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We have run into (expected) competition with homes in the neighborhood selling at much lower prices than one would expect as they were bought at unbelievable prices (out of a foreclosure) and are now back at prices higher than what they were purchased at (of course) but much lower than one would expect to list them (if they were individual owners as opposed to investment companies).
Question I have is - does it even make sense to try and compete? If yes, how would we be able to do that?
Or, would it be prudent to delist our property and wait it out till the other ones are sold?
Investors are going to want to make as much money as they can. They may come in a bit cheaper looking for a quick sale, but hard to imagine they are pricing way below market value. Perhaps they have the numbers right and you don't.
Investors are going to want to make as much money as they can. They may come in a bit cheaper looking for a quick sale, but hard to imagine they are pricing way below market value. Perhaps they have the numbers right and you don't.
Not sure about that. They have been trying to sell the house for a while, from what I can tell. Besides, buying homes in foreclosure and flipping them would almost always be lower than homes bought by non-investors (owners) and maintained well throughout, I would think.
In other words, I can't imagine a price war wherein non-investors have the ability and capacity to beat investors who do this for a business, and are hence bound to know a lot more about the business in that regard.
We have run into (expected) competition with homes in the neighborhood selling at much lower prices than one would expect as they were bought at unbelievable prices (out of a foreclosure) and are now back at prices higher than what they were purchased at (of course) but much lower than one would expect to list them (if they were individual owners as opposed to investment companies).
If you have a quality product to sell...
your best sales tool is an informed buyer.
Quote:
Question I have is - does it even make sense to try and compete?
If yes, how would we be able to do that?
This implies you have a choice in whether to compete or not.
The circumstances of the "investors" that buy foreclosures to flip may very well be such that they NEED to sell quickly. If the house(s) have not sold
quickly it may be that the "flip" is not fooling anyone. Home buyers are not stupid. If it looks like a duck, smells like a duck and quacks odds are that buyers will not pay "swan" prices.
If you have a home that is better maintained, never vandalized / left vacant and is staged like the swan it is then there is a good chance that buyers will NOT be comparing it to the ticking bombs of flipped foreclosures...
While I do agree that it is never a great situation to have "competition" that is priced below the home you are selling there are awful lot of "investors" that bought place in terrible shape and had not special ability to really get them to the point where any sane person would want to live in 'em. Waiting might make a little sense, but the broader questions about how many homes nearby have sold at all can only be answered in the context of how sick / healthy your local economy currently is.
The biggest thing that has been holding me back from even buying houses to rent in the greater Chicago region is the shift that makes the lower incomes towns (where I used to do OK with hardworking renters...) more and more at risk of a prolonged shortage of decent paying jobs...
Talk to a number of local real estate agents. Go visit as many open houses as you can. The agents that have sold some houses recently can give you feedback about what is selling and how realistic the price of either the flipped foreclosure or your own home is...
Quote:
Originally Posted by vauser
Not sure about that. They have been trying to sell the house for a while, from what I can tell. Besides, buying homes in foreclosure and flipping them would almost always be lower than homes bought by non-investors (owners) and maintained well throughout, I would think.
In other words, I can't imagine a price war wherein non-investors have the ability and capacity to beat investors who do this for a business, and are hence bound to know a lot more about the business in that regard.
Comps are only good for like 6 months max so as long as someone is not continually listing these properties you could just wait it out. These foreclosure and short sales are what are making the market sick.
Question I have is - does it even make sense to try and compete? If yes, how would we be able to do that?
Or, would it be prudent to delist our property and wait it out till the other ones are sold?
We faced a similar situation several years ago. We bit the bullet and lowered the price of our HGTV ready house to compete with distressed sales. It was tough to do at the time and I know many of our neighbors were NOT happy with us; but prices have continued to decline ever since, so in hind sight it was the best decision we could have made.
I guess my question to you would be how long are you willing to hold your house off the market while you wait for a change in market conditions? And how confident are you that change will be to more demand and higher prices, not the opposite?
Without knowing specifics (warning: generalities ahead) here's my take... if demand were strong, distressed properties wouldn't need to be discounted in order to sell. But you said the house you're competing with has been on the market for awhile and has not sold. As much as you may not want it to be true, distressed sales do reset market prices, especially when there are a lot of them and when demand is weak.
If you lived in my area my advice would differ depending on price range. At the low end I'd say it might be worth hanging on for awhile. At the high end I'd say bail now and get what you can before prices drop more. Of course said advice could turn out to be worth just what you paid for it, although I think I'm spot on.
We have run into (expected) competition with homes in the neighborhood selling at much lower prices than one would expect as they were bought at unbelievable prices (out of a foreclosure) and are now back at prices higher than what they were purchased at (of course) but much lower than one would expect to list them (if they were individual owners as opposed to investment companies).
Question I have is - does it even make sense to try and compete? If yes, how would we be able to do that?
Or, would it be prudent to delist our property and wait it out till the other ones are sold?
It is a waste of time to delist the property and try to wait it out. Even if the properties on your street sell there are many more bank own repo's coming on the market all the time. The shadow inventory is expected to be handled through this year and that is most likely A LOT in your area as well.
It is always worth competing and all you need is creative marketing. Maybe you should change your listing ads to something like:
"Beautiful "X"Br, "X"Bath in such and such a desirable location. This house is a real dreamboat and does not squeal! No lipstick used on this creampuff! Better act now before you buy that pig in a poke down the street!".
If you're selling through an agent that is their job to help your listing stand out among the rest. A good marketing person (a good agent) should be able to at least draw people to your home. From there other techniques can be used to hold their interest. For example offer an additional 1% over the local standard commission rate to the buyer's agent to get the home sold. When it comes to real estate people money talks!
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Incorrect assumptions...
