When to Walk Away from a Real Estate Listing

real estate listing that has dilapidated interior.

By Karen D. Friedman | 10.05.20

In real estate, it’s all about getting the listing.

When marketed correctly, listings lead to sales. You have the listing, buyers come to you, they make an offer, and you get paid.

Having the listing is also a great opportunity to capture buyers who may not be represented by another agent.

So, it sounds like a no-brainer. Getting listings is the best way to get sales, right?

Well, not all listings are created equal. Sometimes, it’s smarter NOT to take a listing.

Are there really going to be time to walk away from a listing? The answer is “yes.” You’ll save yourself a lot of time and energy knowing the warning signs of a listing that is just not worth it.

Let’s talk about some of those warning signs to look out for.

#1. Divorce During the Real Estate Listing

Here’s the scenario. You get a call from someone who’s interested in selling their home. You meet with them for a listing consultation. You take a tour of the seller’s home, discuss marketing strategies and what their property might sell for on the market.

The seller decides they want you to list their house. You’re excited about the prospect of getting the real estate listing until you hear the reason for selling…

We’re getting a divorce.

Ouch! This is a definite red flag. There are many things that can go wrong when you are dealing with a couple going through a divorce.

They may disagree on the real estate listing price or one spouse is unwilling to sell and both listed on the title.

If there is already tension between the two, this can make the process messy and uncomfortable. You will be spending a lot of time managing your sellers and putting out fires. This would not be the ideal listing to take.

Does that mean you reject a listing based on divorce? No. There are exceptions to every rule.

If you encounter a couple that is divorcing but amicable, by all means proceed with the listing. But proceed… with caution.

#2. Homeowners Owe Too Much

Sometimes a listing may appear to have all the right elements.

You find a happy couple, the property is in great condition, and the sales comparables predict a great market price.

Although, when you dig deeper, you discover that the sellers owe close to what it would sell for on the market. That means there is a very small profit margin.

This is another warning sign.

Not because you may not make much on the commission, although that is a consideration.

It’s because when sellers owe close to what the property is worth, it may turn into a short sale. A short sale is when the borrower or homeowner sells a property for less than what they owe on it.

The bank approves short sales and the selling process can be long and complicated. Not to mention stressful for both you and your seller.

So ask yourself if you are willing to take on a listing like this.

real estate listing that has underlying issues but looks good on the exterior

#3. Overpriced Real Estate Listing

Here’s another scenario on a hot button topic: an overpriced real estate listing.

You meet with a seller and prepare the sales comparables. You share with the homeowner the price they would receive on the market. But the seller asks you to overprice the listing, substantially.

Now you have a very important decision to make.

Do you take this overpriced listing?

Some agents will take the listing in hopes that having their sign on the yard will lead to other listings.

They don’t realize that taking an overpriced listing can have negative effects. They figure that any listing is a good listing. As we’ve been discussing, this is not the case.

The fact is, most overpriced listings don’t sell. You will spend a lot of time, money, and effort on a listing that will just sit on the market. What generally happens is that this overpriced listing turns into an expired listing.

Another negative effect? Your reputation. As a real estate agent, you want to convey to potential sellers that if they list with you, their homes will sell fast.

Having expired listings will not instill confidence that you can sell your home quickly.

So are you ready to gamble your good name on the possibility of selling an overpriced listing?

Remember that you are a real estate professional. If a seller is not willing to sell their property at the price based on the numbers, it’s not a listing worth taking.

Final Thoughts on Walking Away from a Real Estate Listing

Yes, we all know that listings are the key to sales. Getting listings will have the buyers coming to you and will lead to a successful real estate career.

Success in real estate doesn’t come from selling as much property as you possibly can but knowing which property to sell.

But we now know that not all listings are smart to take and when it’s smarter to walk away.

So, remember the warning signs:

DIVORCE – Couples that are splitting will make the whole process messy.
WHAT’S OWED ON THE PROPERTY – Homes in danger of becoming short sales will lead to a long and stressful transaction.
OVERPRICED LISTINGS – Listings that don’t sell, will become expired and negatively impact your reputation.

Look out for them and realize it’s ok to take a pass. You are better off letting some else take on these risky listings.

Every week, we release in-depth videos to help viewers become successful real estate agents on our CA Realty Training YouTube Channel. Also, if you enjoyed reading this article, we would love if you could share it with a friend who you think would get something out of it.