Profile picture for meyers

Thinking of dropping price . . . again

House has been on the market over 4-months and winter is slowly setting in. We are dreading having to carry the house over winter (I'm living with 2 mortgage payments, as we have already moved). So, we are debating on dropping the price yet again to $349K. That number was hard to type considering it is $40K below what the house appraised for in June.

My question . . . does anyone here really think that dropping our price will bring in buyers (or even lookers)? My husband and I argue about this issue. He says that price shouldn't matter because interested buyers would make an offer despite the price. I just don't know anymore. Any thoughts or ideas would help. thanks.
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October 10 2007 - US
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Replies (31)

You might as well try it. Out here, it doesn't seem to be making any difference, but it's worth a shot.
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October 10 2007
Profile picture for Mike2020
Your husband needs to read Patrick.net or some material to combat the NAR spin he's heard over the years..

Think about it.. You go into the store. Some people will pay whatever they need to pay to get that new DVD or new Video game system (ie. Xbox selling on Ebay for thousands on release day).. Others, they want it.. but its just a value to them to have it now.. They wait.. Price drops.. Sales rush in..


This is also why you've noticed that BMWs and Mercedes are cheaper than they were 10-15 yrs ago..

Price dropped but the amount of luxury cars sold went up.. so it compensated and Increased Revenue and Profit..

In the end, very little people buy things despite the price.. Those are exactly the types of people who caused this bubble in the first place.. Those people are now being kept at bay with Reasonable lending standards.. Now who is left? You've got to deal with people who have the cash and who have been frugal.

I don't see why it matters so much to drop the price 40K.. You bought it for 186K just 5 yrs ago. Do you think you deserve that extra 40K? Is entitlement clouding your ability to price your property? Drop it down to 300K and you've still made a profit..
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October 10 2007
Profile picture for meyers
We have had many realtors come through the home - we took the opinions of 5 realtors to set our original price. It was a CMA that set our original price. However, that CMA took into consideration what homes were selling for at that time. Hardly any homes have sold since then, and they are selling for much less.

I say drop it!
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October 10 2007
Profile picture for dvernon_us
Meyers,

We have done the same thing you are discussing. In fact, we dropped our price around the first of September with zero results (no new showings). In fact, we were doing much better before we dropped our price. The house right next door to us is priced at $400,000 more than our house. This is only what has happened to us, nothing more. We are having a new house built so have a little more time. Actually, our builder is working with us and holding off on starting the new house until we contract or sell. I really think they do not want us to walk away from our contract to build...................Good luck.
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October 10 2007
Profile picture for meyers
"Seriously, to determine how you should be priced to sell timely but not leave money on the table you may want to consider the technique in my above suggestion."

Thanks for the suggestion, sungl.

I did research the top agents in my community; however, we did price our home at the high end of the recommendations. You nailed it!

Pricing it at $349K would be below the lowest recommendation given to us in May.
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October 10 2007
I had an independant appraisal done on my home, then brought in several realtors to interview them and all three came within $5,000 of my appraisal. 5.5 months later and my house is being re-listed this week for $65,000 under appraisal.....so the appraiser went with the info of May which isn't the same as this month since prices have kept dropping each month, with the average home in our area reducing by $35,000. I empathize with you Meyers cause I too am paying two payments right now and the snake is constricting around my neck.
Mike2020 is operating on the assumption that EVERYONE selling is making huge profits......I am selling my home for $9,000 more than I paid for it, I am looking to just sell it and be done....each month I just loose more money on it. Yes, if you are someone who has $200,000+ in equity, cut your losses and lower the price and don't get hurt worse by falling prices, and let go of the idea that you are going to be able to buy a nicer/bigger home with the profits. For many they should realize that they need to cancel the contract on that McMansion and stay put and ride the wave, but then there are those like me who had to relocate and are stuck in this mess. But I am not all doom about it, I am hoping to make up my loss by pouncing on on a house in my area go down enough to make it worth buying, so it all equals out. Got to look at the big picture along the way.
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October 10 2007
Profile picture for HoldMyNose2Buy
Meyers, since you asked then my answer might be considered as "insensitive" but I believe is effective. Forget about the comps. You already tried and they are useless.

Go to www.redfin.com. Find out how much your house was worth in 2003 or 2004. Try to price that amount to see you have any lookers or offers. If that was much lower than your current asking price, I know it hurts. It hurts to take a loss but afterwards you will feel so relieved and move on with the next chapter of your life. Indecisiveness and procrastination only breed bigger loss and pain.

I've had loss before and know what it is you are going through. How dare I to give advice here but what the heck!
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October 10 2007
Profile picture for LongIslandBubble
You are not alone. Dropping the price may get you traffic and most likely offers, but if it is not below what other people are asking for the same type of house, it won't make much difference.

There are so many houses for sale and very few buyers; these buyers will look for property that appears to be a better bang for the buck. Make your house stand out as being perceived as a bargain and you stand a better chance to attract a buyer that is looking for your type of house.
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October 10 2007
Most homes for sale right now are overpriced and most sellers are comparing there own homes to the other overpriced listings!

In order to get your home sold in this marketplace it needs to be priced far below the other current listings of homes for sale!

DougWard.com
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October 10 2007
Profile picture for pinksandbaby
is that your Trump face? LOL! Sorry, but that's a stolen Trump expression... good luck to you Doug, hope you have something more in common with The Donald other than his expression!
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October 10 2007
well, I had a property on the market for 699k.

My property: 699k, 1540 sqft/ 3200 sqft lot. 2 BR/ 2.5 BA, 29 years old.

'Comp 1': 735k, 1400 sqft/ 2400 sqft lot, 2 / 2, sold below asking (still in escrow), 35 years old.

'Comp 2': 890k, 1450 sqft, 2600 sqft lot, 3 / 2, sold $850k, 10 years old.

'Comp 3': 760k, reduced to 698k, 900 sqft/ 2000 sqft, 1/ 1, sold below asking (still in escrow), ~ 45 years old

You can see, my 699k was priced competitively. Comp 2 closed in July, #1 and #3 are closing this month.

Price per sqft: my price was the lowest. Visual appearance: Definitely better than #1 and #3. Not as nice as #2 which is only 10 years old (sold in 5 days, by the way)

Why did mine not sell? Bad marketing. I chose the wrong agent.

I dropped the price from 699k to 645k.

On previous weekends, I would have good traffic.

End of September, even with the 55k drop, only 1 visitor! ONE.

4 days after the price drop I took my house off the market. If a 54k drop doesn't sell it - ON THE SPOT - then nothing will. Keep in mind, some realtors suggested I list it for 740k.

The PRICE will not sell it. Especially if you make tiny drops. Your 40k is at least over 10%, so that's a good drop. But 10% below 'appraised value' - sorry, that's probably NOT good enough. That appraisal is worth nothing. If the appraisal says 390k and nobody buys for 390k.. you get the drift.
Now, if you drop to 299k, then people may bite.
I do not suggest that you do that!

The only reason someone will buy right now is "They FEEL that THEY STEAL it from you." It has to be a SUPER DEAL.

I made it a rental now. It was a pleasant surprise how many applications I got, and from pretty good people, may I add.

-Peter
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October 10 2007
I'm still choking over a 1450 SF home listed for for over $900,000. ARGGHH!! What's that all about? I am in an area where a house that small goes for $140 or much less.
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October 10 2007
LOL Molly, welcome to California.
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October 10 2007
Profile picture for LongIslandBubble
Don't just price the house below the comp; price it well below all the other listing prices of similar properties in your area. Yes; it may still take some time because there are very few financially capable buyers out there to support even the modestly discounted bubble prices. Yes; it still might not even sell at all because of this reason, but if any of them are going to get offers, it will be you at the top of the list.

Our economy will soon be in recession; if you think the market sucks right now, wait until the jobs disappear! ...and when we are in recession, NOTHING is worse than being a landlord!
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October 10 2007
Profile picture for LinusK
*** I'm still choking over a 1450 SF home listed for for over $900,000. ARGGHH!! What's that all about? I am in an area where a house that small goes for $140 or much less.***

Tell me about it. I look at the homes in my area, and I think many of them are over-priced... but nothing like California. And the weird thing is, they're not that much richer than the rest of us. $68K for CA, $48K for the rest of us.

But they pay so much for their homes! $600K vs. $224K. They make 40% more, but pay 267% more for their homes?

The mortgage alone on 600K comes out to almost $4000/month.

After they pay taxes, and food, and gasoline, I don't see how they do it.
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October 10 2007
*** I'm still choking over a 1450 SF home listed for for over $900,000

well, this is a beach community, and one of the 3 most desirable areas in the county. All 4 properties from my previous posting are approximately 0.8 to 0.9 miles from the beach. Of the 4 properties, mine has the cleanest street. The 10 year old that sold for $850k is a KB Home with 3 foot space between houses. Horror!

In this town, if you come closer to the water, prices go up a bit. This one just reduced the price, I think. It is a bigger - 2800 sqf - and thus a tad more expensive:

http://www.redfin.com/stingray/do/printable-listing?listing-id=675172

Hey.. their lot is only 10% bigger than mine. Between ocean and mountains, there is no more land here. The only 'new construction' happens when they tear down existing structures. Therefore, I am confident that in 5 to 10 years, you will get nothing for under 1M here.

I am not saying that this makes it a great investment. My $400k equity (after sale fees...) would most likely produce better return on the stock market. But holding the property is not terrible either.

@Marci: *** LOL Molly, welcome to California.

yes, California, that's where my 'new rental' is. Damn, it still p*sses me off that someone else gets to live in this place. I was just over there checking on my contractor's work and I don't know why I ever moved out.

-Peter
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October 10 2007
P.S.:
This is the 3/2 (1450 sqft on 2600 sqft lot) that sold in a record of 5 days for $850k (6/21/2007)

http://www.redfin.com/stingray/do/printable-property?external_id=2275127

You can see how close these places are together. No back yard. No front yard. The street is so narrow that it is a one-way street ('Francesco Circle').

I think that buyer paid $100k too much. My place got on the market too late, in mid-August.

-Peter
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October 10 2007
Profile picture for fairygirl43
Hi meyers - Drop the price. We got all three offers when the price dropped. Third buyers are looking good to close on the 30th. In this current market, appraisals and comps mean nothing. Not all buyers are looking for a steal but they are looking at the bottom line (as are their lenders).

You also have to take into consideration the stress level of maintaining two properties. We dropped the price over $50k from where we started in February (in Tucson) and have had 3 months of double mortgages (also double utilities and maintenance).

You'll have to get over what you could've sold for in 2005 and accept where things are right now. Not fun - been there!! But this is reality and it's not looking to get better for quite a while.

Good luck and keep us posted on how things progress!
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October 11 2007
Profile picture for Mike2020
You are looking for COMPS that are making your house look favorable.

In order to win, you have to be the best. Find the COMPS that make your house look like its an overpriced slum. Those are the people you are competing against. Of course you can always cherry pick the high $ sale comps but you are still FOOLING yourself and wasting time.
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October 11 2007
*** You are looking for COMPS that are making your house look favorable.


Mike, I am not sure if you were talking to me. I was the cheapest.

http://homes.realtor.com/search/searchresults.aspx?zp=95010&ml=3&typ=1

This is a search for all houses in my ZIP code, results sorted by price.

#1 $635k, 692 sqf, 1/1
#2 $679k, 758 sqf, 2/1 -- fell out of escrow
#3 $735k, 1387 sqf, 3/2 -- condo feeling! -- but in escrow
#4 $735k, 876 sqft, 2/1 -- on a very busy street
#5 $739k, 1573 sqft, 3/2 -- big lot, good 'deal'
#6 $739k, 1785 sqft, 3/2 -- started at 799k.

#6 started at $799k. They are around the corner from me. This is a deal now.
Now how does my listing fit in there?

#<me> $645k, 1543 sqft, 2/2.5

down from

#<me> $699k, 1543 sqft, 2/2.5

I think, even the price of 699k was very competitive. People just do not want ot buy. Dropping to 645k did not help.

For some reason #3 sold rather quickly (under 30 days, I think)

I repeat: REASONABLE price drops will NOT DO it, at least not in my market.

The only way to sell right now is to "GIVE IT AWAY". I probably would sell for $550k.

And, yes, I do have now 2 properties in this zip code. I understand your feelings about carrying 2 mortgages. FYI, my new home is 2100 sqft and it's no mobile home.
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October 11 2007
*** But this is reality and it's not looking to get better for quite a while

100% agree. I am prepared to keep my 2 properties for 5 years and will sell one of them then. Right now I feel like selling the 2100 sqft home and move back into the smaller (cleaner) place.
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October 11 2007
Profile picture for LongIslandBubble
****I think, even the price of 699k was very competitive. People just do not want ot buy. Dropping to 645k did not help.****

...but you said you took it off the market after 4 days; why don't you give it some time?
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October 11 2007
*** ...but you said you took it off the market after 4 days; why don't you give it some time?


my agent was not good. And I don't want to run into the problems with people writing a low-ball offer, me accepting it, and then they cannot get the loan.

Peter
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October 11 2007
Profile picture for HoldMyNose2Buy
I know some sellers would not allow any showing unless the looker is pre-qualified. They ask their agents to screen for them. What's wrong with that. It's a pain to have strangers walk through your house and then after all that excitement of an offer and be left with... no financing!
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October 11 2007
Profile picture for cabinfever07
"What's wrong with that."

Absolutely nothing. After the recent credit turmoil, all buyers should pre-qualify. It benefits the buyer to know what homes are in his range. There's no need to be concerned about your fico score being lowered by several inquiries in short time frame.
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October 11 2007
Profile picture for klarek the realist
It won't hurt your chances of luring buyers, that's for sure. But once you're well below the competition, it doesn't really matter at that point.
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October 11 2007
Profile picture for 2 Big 2 Fail
No, do not drop your price ebcause then you will just be inviting lowball offers. Instead, try staging. I just read ana article in a NJ magazine today in the dentist's office and it mentioned multiple homes that were sitting and sitting on the market, and they then sold within weeks after being professionally staged. Since you already moved, the house you are trying to sell sounds like it is vacant. Try putting some futrniture into it to make the spaces more defineable.
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October 11 2007
Profile picture for LongIslandBubble
What the hell is the point Allpain? If the price is too high, no one is going to even see it! Put down the crack pipe!
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October 11 2007
Profile picture for ElCasaBomba
Alpine..or should i go along and say Allpain?....
2002 called and they want their mentality back.
Staging...lol.
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October 11 2007
IMHO you need to both stage and be appropriately priced. Just low enough to attract the buyers that will be turned on by your staging.
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October 11 2007
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