500,000 I will take a listing up to 2% (+/-) over my recommended price. For progressively more expensive homes I will adjust that percentage somewhat higher. Outside of those pricing parameters the only time I will accept a listing is if we sign an addendum to the listing with pre-programmed price drops on specific dates.

This sword can cut both ways - - there have been times when I have lost listings that later sold when the seller did agree to significant price drops shortly into the listing. These have been offset by times when the seller has come back to me the second time around - - Someone else got to waste their time on the first listing period. I’ve also won listings (at my price) because the sellers were impressed that I was professional enough to do the research and convince them their idea of value was incorrect as opposed to other agents they interviewed who were content to accept the seller’s opinion of value as the list price.

At what point? For me, it starts when we first talk about the pricing. For me, I think it's key to set the right expectation. If it was never discussed, then it would be fair to the seller.

It doesnt mean I wont take an overpriced listing. 50K doesnt mean much, unless we know how much it is in relations to the property. 50K on a 300K home is a very serious overpricing - and hence I will really decide if I would take on the listing.

If it was an 800K listing, then 50K isnt as bad for consideration of lowering it later.

But the conversation of lowering will begin even before the listing agreement is signed.

Setting expectations is important to me. Clear and understanding both sides. At least thats me. 

Ideally, it's discussed at the listing appointment.  Since it's a second time around listing, a good discussion would've included why the seller thinks the property failed to sell.

The market speaks loudly, even if it's deafening silence.  It's important to tell that to the seller and to convey what it means.

I ask them how they came to think the property is worth what they are wanting to ask, and then I suggest they get a professional appraisal after I show them the competiting listings don't support what they want.  I then ask them, politely but straighforward, if they really do want to sell the property.  Sometimes, while the words say "yes", but the body language tells you "not really".  Once you get a better read on that, you might be able find a way to to talk about it more effectively. 

I find it a lot easier to except the listing with an automatic 2 week price reduction. Most people are so sure their house is going to sell in less than a week I don't have problem getting their signatures...