Reasonable timeframe to sell a house in this market (BEFORE a price drop) (bank owned, comparable sales)

[gammann]

Originally Posted by vauser

How long should we wait before we "do something" (give subsidies, drop price, etc) to make the house sell. Here is the plan we have in mind:

Day 1: List at $X (a price we think we would be more than HAPPY to pay for a similar house, and is inline with the comps for the most part).
Day 19: Drop about 1.5%.
Day 35: Drop another 2%.
Day 49: Drop another 2%.

Wait, till it sells (as that would be low enough from even a how-bad-the-market-currently-is standpoint).

Of course, we are novices so this plan might suck. Thoughts?

I don't think your drops would be significant enough. I think you need to think in terms of ranges. When you are looking for a house, you generally look at a range. Say $375k is your max. You're probably looking at the $350-$375k range. When something drops into that range, then it pops up on your radar. Now if you are on top of your game, you are watching the next range up ($375k - $400k) and looking for things that have been on the market for a while, and offer them a price in the lower range, before they lower it. Once they lower it, it pops up on a lot of new potential buyer's lists.

Now flip it, if you list at $400k, it would take a 6% drop to get it into that $375k range. Maybe $25k is a little too much, but I don't think a $6k drop ($394k) is going to make it show up many new buyer's lists.

I would make sure that you have an open house shortly after Day 1, judge your traffic and see how much it gets. Be prepared to take some low shots from people who are just trying to snag a deal.

I don't think the winter is necessarily that bad of a time to list. Are there a lot less comps on the market? Less competition for you the better.

It could also depend on the type of house you are selling. If you selling something that first time home buyers would be interested in, maybe they don't have kids, or they have young kids, that they can make a move anytime. If its more of a move up home, where people have older kids in school, they will probably be more inclined to wait towards the summer as to not interrupt their kids school year.

[vauser]

Originally Posted by gammann

I don't think your drops would be significant enough. I think you need to think in terms of ranges. When you are looking for a house, you generally look at a range. Say $375k is your max. You're probably looking at the $350-$375k range. When something drops into that range, then it pops up on your radar. Now if you are on top of your game, you are watching the next range up ($375k - $400k) and looking for things that have been on the market for a while, and offer them a price in the lower range, before they lower it. Once they lower it, it pops up on a lot of new potential buyer's lists.

Now flip it, if you list at $400k, it would take a 6% drop to get it into that $375k range. Maybe $25k is a little too much, but I don't think a $6k drop ($394k) is going to make it show up many new buyer's lists.

I would make sure that you have an open house shortly after Day 1, judge your traffic and see how much it gets. Be prepared to take some low shots from people who are just trying to snag a deal.

I don't think the winter is necessarily that bad of a time to list. Are there a lot less comps on the market? Less competition for you the better.

It could also depend on the type of house you are selling. If you selling something that first time home buyers would be interested in, maybe they don't have kids, or they have young kids, that they can make a move anytime. If its more of a move up home, where people have older kids in school, they will probably be more inclined to wait towards the summer as to not interrupt their kids school year.

Fantastic points. Thanks a ton. I think we need to rethink our potential "drop" strategy (but hope it doesn't come to that!). It ain't going to be easy to drop it everytime to make it fall under the next bucket though. Something that we need to think about, I guess..

[Carlingtonian]

I don't know how things are outside the Beltway, but I recall that when we were house shopping in Arlington, if a house was reasonably priced, it got snapped up within 3 days or so. (This is still the case here.) As sellers, we had our house priced too high and decided to lower it after 3 weeks with no offers. Fortunately, it worked.

As to how much to drop by: I almost think it doesn't matter that much. The main thing is to drop it by something significant (at least 10K) so that buyers realize you're flexible on the price and not one of these boneheads who refuse to budge while their house sits unsold for a year. If you'll come down 10, you might come down another 10. Or you might not. But as a buyer, it's at least worth finding out by putting in an offer.

I've said it before, but I think the thing to do in the first place is put your asking price well below the real market value as to create a bidding war. If that doesn't happen, there's nothing to say you're obligated to accept any of the contracts you receive on the house. This is what happened with our house. The seller listed it for way, way less than it was worth. In retrospect, we now think the seller (who lived elsewhere in the country) did this unwittingly--their agent was also not not based in Arlington and not experienced in the local market--but at the time we figured it was probably a shrewd attempt to create a bidding war. (We managed to pre-empt one by putting in a clean offer way above asking price [but still below full value] after it had been on the market for one day--before there was even an open house but with a 24-hour deadline.)

I realize that as a seller, you might be afraid that pricing your house artificially low could make buyers think of your house as being only worth that low price. But once they see it, realize there's nothing wrong with it, and then see the comps, they'll realize what you're doing and will be eager to buy. They'll know that other people just like them are seeing the same thing they are. The caveat: I wouldn't do this in the dead of winter when there are not many buyers, and I can't imagine this would work with a house that's already been on the market a while.

One sees the opposite all the time--houses priced way beyond any comparables, that sit there for months, the sellers' stubbornness becoming more and more comically delusional as the months go by.

[gammann]

Originally Posted by Carlingtonian

I've said it before, but I think the thing to do in the first place is put your asking price well below the real market value as to create a bidding war. If that doesn't happen, there's nothing to say you're obligated to accept any of the contracts you receive on the house.

I dunno, I see this as almost bait and switch. Offering something at a price you have no intention of selling it for. How would you feel if someone did this to you? Listed a nice house that fell into your range, but when you went to see it or put in an offer, they told you they would only accept offers $20k higher putting it out of your range?

I imagine you might have a hard time convincing your realtor to go along with this as well. For you, it's no big deal, you're only selling maybe 1 or 2 houses in your lifetime, but your realtor may do business with the other realtors who might see some ethical issues here.

I've seen this done before, where the house was listed low to get a lot of traffic, and then they basically told people they wouldn't be accepting any offers at list price.

[vauser]

Originally Posted by gammann

I dunno, I see this as almost bait and switch. Offering something at a price you have no intention of selling it for. How would you feel if someone did this to you? Listed a nice house that fell into your range, but when you went to see it or put in an offer, they told you they would only accept offers $20k higher putting it out of your range?

I imagine you might have a hard time convincing your realtor to go along with this as well. For you, it's no big deal, you're only selling maybe 1 or 2 houses in your lifetime, but your realtor may do business with the other realtors who might see some ethical issues here.

I've seen this done before, where the house was listed low to get a lot of traffic, and then they basically told people they wouldn't be accepting any offers at list price.

I didn't even realize this was possible. If you list a house at $X and you get a contract for $X, aren't you obligated to selling it at $X??

[ACWhite]

Originally Posted by vauser

I didn't even realize this was possible. If you list a house at $X and you get a contract for $X, aren't you obligated to selling it at $X??

Home sellers aren't obligated to accept any offer. However, the contract you signed with your agent probably (because a standard NoVA contract is widely used, but maybe you changed terms) guarantees him/her a paid commission if you receive a valid offer at your asking price. So you should be careful about this.

In the past some Realtors considered it unethical or at least questionable to deliberately price the house below what they believed the house to be worth, in order to create a bidding war. I think it became so common around here during the bubble, that this may have changed.

[Denton56]

Have you done a search on the houses sold around you in the last year? This site is a good source for that. FranklyMLS.com Virginia & MD, DC MLS via Keyword Search & Wiki. Homes for Sale
I randomly chose Vienna, but you can search by town or by zipcode. If you click on a listing you can see pictures, and how long the house was on the market, price drops, etc. It's a great resource.
I agree that this is not a bad time to list a house. It is the beginning of the Spring market. We moved three years ago and we began looking in earnest in January.
Best of luck to you! Selling a house can be very stressful.

[vauser]

Originally Posted by Denton56

Have you done a search on the houses sold around you in the last year? This site is a good source for that. FranklyMLS.com Virginia & MD, DC MLS via Keyword Search & Wiki. Homes for Sale
I randomly chose Vienna, but you can search by town or by zipcode. If you click on a listing you can see pictures, and how long the house was on the market, price drops, etc. It's a great resource.
I agree that this is not a bad time to list a house. It is the beginning of the Spring market. We moved three years ago and we began looking in earnest in January.
Best of luck to you! Selling a house can be very stressful.

Fantastic! Thanks a ton for that reference.

[khuntrevor]

No action in 14 days would call for a drop. That would apply in almost any market. Action doesn't necessarily mean offers, but would mean solid interest and at least a few showings. I would expect at least 1 offer in 8 showings.

[vauser]

Originally Posted by khuntrevor

No action in 14 days would call for a drop. That would apply in almost any market. Action doesn't necessarily mean offers, but would mean solid interest and at least a few showings. I would expect at least 1 offer in 8 showings.

Even in today's market?