Price Drop Route - Too soon?

Question

Hello BP Family,

We listed our recent flip last week Wednesday 1/17/2018. My husband and I wanted to list it at $448k, whereas our agent wants to list it at $429k. We met at the middle and decided to list it at $438k.

We had an open house last Sunday, it was packed! So far 78 showings for one week, but still no offer. Today is the 7th day of the listing . Buy my agent called me out yesterday and said we needed to act quickly because he doesn't want to lose momentum and that we should consider lowering the list price before holding another open house this weekend. Our agent said that the feedback from showings is that the list price was too high. My husband and I think its too soon to consider a price drop. Any thoughts on this?

Just FYI too, the ARV given to us by our lender is at 465k, so not sure why our agent is rushing to go to the price drop route.

Nathan Gesner · Answer

Who sells more houses: your REALTOR or your lender?

If you hired a good agent, they will know what the house will sell for. Lender valuations aren't as accurate.

Let's review the facts. Nearly 80 people walked through and said it was priced too high. Your REALTOR says it is priced too high. I'm going to go out on a limb and say it's priced too high and that you should have listened to your REALTOR instead of trying to squeeze out an extra $9,000.

If you don't trust your REALTOR, go find one you do trust and then listen to them.

Nathan Gesner · Answer

@Maybelle Francisco

It sounds like you have a hot market and should have no problem selling. However, your agent should know what price it will sell for. Even in a hot market, an over-priced home won't move.

Your agent should have provided you with a market analysis to show recently sold homes. I also recommend looking at homes currently on the market (or that just went under contract) so you can see your current competition. If you have a 5bed/3bath and there are only three others on the market comparable to yours, you can set your price in relation to theirs and beat the competition. If the other homes are listed at $415,000 and comparable to yours, you will lose out.

Should you lower your price now? I think so but you need to study your competition first. The number of visitors during your open house tells me the demand exists. Figure out what price they are willing to pay and then get there ASAP. The longer you let it sit on the market the more people will start scratching their head and wondering what's wrong with it.

Marc Winter · Answer

78 showings in the middle of January in NJ?  Wow!  If they all say it's listed too high, your agent might be ask them "about how much too high?--what price would you invest in and own this home for?"  Serious buyers usually are NOT afraid to make offers.  Again, 78 showings?

Maybelle Francisco · Answer

Just to give quick update. We agreed with our agent to lower the list price by 20k. It is now listed at 418k. We got 2 offers, both at 400k, both his clients. My agent said, let's see how much these offerers are willing to pay, and pick the best offer and who can quickly close. He said he will continuously show the house until we get to the price that we are willing to take. The house has been listed for 2 weeks now, and so far 160 showings.

Brian Pulaski · Answer

@Maybelle Francisco 78 showings in 7 days? 11 showings a day on average? If I had a property with that many showings and the feedback was overpriced, I would think one would be tossing in a low offer, or any offer. Also why are you having a second open house? Does your realtor feel the house will sell at an open house? Personally I would listen to the realtor if he is the professional salesman you hired... What ARV did you "plan" for? You noted the list price is below your ARV? How did you arrive at it?

Lynn McGeein · Answer

If comparing apples to apples, and you are much higher than others being offered, then all you are doing with your price is help sell theirs.  In that scenario, your agent asking you to drop it quickly is him/her being prudent.  Buyers tend to forgive a high price if it's lowered quickly, before they've moved on and your listing is stale.  It may even generate competition and help get you back up near where you wanted to be to begin with.

If you don't need to sell and really won't unless you get your price, then let your agent know so at least you're on the same page.  If you want it sold quickly, listen to your agent.

Odie Ayaga · Answer

@Maybelle Francisco I'm in @Nathan G.'s boat. Personally things that make me think "I wonder what's wrong with THAT property?" are if it keeps going under contract and falling through or if the DOM is high. A price drop early is more likely to get me to throw in an offer if I'm already interested in the property but think it's overpriced.

Jason Lee · Answer

78 showings in one week should lead to a best and final scenario. If the overall feedback was the price is too high then the price is too high. None of the feedback included numbers where the buyers would get a deal done? 78 is a lot of buyers and your agent should have been able to gain a lot of insight on pricing needed to get a deal done.

The first thing you need to do is figure out the true ARV (the lender or appraisal ARV aren’t worth anything). Yes, ask for comps. Closed ones from within the past 6 months. Also look at the available inventory right now and see who your competitors are and see how you stack up. 9K is a relatively small amount at this price point and so it’s possible 429K is too high, too. 9K shouldn’t keep offers away.

The other thing to consider is there could be something about your listing (neighboring properties, location, renovation, some other condition) that’s not readily apparent from your listing description and photos, but is a deal breaker in person. Examples would be brick wall views that aren’t visible in photos, really wide angle photos that make rooms appear much larger, etc. Very often if you’re more transparent about some negative aspects then buyers are accepting of them, but if they come as a surprise they can become deal breakers. If you take an objective look around are there any changes to the listing, photos, or staging, that could be improved upon?

If you do a price cut after one week it won’t look good. From the info you’ve provided I’m not even sure 9K would really move the needle either. I would first have your agent reach out to any buyers/buyers agents that seemed really interested and have a conversation about pricing. Have him hint that there’s some wiggle room on price and that you’re negotiable. Once he’s exhausted those 78 leads then you guys can talk actual price cut.

Good luck!

Jimmy Dudley · Answer

So ask your agent to SHOW YOU the days on market for the comps. He can pull it up in a couple minutes. Then go down the list and say to yourself if this house were on the market right now would I buy it or mine. You will quickly find out how much your house is worth to the market. Lenders can imagine what the house is worth, but if 78 people saw it and said too high it's too high for your market.

Maybelle Francisco · Answer

@Nathan G. - Good point. Just cited the ARV from our lender as reference. Our list price is still way below the ARV. Anyways, we trust our agent and thanks for raising that. But do you think, it will create a negative impact if we price drop now, 1 week after listing? Would buyers think that there is an issue with the property. Sorry for the novice questions = )

@Charlie MacPherson - Love the question on average days on market. I will go back to my agent and ask those. In our call yesterday, he said he listed another 2 houses the same time as ours and it has multiple offers as of now. All of the 3 houses he listed is in our town Fair Lawn NJ. Apparently, my listing had the most showings and packed open house but no offers.

@Marc Winter - Yes 78 showings. But no offer. sad face = (  My point is same as yours. If we got no offer, then how much are we high, right? That was not clear from my agent and I will ask today.

Thank you all.

Price Drop Route - Too soon?

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