Category Archives: Sellers

How do you know you’re not in Berkeley?

When you see this address:
8113 War Glory Place
And for all its Glory, the house for sale at this address in Pleasanton had its original asking price of $3,250,000 defeated, and has now surrendered to an asking price of just $2,999,000.

glory war

P.S. While it is probably obvious that I don’t think war is glorious at all, I actually woke up in the middle of the night with the thought that “War Glory” might have a slightly less ominous pedigree.  A groggy stumble over to my computer proved me right.  War Glory is also the name of a race horse from 1930.  But still…


The “Epidemic” of Under-Pricing

An open letter to the real estate community regarding the “epidemic” of under-pricing

(first published May 2005)

You know the practice: suggesting, or going along with a seller’s idea, that the best way to obtain the highest price in the sale of a house is to deliberately ask a price that is well below what you expect it to sell for. A more odious variation: agreeing to list a property at a price the seller has told you he would not accept. You figure this is pretty safe: everything gets bid up these days. The SF Chronicle recently dubbed this the “under-pricing epidemic.”

Sometimes this practice is blatant, as when the agent puts in the confidential remarks section of the MLS: “seller reserves the right to reject any and all offers.” Other times, it is hidden, as when offer day comes and you, the buyer’s agent, deliver the only offer. You are then countered at a price ten of thousands, and sometimes, hundreds of thousands of dollars more than the asking price. In essence, the buyer is being told to bid against himself.

Doesn’t anyone (at the very least, the listing agent) see what is wrong with this? Totally ASIDE from the human toll (disgruntled, disillusioned and desperate buyers, sometimes willing to pay anything just to get a house) and the negative image this casts on our profession (what about our duty to be “fair and honest and deal in good faith”), we may have an even bigger problem.

The issue is fraud. My dictionary defines this as “a piece of trickery; a trick.” Therefore, the agent who knowingly agrees to list a property for less than what the seller will accept is a party to fraud. Secondly, it is “false advertising,” a violation of real estate law. Business and Professional Code section 17500 states:

To Make or Cause to Be Made False or Misleading Statements in Unlawful

17500 It is unlawful for any person, firm,…with intent directly or indirectly to dispose of real or personal property or to perform services, professional or otherwise….to make or disseminate�any statement concerning that real or personal property…which is untrue or misleading, which is known, or which by the exercise of reasonable care should be known, to be untrue or misleading, or for any person, firm…to make or disseminate….a plan or scheme with the intent not to sell that personal property…so advertised at the price stated herein. Any violation of the provisions of this section is a misdemeanor punishable by imprisonment in the county jail not exceeding six months, or by a fine not exceeding two thousand five hundred dollars ($2,500) or by both that imprisonment and fine.

In our office, we have made is a policy that the asking price on any of our listings is a price the seller will accept if that is “all” they receive. This hasn’t stopped us from receiving multiple offers and large overbids. But this is the doing of the market, not the result of a calculated ruse.

We know we have lost listings because of our pricing policy. We’ve heard that other agents dismiss a seller’s ethical concerns with the statement “everyone under-prices. It is expected.”

This has gotten out of hand.

Respectfully Submitted,

Brett Weinstein Broker, Realty Advocates


Within days, we had received many letters of support from fellow Realtors. We also heard through the grapevine that any number of Realtors were quite upset with us. Guess who they were: the ones that deliberately underprice their listings to make their statistics look better (i.e. “my listings consistently sell for 20% over their asking price!”).

A few months later, the Berkeley Association of Realtors dedicated a lunch seminar to the topic, with the attorney for the East Bay Regional Data as the guest speaker. While she conceded that the practice of deliberate underpricing could have some negative, nonlegal consequences, she completely dismissed my interpretation of B&P Code 17500, saying in effect, that the prohibition against deliberate false advertising applied only to personal property, not real property. Therefore, according to her, it is perfectly legal to falsely advertise a house but illegal to falsely advertise a digital camera, for instance.

The bottom line, again, according to her, was that listing agents have the primary fiduciary duty to the seller to get the highest possible price, and that false advertising was a perfectly legal means to this end.

After the meeting, one agent who shared my view shook her head with disgust and said: “we should have known better to ask about ethical conduct from an attorney.” A moment later, an agent who did not share my view said: “nice try, Brett. Now get real.”


Within about 6 months of this meeting (June ’06), the seller’s market juggernaut in our market area sputtered to an end. Now, even if one deliberately underpriced a listing, there would be a 50/50 chance that you still wouldn’t get a single bid, let alone one over the asking price.

A Company Doesn’t Sell a House

An Agent Does

The Emperor Has No Clothes!

Does the name of the “For Sale” sign in front of a house make any difference in its sale price? The truthful answer is, of course, no. A company doesn’t sell a house – an agent does. And there are good agents and not-so-good agents and any given company is going to have some of both. But the fact remains that there are some sellers who make their choice of who to list with based on the company name.

I guess it boils down to the mystique of “branding.” On any objective basis, there often is no qualitative difference between one product and another. In fact, in some cases two differently branded products come from the same factory, produced to the same exact specifications. The only difference is the name on the label, and a 500% difference in price! It never ceases to amaze me that some people will pay such premiums, not for any assurance of inherent quality, but simply for the snob appeal of a name.

In real estate, a similar phenomenon occurs. Some companies spend millions of dollars to brand themselves as the Gucci of companies. List your house with us, they say, because our name is synonymous with high class, and high class will attract a higher paying buyer. Newsflash: the emperor has no clothes! Houses aren’t sold this way. The majority of times, a buyer is represented by an agent from a different office. The buyer could care less who the listing agency is.

The best service comes from the best agent, period. Everything else is simply smoke and mirrors, or to borrow from Macbeth, “sound and fury, signifying nothing.”

No Pre-Inspections

While the current home sale market is considerably cooler than in the recent past, there still remain many pockets of under-supply and over-demand. North Berkeley is a good example, where homes are still receiving multiple offers and large overbids. When a house for sale is vacant, one of the ways buyers make their offers more competitive, aside from price, is to have the property “pre-inspected” by a professional home inspector, with the idea to make an offer without an inspection contingency. While it can seem very attractive to a seller to receive a non-inspection contingent offer, there are larger issues at stake that make me recommend to my sellers that I expressly prohibit a buyer from pre-inspecting.

What’s wrong with allowing pre-inspections? It’s not really fair, for one thing. In effect, the seller is asking buyers to spend somewhere $500-$700 for an inspection on the speculation that their offer will be accepted. Well, only one offer will be accepted, leaving every other buyer with a useless report and a lighter pocket. Now repeat this process several times with several properties and you can see how a buyer might get more than a bit annoyed. So even when the buyer finally does get into contract, he is predisposed to being unhappy. This is usually not a good recipe for living happily ever after.

For another thing, allowing pre-inspections creates a logistical pain-in-the-ass. There have been many occasions where several groups of buyers, their agents, and their inspectors are all at the house at the same time. I can assure you, the only people happy with this scenario are the inspectors.

The remedy of all this is simple: allowing for a few possible exceptions (major fixer uppers, for instance), listing agents should prohibit buyer pre-inspections. Assure buyer’s agents that a reasonable inspection contingency period in an offer will not be held against them. This way, buyers can compete strictly on price and other terms.

This isn’t just touchy-feely stuff. It is my experience that when a buyer feels fairly treated, they will offer more.

The listing practice of not allowing buyer pre-inspections should go hand-in-hand with the seller providing a very good disclosure package. I’ll discuss this in my next posting.