Expired and cancelled listing and the winter market
When I began to write about the winter market, I drew a comment from my friend and ally, Bill Wendel. He and I met in 1992, when we had allied interest in the development of buyer agency, MABA and NAEBA. During December, Bill began writing about the winter market, including expired and canceled high-end listings.
Timing the market is not as simple as just showing up at the low-demand time of the year. There is leg-work involved in finding the properties that have not sold because they are over-priced or otherwise mis-marketed. Like jj24, successful buyers watch long-standing listings until the time is right to make a good deal on it.
Bill writes:
This year, we realized that focusing on seller-initiated mega price reductions caused us to miss some significant savings, like price concessions negotiated by exclusive buyer agents and price reductions that effectively occur when listings expire or are canceled. Is "timing the market" really be the most effective way to get a price reduction on a luxury home in Boston or elsewhere in MA? That's a possibility, based on the success of past clients and our ongoing analysis of expired & canceled listings across Massachusetts during the final weeks of 2011.
During 20 day period between St. Nick's Day and Christmas (12/6-25/11), approximately 234 residential MLS listings priced over $850,000 expired or were canceled. As noted in our previous blog posts in this series Sellers with high end homes seemed less likely to reduce their prices than less expensive listings which often expired even though they were priced well below their assessed value.
Still we were surprised by a new finding: As shown in the graph, a stunning 60% [rounding up] of the 234 luxury listings that expired or were canceled during 20 days before Christmas 2011 had never reduced their original asking price. Further, less than one in three luxury listings reduced their original asking price by 5% or more. That means that timing the market so you can approach homeowners directly after their listing expires or is canceled may be the most effective way for you to get a sizable price reduction. That's because the seller is no longer obligated to pay real estate agents a brokerage commission.
Remember that a listing broker can lay claim to a commission if you, as a buyer, have been to the house while it was being marketed by that brokerage agent. If you want the seller to not be obligated to pay their former listing broker, the buyer needs to stay away from the property until the contract has expired.
Bill writes:
If you've
(1) never seen the listing before at an open house,
(2) had private showing, or
(3) inquired about the listing by phone email, they [the seller] can reduced their last asking price by the full amount of the commission, pass the savings on to you and still net the same profit!
I will be inviting Bill back to discuss his "Guide to approaching owners of expired and canceled listings." There are a number of tips and traps that he will explain to you.
Are you willing to wait on the sidelines during high-demand season in order to find a broker-marketed property that has expired? Does anyone reading this have a first-hand success story?
