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Old 05-25-2008, 08:52 PM
 
Location: Columbia, SC
8,829 posts, read 17,411,596 times
Reputation: 6168

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There are different motivations for everyone. Just because price is one buyer and sellers motivation doesn't mean it's the same for all buyers and sellers.

Sellers are either price or time motivated. A seller with no mortgage and is price motivated may not care if the home takes x years to sell as long as they get their price. A person needing to sell in x months cares less about price as long as the home sells in x months.

A buyer looking for a dream home that have no plans of moving again are less concerned about price than finding the home that's perfect for them.

Supply and demand control the market but every buyer/seller has their own motivation and it isn't always price.
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Old 05-25-2008, 09:04 PM
 
Location: Lake Oswego, OR
30 posts, read 114,065 times
Reputation: 41
most definitely.

price is A factor, not necissarily THE factor.

however, if 2 identical houses are on the same street, and house A is 25K more expensive than house B, which one would you take.

that is a rather simplistic illustration of today's market in some areas.

and olecapt, you could use a little lesson from your fellow realtors in diplomacy.

average original list price to sale price is 90%. that is average...

very few houses are selling in my price range, so that average is even lower, even with re-listed houses and houses that have dropped their price by 10K 6 times over the last 8 month.

portland is 40% overvalued, bubble in portland is just bursting, case-shiller indices...blah blah blah.

if i cared, i could put together a nice spreadsheet for you, but my realtor and i know what we're doing.

i sold my house before it even listed, because i know what i'm doing from the selling end. there are quite a few sellers in portland who don't know what they're doing. they need a good agent, not me.
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Old 05-25-2008, 09:42 PM
 
Location: NW Las Vegas - Lone Mountain
15,756 posts, read 32,442,422 times
Reputation: 2661
Quote:
Originally Posted by mazurkr View Post
most definitely.

price is A factor, not necissarily THE factor.

however, if 2 identical houses are on the same street, and house A is 25K more expensive than house B, which one would you take.

that is a rather simplistic illustration of today's market in some areas.

and olecapt, you could use a little lesson from your fellow realtors in diplomacy.

average original list price to sale price is 90%. that is average...

very few houses are selling in my price range, so that average is even lower, even with re-listed houses and houses that have dropped their price by 10K 6 times over the last 8 month.

portland is 40% overvalued, bubble in portland is just bursting, case-shiller indices...blah blah blah.

if i cared, i could put together a nice spreadsheet for you, but my realtor and i know what we're doing.

i sold my house before it even listed, because i know what i'm doing from the selling end. there are quite a few sellers in portland who don't know what they're doing. they need a good agent, not me.
I pass on the diplomacy. I like to call it as it is...not as some incompetent wishes it to be. One of the things wrongs with RE Agent...too much diplomacy too little truth.

Original list price is generally the first price set by a seller when listing the property. It is often a high flyer to see if there is someone waiting who really wants this house. On specialty houses it is a very good idea. One gets one out of five or ten...but it is nice when it happens. Nobody wants it that bad you drop to some more reasonable price in a couple of weeks or a month. Then you adjust your price over the intervening period to compensate for where the market or your appreciation of the market has gone. Origional list price is the sellers wet dream of what might be...only one lacking understanding would give it any significant import.

If you ever come across two identical houses give me a call. I might well fly across the country...or at least to Portland...to see that.

I have offered no opinion on the "bubble" in Portland. If you are confident rent for a year or two. You will make out like a bandit if you are correct. And if you are wrong you end up buying a house a tier or two from what you could have afforded. I would be very careful about calling the "bubble" in the NW.

Don't whine here. Vote. Buy now or rent. Come back in a year and two years and tell us how you did. We will all learn from the experience.
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Old 05-25-2008, 10:06 PM
 
Location: Los Angeles Area
3,306 posts, read 3,317,918 times
Reputation: 592
Quote:
It is well known that large expesive properties often remain on the market for years.
I'm not talking about multi-million dollar homes or even lower cost "speciality houses", only a small percentage of people have homes like this and that is clearly not what I had in mind when I created this post.

Price declines matter a lot in your typical housing market because the houses in a particular area all fairly similar. Just as mazurkr was suggesting if you have two properties that are pretty much the same then you're going to pick the cheaper one, they don't need to be identical just similar enough. Most housing in this country is track housing which makes it ever easier to find a similar house, you just look in the area for the same model. So, in these sorts of markets (which...represents the vast majority of the housing market) even small price reductions of 5~10% can make a big difference.

Is your only point that some small percentage of markets violate standard market principles? I personally have no idea how the market for 10 million dollar homes works, but the market for low to upper middle-class homes follows the principles in any intro to economic text to the T (In Southern California I would say that is currently homes in the 0-1.5m range).
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Old 05-26-2008, 07:58 AM
 
Location: New Milford, CT
104 posts, read 348,610 times
Reputation: 58
I have a house that was built in 1786 with 22 acres that come with stunning views of the mountains from the picture window in the living room and back deck. The land is situated such that it is peacful and quiet with no neighbors on either side within 1/2 mile. The property is close to being one of the nicest in the area but it does have the old horse hair plaster walls, ceilings are low, and part of the basement is dirt. I have updated all the major systems with new and put in thermal windows and doors and a new energy efficient furnace and new woodstove.

The house was on the market last year for 6 months with one very low offer from a developer. We had buyers in almost every week but no other interest. I have just listed it again and lowered the price 30K. I am at the low end of the comps ($230-266K) and the next closest price is 20K more with only 10 acres and no views. It is a smaller house but it is newer (what isn't!) I am moving out of state and leaving the house empty but I REALLY need to sell it before winter. I don't think the problem is my price but the age of the house. I have spent all I can to "update" and the house is freshly painted and clean. My negotiating room is minimal at this point so I guess my point is lowering the price is not always the answer.
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Old 05-26-2008, 04:39 PM
 
Location: Broward County
2,518 posts, read 9,680,032 times
Reputation: 1333
Quote:
Originally Posted by ChristineL View Post
I have a house that was built in 1786 with 22 acres that come with stunning views of the mountains from the picture window in the living room and back deck. The land is situated such that it is peacful and quiet with no neighbors on either side within 1/2 mile. The property is close to being one of the nicest in the area but it does have the old horse hair plaster walls, ceilings are low, and part of the basement is dirt. I have updated all the major systems with new and put in thermal windows and doors and a new energy efficient furnace and new woodstove.

The house was on the market last year for 6 months with one very low offer from a developer. We had buyers in almost every week but no other interest. I have just listed it again and lowered the price 30K. I am at the low end of the comps ($230-266K) and the next closest price is 20K more with only 10 acres and no views. It is a smaller house but it is newer (what isn't!) I am moving out of state and leaving the house empty but I REALLY need to sell it before winter. I don't think the problem is my price but the age of the house. I have spent all I can to "update" and the house is freshly painted and clean. My negotiating room is minimal at this point so I guess my point is lowering the price is not always the answer.
22 acres of land fro 230k-266k ?? Sheez. Any smart person would buy your home, demolish that 1786 home and build something new on it. The land alone is worth that price in my honest opinion. Who is your real estate agent ? You need EXPOSURE girl ! Believe me.......some good exposure with some good marketing through VisualTour and you will sell...quick.
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Old 05-26-2008, 05:44 PM
 
Location: Los Angeles Area
3,306 posts, read 3,317,918 times
Reputation: 592
Quote:
My negotiating room is minimal at this point so I guess my point is lowering the price is not always the answer.
How fast to homes usually sell in the area?

But owning a home from 1786! wow. That just sounds odd to a west coaster like me!
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Old 05-26-2008, 06:10 PM
 
Location: Columbia, SC
8,829 posts, read 17,411,596 times
Reputation: 6168
Quote:
Originally Posted by heydade View Post
22 acres of land fro 230k-266k ?? Sheez. Any smart person would buy your home, demolish that 1786 home and build something new on it. The land alone is worth that price in my honest opinion. Who is your real estate agent ? You need EXPOSURE girl ! Believe me.......some good exposure with some good marketing through VisualTour and you will sell...quick.
It's all relative. I can get land around here for 2500/acre in some areas in my market. Granted, it's rural and has easement access. If you want road frontage, break out your pocketbook because it's gonna cost $3500/acre.

Yup, it's all relative.
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Old 05-26-2008, 06:24 PM
 
Location: NW Las Vegas - Lone Mountain
15,756 posts, read 32,442,422 times
Reputation: 2661
Quote:
Originally Posted by Humanoid View Post
I'm not talking about multi-million dollar homes or even lower cost "speciality houses", only a small percentage of people have homes like this and that is clearly not what I had in mind when I created this post.

Price declines matter a lot in your typical housing market because the houses in a particular area all fairly similar. Just as mazurkr was suggesting if you have two properties that are pretty much the same then you're going to pick the cheaper one, they don't need to be identical just similar enough. Most housing in this country is track housing which makes it ever easier to find a similar house, you just look in the area for the same model. So, in these sorts of markets (which...represents the vast majority of the housing market) even small price reductions of 5~10% can make a big difference.

Is your only point that some small percentage of markets violate standard market principles? I personally have no idea how the market for 10 million dollar homes works, but the market for low to upper middle-class homes follows the principles in any intro to economic text to the T (In Southern California I would say that is currently homes in the 0-1.5m range).
Wrong issue. Selling expensive houses is just like selling less expensive houses just a difference time frame or, if you like, x is very small. As a for instance the probability of selling a 3 or 4 million dollar house in Las Vegas is probably around 2% in any given month. The probability is cumulative so you have about a 50% probability of selling it in 25 months.

Smaller homes work the same way. There are however more buyers and less time is generally required.

At the bottom of the market Las Vegas was selling around 4% of the rationally priced homes each month. Inventory probably peaked at close to 30 months but everybody was not serious and there were unsaleable shorts in the mix.

If at that 4% instant you cut your price by 10% you may well have doubled your chance of selling. But that is from 4% to 8%...you still have well less than one chance in 10 of selling your house in the next month and probably will sell, on average, in about 5 months.

At the moment in Las Vegas we have about 10 months of "real" inventory. So about a 10% probability of selling if well priced. If at this point you cut your price 10% below the comps I would suspect you may well better than double your chances of selling...but it is still only one in three or one in four for the next month.

It is to some degree possible to figure out these numbers. Unfortunately it is not simple. You have to compartmentalize into similar sets and then analyze and some of the parameters are difficult. The whole "similar" house paradigm for example. In fact wood floors take out over half the buyers. And tile floors take out a third of the buyers. And carpeted floors take out 25% of the buyers. In an economically oriented real world this would simply be a matter of some dollars. Any of the flooring changes can be made for a small percentage of the home cost. But the flooring fanciers seldom look at that way...they simple blackball anything with the "wrong" flooring. (That is one of the reasons that a 10% cost savings does not always do it. A floor fancier won't bite at that or twice that level.)

then we find that the availability of buyers is often quite different in different economic segments. Buyers may be beating down the doors at below 275K But nobody is buying between $300K and $500K. That makes small price adjustments very effective at the low end. But large adjuments for homes between $300 and $500K do absolutely nothing. Nobody is looking so who is it you will impress with your cut?

This stuff is all pretty rational if you approach it reasonably. But no cutting the price may not solve your problem. You may simply have to outwait it or give the house away.
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Old 05-26-2008, 07:11 PM
 
Location: Lake Oswego, OR
30 posts, read 114,065 times
Reputation: 41
excellant points, olecapt.

however, pretty much all of it is from the seller's perspective.

in your 300K-500K (or 400K-700K, for my market), a 5 or 10% cut in price will definitely matter to a buyer.

and, as i've sold my house, me as a buyer is the only variable i'm worrying about in the equation.


i almost think it would be more sensible in such a sub-market like this (50+ sellers and only a few customers), for me to advertise my approved mortgage, and have the sellers all bid on me.
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