Will a price drop really help, or are there just not enough qualified buyers? (contingencies, feedback)
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I'm trying to sell my house in this down market after taking a new job in a new city. I'm contemplating dropping the price significantly. I've already lowered the asking price by $20,000, and I am thinking about lowering it another $25,000 to increase the chances of it selling.
But my agent tells me, and from what I've heard from a few other people, is that there just aren't enough qualified buyers looking for houses right now. Houses will sit on average for 6 months to a year. Mine has been on the market for 4 months now.
Would I be giving it away if I lowered the price again, assuming I even find a buyer? Or should I wait and just be patient? The comps show that it's priced about right. Or should I lower the price by a little bit, say $10-$15K? Any thoughts or advice on whether it still comes down to price?
Compared to what?
A $20-25,000 reduction relative to a $600,000 price means nothing.
relative to a $150,000 price...
It always comes down to price (relative to perceived value).
And btw, "comps" doesn't mean what it used to mean especially when the closing prices (in most markets) gets lower and lower every month.
The question to be asking is what the (presumably qualified) buyers who have seen the house have done in the absence of making you an offer.
hth
I'm in between $350K and $400K. I originally listed the house at just under $400K.
Feedback has been that buyers like the house and that it shows well, but they don't like the location. I guess that means a lower price would better reflect my house's "poor location".
Seasonal slowness is the biggest factor right now -- people are shopping for holiday gifts NOT houses. The lack of buyers is unlikely to change for a several months...
If the economy does not improve you may have to cut price again, but I agree with your agent that this NOT the time to do that.
Qualified buyers at that price level in most markets are "buying up" and have many options when looking.
They'll still be concerned with the location basics like school district and tax rates and commute hassle to their jobs.
Presumably you had a similar location/amenity latitude when you bought...
what motivated YOU to buy THAT house?
Quote:
Mine has been on the market for 4 months now.
Which means you hit the market back at mid summer.
How many lookers did you have in August and September?
How many short sale and foreclosures are you competing with?
Or are you also a short sale?
Qualified buyers at that price level in most markets are "buying up" and have many options when looking.
They'll still be concerned with the location basics like school district and tax rates and commute hassle to their jobs.
Presumably you had a similar location/amenity latitude when you bought...
what motivated YOU to buy THAT house?
Which means you hit the market back at mid summer.
How many lookers did you have in August and September?
How many short sale and foreclosures are you competing with?
Or are you also a short sale?
hth
The house is in a decent neighborhood with very few foreclosures and short sales. It is not a foreclosure or short sale. It's in a very good elementary school district, and the school is down the street. I bought the house because it was new construction, spacious, and was well-priced compared to what else was on the market in the neighborhood. Smaller, older houses were listed for the same price at the time. I think the two biggest things holding up an offer are that people looking in my neighborhood tend to look for older houses with more character (not new construction), and my street is fairly busy and has a mix of housing stock.
I've had very few showings, and a similar house down the street that I'm competing with has also had very few showings. That house is listed for $15,000 more than mine and is also fairly new construction.
For the right price there is always a buyer. Price reductions will sell the home if they get it well priced.
I agree with this. In my city a busy street is easily a 10%-20% discount compared to comparable homes. I have no idea what that discount is in your city. You can drop the price now, but it is insanely slow right now in many markets. You need to chat with your agent and look at the sold comps again.
The house down the street doesn't matter because it hasn't sold yet either. You only care about where buyer demand is, which is the sold comps and pending listings. What are pending comparables priced at that they drew in a buyer?
I've got money ready for the right place at the right price. The overall market is still inflated by about 20% IMHO. Locations vary greatly, of course.
Here is a chronology of a recent home sale with which i am involved. Before you say, 'well, those numbers don't mean anything in my price bracket', let me say that the previous two homes which i sold were both in the 750 to 1 mil price range, so i am aware of the higher price shoppers as well.
Recent sales in my neighborhood were 150 to 180. I priced at 159, which had me under water (purchase price) by about 15,000.
In May i had a flood of 'lookers'. Nosely neighbors; the old farts who used to go to funerals and now go looking at new home listings, etc. I did have a 'contingent' downsize buyer within the first two weeks, but they STILL have not sold their home.
In June the pattern contunued, with lots of older folks...generally two or three showings per week. "Home shows lovely, really like it, blah, blah, blah.' "We have to sell our existing 'family' home and then we would like to buy yours."
July was less active. Same type of lookers. August was quiet. Very.
September we dropped the price by 10,000 (6%) and had a few lookers. We painted in late September--everything inside....even though there had been no negative feedback about condition. This house is SO clean you could eat off the floors in any location. We wanted the house to 'pop'.
In October we finally saw some younger...not young...buyers who were qualified and who could live with a one car garage (the apparent drawback to this house for many of the downsizers. They want to downsize, but they don't want to give up anything. I understand).
In November we had two showing on one Friday, and both made offers. One lives right down the street and had driven past the listing every day for six months! Go figure.
We now have a contract at the lower listing price. It all appears good to go from what we have seen...appraiser, home inspector, etc.
Our agent...a mature, experienced agent, told us going in that the 'average' time to sale from listing had recently been about 90 days in our area. We took twice that time, and were tearing our hair out. I don't think many others have done much better.
We have spoken with a couple of other buyers who sold homes comparable to yours...i am guessing. Four bed, three bath sort of thing. They took one year to 18 months to sell good properties, and at least one had a deal fall through. Financing, i think. Many also have have contingencies for selling existing homes before they buy yours. Most don't get done around here.
Hope this helps. I do think it is largely about price. We went below150 because we thought it might catch the buyers who input 125-150 in the price range. Perhaps if you get below 350, you will catch another group of buyers who max out at that price. Just sayin. No secret formulas for sure. Just patience, perseverence, and a BIG cocktail once in a while doesn't hurt either!
Good luck.
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