Did I overprice my flip and now what? MLS Price change?

Question

MLS list date was April 3rd with no showing until first open house which was Sunday 6th.

80+ turnout at the OH, but no offers, a couple follow-up showings (2) after the OH, but nothing solid. Also, very few follow up showings during the first week after the OH (so far 1, today Friday 11th)

We priced the house at $288k based on the comps and also a very similar type of house on the same street that was UAG at the time. On the 7th, that house sold for $11k less than list price (List price $275, SLD price $264k) and based on that sale price, I believe we need to drop the price from $288k (current list price) to something like $275 - $278

My agent wants to give it two solid weeks, so we are now considering a $10 drop on the 17th of April.

I'm struggling with whether I was too greedy OR I should have just priced the house more aggressively towards the similar comp at the end of the street (although my house certainly has a lot more upgrades than it does).

Any advice or thoughts on this would be greatly appreciated! Specifically, what do you think about the effect of a price change? In hindsight, I wish I could go back in time and change the list price.

John Moore · Answer

Every market is different.  We all can tell war stories, how agents will sell off of your house in order to sell another home.  I did a study for a client who had a lot of traffic and no buyers only to find out some of the prospects were individuals attempting to get design ideas for the homes their own home; others are professional open house tire kickers.  It is difficult to get to the common denominator, the real truth.  Don't second guess yourself.  If you did your study and the house is priced right all you need is one buyer.  The more masses of passes you get to visit your property the better off you are.  You might consider having a take away flyer to reinforce your offer.  We have found that an incentive does work both for the prospect and the selling agent.  The more carrots you have the more traffic you will attract.  Don't panic.  This is a learning experience and don't think ever visitor is a qualified buyer.  Sorry to jump back in but everyone goes through these reflected moments.  More food for thought.

Joel Owens · Answer

Joey if your agent had 80 people come through and all you got was a shoulder shrug from them on feedback you need to get a new agent.

Every day that goes by you have carrying costs. If you paid cash you can lose opportunity costs on other deals from unavailable funds stuck to this property.

I have always strongly disliked the bonus angle to agents. I do commercial so you don't see that like in residential. What happens with " Get paid a bonus in 30 days if it closes " is an agent thinks it's bait and switch. The buyers broker/agent can't control lending, underwriting, inspection delays etc.  If it goes over 30 days the agent gets nothing extra. So with the bonus builders used to do that stuff and then in small print it would have all this criteria for it to happen.

Better in my opinion is just offer more to the buyers broker for commission. That way they know if they bring the buyer to your property they are getting more and there is no funny business to worry about.

I really do not agree on this 2 week thing and drop the price. 90% of a listings activity is the first two weeks to market.

Your agent needs to be calling buyers back directly and also talking to the buyers brokers and getting brutal feedback with your property. Did your listing agent not have a sign in sheet to capture the information to follow up with all the prospects later??

Joey most buyers want VALUE. They do not want the most expensive house at the most expensive price. They want the nicest house at a fair price. I could pay 100 for a great steak but get more satisfaction when I find a really great tasting one for 25 to 30. You might find a buyer to pay top dollar for turn key but it will limit your buyer pool.

Albert Bui · Answer

@Mike D'Arrigo - good one I would definitely have your listing agent call up those 80 people that came through to follow up on what they thought of the listing to probe through and see why their buyer's motivations were so you can adjust accordingly.

It may not be price related or it may be but you'll never know till you get the correct feedback.

If your listing agent took note of the traffic that came through he/she should have a list of 70-100% of these crowds that came to your open house.

When working with my realtors I usually use "openhome," application to take information from the crowds coming through the open house and incentivize them by offering a freebie like movie tickets and dinner or etc.

Hope that helps!

Mike D'Arrigo · Answer

@Joey DeFilippo This doesn't look like a pricing issue to me. 80 turn outs for an open house shows a lot of interest. I don't think you'd be getting that kind of turn out on an over priced property. I don't think offering a bonus to the selling agent to get it sold in 30 days is the answer either. It looks like the selling agent is doing the job and generating traffic. You need to find out why 80 people have come through and no offers and follow up showings. There's something that is causing a lack of interest once they see it. Isn't your agent getting any feedback from the open house? With 80 people, there should be some comments.

George P. · Answer

i'd give it 2 solid weeks if you can wait and then drop. most likely, 99.9%, you are correct that it needs to drop, but since it's already listed, i'd give it 2 weeks.

Rolanda Eldridge · Answer

@Joey DeFilippo ..Seems like the interest is there..If there's room in the deal, I would definitely drop.  You could possibly get multiple offers if priced right...maybe even a bidding war, since you have more bells and whistles...Good luck!

Paolo Ruggieri · Answer

a good agent would call back buyer agents that showed property and ask for feedbacks. It is very possible you might need to do one or two touch ups or upgrades to make house sparkle

Joey DeFilippo · Answer

SOLD!!

Ok, I think it probably took a month longer than it would have if I priced it right to begin with.

I ended up dropping the price $10k and within a few days the offers started coming in.

Appreciate all the posts everyone!

CK Hwang · Answer

Hi Joey, personally, I would wait out the 2 weeks but start getting feedback from the people that walked through. Depending on your market, 2 weeks all in all might not be all that long.

Personally, I would worry about the final transacted price of the other house, the reason being that the final recorded transacted price can be manipulated in lots of ways to make the purchase price look lower.

Many of my buyers tend to request this. i.e. in my last flip, the offer price was $700K+, however to reduce the property tax, the seller offered to pay for escrow, title, agent commission, etc etc, in exchange for me to lower the selling price of the property. This finally dropped property price to the $670K mark, saving the new owner approximately $300 a year in property taxes.

Robert D. · Answer

Instead of my obsessing over how  many showings I've had, the comments from Realtors who showed the  property, wasting my time by trying to follow-up with people who've seen  it, I just keep dropping til I have an offer.---> don't you think you just leaving money on the table not know what's the problem with the property ? perhaps adding 4th bedroom for 10K will bring 2 offers during the next open house ? I think feedback is very critical. once you know what mistakes to avoid your next flip will be better...

Did I overprice my flip and now what? MLS Price change?

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