Headline: Beware of Sales Practice Called "Buying a Listing"

• A Sad But True Story:  Some time ago, I met with a prospective Wading River seller who needed to sell immediately because he was starting a new job in another state.   In 2004 he purchased his house for $600,000 and was now "somehow" led to believe he could sell it for $670,000.   I showed him comparable houses on the market and some that had recently sold for just under $600,000 and suggested it be listed at no more than $610,000.  When he balked, I said, "How about we list it at $620,000 for two weeks and then lower the price if no one shows interest?  He said he would get back to me.  The next day he listed with another broker for, guess what, $670,000!  The house has now been vacant for more than 7 months.  Over this time he has paid insurance, mortgage principal and interest, utilities and $7,000 in real estate taxes.  The price has been lowered 3 times (It is now at $609,999.) and, worse yet, he signed an irrevocable listing contract for a full 1% MORE, which means that when the house eventually sells, he will pay some $6,000 extra in commission.

So, what went wrong?  This seller fell victim to the practice called "Buying A Listing."  A sales person convinced him that the house was worth more than it actually was in order to get his business - knowing full well the price would have to be reduced, again and again, until it eventually sold.  In the meantime, this owner will pay $13,000/year in taxes,  $6,000 in extra real estate commission, winter utilities bills and 6.5% interest on a $560,000 mortgage.  This listing is now "shop-worn", but worse than this, the owner is suffering from the mental anguish of having a vacant house, 950 miles away, on which he must bear the burden of huge monthly payments, in addition to the payments he must make on his new residence.

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