I like this real estate agent's approach:
"If both the sellers and agents operated like they had to find a buyer in 30 days, they wouldn't be so casual about price, about inquiries, and about offers & repairs.- Jim Klinge
Extend the listing beyond the one month if you have to, but only under these terms:
A price reduction of 5% if there had been offers, or a price reduction of 10% if there were no offers tendered during the first 30 days.
Because of the internet, the listings are distributed to all waiting buyers within seconds, and literally by the next day everyone knows your house is for sale. After a home is one the market for two weeks, the traffic dies down considerably - don't think it is going to get better after 2-4 more months, it isn't."
That's advice that might help avoid these situations:
10555 BEARS DEN RD
Marshall, VA 20115
MLS #: FQ6349005
Listing Date: 03/22/07
On Market: 406 days
(Listing expired yesterday)
Price Reduced: 05/05/07 -- $559,900 to $549,000
Price Increased: 05/05/07 -- $549,000 to $549,900
Price Reduced: 05/23/07 -- $549,900 to $539,900
Price Reduced: 08/03/07 -- $539,900 to $529,900
Price Reduced: 02/29/08 -- $529,900 to $489,900
Price Reduced: 03/11/08 -- $489,900 to $459,000
Price Reduced: 03/20/08 -- $459,000 to $439,000
Price Reduced: 04/03/08 -- $439,000 to $399,900
9 comments:
I don't get how it applies to that situation.
It was a totally different market a year ago.
everyone is holding out since they can't sell for less than what they owe.
the smart thing would have been to see for 539 in the first place.they would have been much closer in the ballpark and maybe got an offer for 500k.
So the person should have listed the house for $20K less 18 days earlier and then they would have sold?
That makes perfect sense.
It's in the interest of real estate agents to sell quickly. The quicker a property sells, the less in "carrying" expenses such as advertising, taking phone inquiries on the property, etc. The small incremental amount more they can make by the property selling for $20,000 or even $100,000 more, is easily eaten up by carrying expenses which triple, quadruple, or more by having a property on their selves for 2 months vs. 2 weeks.
It is in the seller's interest to have the property out there longer. They obviously can't sell that property to multiple buyers. All they need is one buyer ... the one buyer willing to pay the most for it.
Realtors really need to change the way their fee structure is set up. A flat 3% just doens't make sense. It doesn't give them any incentive to get the highest price for you, just to sell the property. I've read many articles that say the average realtor keeps his house on the market twice as long as the average buyer.
I don't understand why realtors haven't tried an alternative pricing structure, such as an hourly rate or monthly rate, or sharing the advertising and listing costs. That is probably why redfin and other sites are picking up steam, because buyers don't feel like they get any value out of their services.
amen to this guy.
cpa1: I wonder how many offers the home owner had and declined.
That doesn't really answer my original question.
Why would lowering the price by $20K 18 days earlier yielded a sale.
Trying to price a house right now is probably really difficult. Who knows what people are willing to pay, and what someone considers a good value.
But back to Harriet's original post, an agressive price reduction was definately in order. The owners would have been better served to relist it after 60 days. Once the house has hit the realtors "hot sheet" and there are no takers or offers, you might as well give up, it is old news.
How many offers did they reject? I don't know, if it is short sale, maybe the bank wouldn't let them accept some of the initial offers. Maybe they were greedy. But a $20K difference doesn't seem like it would have matterred that much. I don't even know where Marshall is, but I bet the market for half million dollar homes in 2007 was pretty small, and a smart person would have know it was only going to get smaller.
cpa1,
You're right -- I used a bad example as the house seemed so far overpriced in the beginning.
I just looked up the tax record and the buyers paid $499,900 in 2005. By 2007 it would have had to have been a short sale to make sense right at the start.
I think the realtor in question has a point. You are wasting his time if you are not willing to lower your price to what the market at the time dictates.
If your property is not getting any interest when it is first listed, that fact is probably not going to change. Too many people are locked in to the idea of what their home is "worth". Whether that is from comps or from the peak days of the bubble.
I find it amusing that many realtors blame the slow housing market on the media. They weren't complaining about the bidding wars fueled by the media telling everyone to get in now or they would be priced out forever. Or to take on whatever mortgage product is available to get in to a house now, or else you will miss out.
There was an interesting article on Slate a couple of years back about how most realtors don't make a large amount of money. Due to the fact that the cost of entry is so low and the exam is relatively easy. When the market goes up, lots of people become realtors. When the market goes down, they bail. So the finite amount of money available to the realtor pool is absorbed by new realtors when the market goes up. I'm sure the bubble blew that theory to hell, but we will probably get back to those days eventually.
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