When to drop price?

[smethwickman]

All:

My first post here, so go gently on me.

I live in Collin County, TX and am selling my house.
It has been on the market for also four weeks and
despite 34 showings thus far - a healthy number of
which were repeats - no offer as of yet. Feedback
from buyers has been excellent with the only negatives
being the absence of a pantry and the layout not
working for some people. No negative comments,
however, as to the list price or price per square foot.

The price of $240K is what the market in this particular
part of the world will easily bear but it is not, as they
say, "priced to sell". As I need to sell the house soon
due to an impending divorce, any thoughts as to what
pricing strategies I can employ so as to realize a sale?
By how much - and at what stages - should I lower the
price?

Thanks in advance,
Staffy

[judyo]

Staffy,

Whenever I list my own personal properties I always try to put them towards the bottom of the price range, if not the lowest price "in that range." I have the properties as clean & fresh as possible so it is also the best buy for the money. Because of this I've never had to reduce my price as my properties have sold quickly.

However, I always had a price contingency in mind just in case. The minimum reduction should be at least $5,000 but the higher the price it could be more. I've noticed that in some of my higher priced listings (not my own properties, I'm talking current listings now) a $5,000 reduction hasn't always made a big difference.

In a quick market I don't think I'd even wait a full month but that depends on your motivation. In our market if a home sits for a month without a contract then a reduction is certainly in order. Sometimes you need to view a new CMA just to see if things have changed. And maybe view it through more realistic eyes this time. Maybe that CMA will show you that $240,000 was still at the high end & if you had 34 viewings & no offers then the price is definitely too high.

So I would say minimum $5,000 reduction or maybe a $10,000 reduction would be called for. Without viewing a CMA & your home I can only give a general idea. Best of luck!

[kensmith]

Once you have had more than 15 showing you should have reduced your price. At this point a lot of people have told you that you are priced to high. They may not have used words to say it, but their actions are clear as day. 2% or $5,000 will not be enought to make a difference. If you are only 2% overpriced you would have had an offer by now. My guess would be that a $10k price drop is needed.

[Nickie]

I agree, if it has been on the market for a month, definitely a price reduction is in order.

Even after two weeks, if no offers have come in, a price adjustment should be made at that time.

You get the most activity from buyers in the first couple of weeks so you don't want your listing to get stale.

Also, you mention the "layout not working for some people". Try re-thinking the flow of traffic. It might help to move some furniture or change the way the space is currently being used. The way the space is used now works for you, but try to envision how somebody else might use it. Maybe pack up a few things to open up the space so it is easier for the buyers to picture themselves in your house. Of course, I haven't seen your house, but it could help to look at your home through the buyer's eyes.

Good luck!

[Jnazareno]

price low, sell high is my Motto to my sellers - but might to change
tactics due to this Real Estate Correction Iam seeing.


Homes that captures the hearts of buyers will always sell higher and faster
-
so by having 34 people seeing your home, they are second guessing if this home is worth making an offer or make an offer on another property.

[MrJodyHudson]

I suggest two things after that many walk-through visitors!

A minimum of $10,000 price reduction.

Consider Staging the Property to show it in it's best light and perhaps change that traffic flow problem.
http://www.kate-jody.com/Staging.html

[bigsky]

peoples probably want to buy it but 240k is not so cheap . you need to bargain and lower price . try to ask buyers how much they are willing to pay and sell house to someone who are paying maximum among those peoples

[Irene M Ward]

Hmmm, I guess I'm the only one that thinks the price might not be the problem, I suppose. Obviously, your traffic isn't an issue so I wouldn't be inclined to think the price is the reason (unless they don't know the price until after they come through the door).

It could be a number of other things: you're telling the buyers too much; you're not telling them enough; they're intimidated proceeding without an agent; there's a lot of inventory they can chose from WITH an agent; you're not making your bottom line clear to them from the start; you may not be suggesting that you'll consider closing costs (if you feel the property will appraise at $240K).

The list is endless and obviously I'm just speculating. However, if they know the price ahead of time and are still coming through the door and not making an offer, then you may need to stage the home more effectively (lighting, minimize clutter, empty closets, add fresh, neutral paint, clean, clean, and clean some more, etc). Most agent sites will offer important seller information about preparing your home to sell. Surf around and get ideas - http://www.irenemoralesward.com/page.asp?num=1649.

The other obvious suggestion is to offer closing costs. In my market, $240K is very low and a first time homebuyer would be drooling to get into it. However, they are traditionally low on cash. So are young military families. If you live in an area with military (not sure what bases you might be near in Collin, TX) you may want to consider a couple of "incentives" like offering to pay for a home warranty (between $300 and $400). This buys them piece of mind and you don't pay until you get to the table. If you do offer to pay closing costs, be specific on the amount. If the buyer has a subprime loan, you could be looking at 6% of the sales price!!

Good luck to you!

[judyo]

Irene,

This is an old post but I disagree with you about the whole "price" consideration. Let's say that $300,000 is a popular price range in a specific neighborhood for a 3 bedroom, 2 bath home with a 2 car garage. A listing with all these features is priced at $300,000 even though the agent thought it should be $285,000 max because of condition. Because this is a popular price range there are many buyers viewing the home. But because this home isn't up to par (for whatever reason, be it decorating or bad layout or bad curb appeal) buyers will continue viewing the home but make offers on other homes in the price range that offer more for the money. Sure, they knew the price was $300,000. They cannot tell from the print-out that it's not in the best condition (or whatever the problem is).

In the case of a bad layout or maybe it's next to an unkempt property or something that a seller can't or just won't change, then price is the key. And many sellers refuse to make changes that we suggest that might get them a better price. But they figure, "I lived with it like this & I like it, let the next owner change things." So any seller with that attitude will eventually have to reconsider price after a time period of no offers.

[Irene M Ward]

Irene,

...I disagree with you about the whole "price" consideration. In the case of a bad layout or maybe it's next to an unkempt property or something that a seller can't or just won't change, then price is the key.

Judy,

I reallized my mistake as soon as I pressed the submit button with regard to the post being old. OOPS! Anyhow, my position stands only because marketing is not a knee jerk reaction that immediately leads to a price correction but a strategy that will benefit the seller over time.

True, time was of the essence and ultimately if this guy wanted the house sold quickly, he was more than likely going to have to drop the price AND offer concessions. However, my input was to offer options other than price dropping.

Since this seller admittedly said it was in the right price "range" but not priced to sell, he knew what was happening. Giving him advice to try to get top dollar, just like I would my own sellers, is always my first option. If that doesn't work within a given amount of time, then and only then does the price come down.

I consider myself pretty conservative when helping my sellers price properties but in my market, if I were to automatically drop the price because the home was staying on longer than I thought it should, I would be doing my seller a disservice. My listings have sold an average of 99.76% of list price over a 5 year period and I can honestly say I am the last to ask my sellers to drop the price. There's just no substitute for good marketing.

On the other hand, I don't know enough about the Texas market to make any blanket statements which is why I said I was speculating. My response was relative to my experiences in the DC Metro area.

Hope that helps explain my perspective while I understand there's no perfect answer.

Irene