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I Don't Want To Reduce My Price Any Further!

By R. B. "Bob" Mitchell - Loan Officer Raleigh/Durham

Mortgage and Lending with Bank of England (NMLS#418481) NMLS# 1046286

June 25, 2007 07:28 AM

I just read a post about home sellers being in denial over the fact that the market has changed. As I was reading it I St. Louis Home Sellers The Their Heads In The Sand had to ask myself if that was true about myself. Was I in denial about the two homes that I currently have on the market?

They both have me perplexed. The one I've actually sold twice in the high $170's, though neither buyer was able to finish the transaction. We currently have it on the market $15,000 less than that. The other is priced $5,000 dollars below everything else in our area and about $10,000 below the comps. Yet they both sit!

I'm not in denial about this. I know exactly what happened and is happening. The market has, if not crashed, then St. Louis Real Estate Market making a hard landing! come in for a hard landing. I would say that I'm more hard headed than in denial. Past this point, I'm not going to sell the home at any lower a price. I'll sit on it first. Fortunately, the note on both homes is lower than we can rent them for, so that's what we're going to do.

And I think that a lot of people are in our boat. It's not that we don't know what the market has done, we're just exercising our rights as sellers to not participate in a dropping market. What we are doing is a natural part of the markets adjusting themselves. Sellers providing this resistance is the first step towards a turn around in the market. If I take my two homes off the market the supply side of the equation will shift. If demand, even a low level of demand, stays the same, then prices will increase.

Some of the posts that I've read on here make it seem like what I and other sellers are doing is a bad thing. It's not, except for the agent who only gets paid when it sells. But one thing that you have to remember is that when you sign a listing agreement, you're not working for yourself. You're working for the seller. Keep that in mind when you go to them asking for a price reduction! Are you asking for that price reduction for them or for yourself?

Bob Mitchell

ValueList Real Estate Services, Inc.

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David Phillips

Solid Source Realty - Marietta, GA

As investors, we switched over to renting and lease/options months ago. We do keep some of these properties for sale for the occasional quick turn, but renting is the way to go.

Jun 25, 2007 08:10 AM

Bryant Tutas

Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL

Selling Florida one home at a time

Bob, I agree with some of what you have said. BUT it is all about the price. If a home has been sitting on the market then the seller either needs to adjust the pricing or take it off and wait for better times. I tell all my potential sellers right up front that if they do not need to sell then don't put it on the market. In my market, right now, they will not "get lucky". No sense wasting time trying to. Rent it out and wait.

Now having said all that, lowering the price is not always the best strategy. I just raised the price on two of my listings and showings have increased quite a bit. They were both priced to low! One was the best priced 4 bedroom home in Poinciana. The problem was REALTORS(R) were putting a minimum price range in their MLS searches because they did not think there would be any 4 bedroom homes below $175,000. My listing was priced at $169,000. I just raised it to $175,000 and we are back in business. So even though it's ALWAYS about the price it could be too low as opposed to too high. I think I feel a post coming on:)

Jun 25, 2007 08:17 AM

Craig W. Barrett

RE/MAX 100 - Hughesville, MD

Hughesville MD Real Estate

Yes, I agree. If the seller is not getting their price expectation, no sense in wasting market time. Rent it out and sell when the market turns. Hold until timing is right.

Jun 25, 2007 09:15 AM

R. B. "Bob" Mitchell - Loan Officer Raleigh/Durham

Bank of England (NMLS#418481) - Raleigh, NC

Bob Mitchell (NMLS#1046286)

Dan, Scott, Nattalie, Vera, David, Bryant and Craig: Thanks for the comments. I agree with you guys that it's usually a matter of price in a particular market. The first home that I mentioned I actually have somebody interested in it, it's just a matter of if they can rent their home out for an amount high enough to cover their payment, then they'll buy my home. If that doesn't work, I think that I'm just going to rent it out until the market comes back..

Bryant: That is wild! I've never heard of that working before, but if you were right that people weren't looking that low in the price range, then I guess that it makes sense! Good luck to you on that!

Bob Mitchell

ValueList Real Estate Services, Inc.

Jun 25, 2007 09:42 AM

1~Judi Barrett

Integrity Real Estate Services 116 SE AVE N, Idabel, OK 74745 - Idabel, OK

BS Ed, Integrity Real Estate Services -IDABEL OK

Bob - It sounds like you have thought this thing out and are speaking from experience. Thanks for the post.

Jun 25, 2007 09:51 AM

Michael Eisenberg

eXp Realty - Bellingham, WA

Bellingham Real Estate Guy

It all depends on the situation, obviously you don't need to sell, if you did a price reduction might not be a bad thing

Jun 25, 2007 02:55 PM

Dan Homan

Coldwell Banker Ellison Realty, Inc - Ocala, FL

"It's not that we don't know what the market has done, we're just exercising our rights as sellers to not participate in a dropping market."

Good point. The real issue is that too many sellers want it both ways in this market it ain't hapenin'. The problem is many areas like mine have almost two years of inventory. If you are not going to play get out of the game, Lead follow or get out of the way.

Jun 25, 2007 06:08 PM

R. B. "Bob" Mitchell - Loan Officer Raleigh/Durham

Bank of England (NMLS#418481) - Raleigh, NC

Bob Mitchell (NMLS#1046286)

Michael: I agree with you. This post was written because I had seen several other posts that made it seem like if the seller didn't lower their price that they were doing something bad or were delusional or something. Different sellers have different situations and different motivations for selling. Just because a seller isn't willing to sell their property below a certain price, doesn't mean that they are delusional.

Our job is to sell homes, but when we do we have to take the seller's situation and motivation into account. If the market has moved on to a point where "that" price that the seller won't go below is not obtainable, we need to be forthright with the seller and let them make their decisions. I was afraid that agents were putting their desire to obtain the goal of selling over the needs of the seller. Worse yet, I was afraid that some agents were putting their needs to generate a commission over the needs of their seller!

The market is the market and anything will sell at the right price. I'm sure that if I knocked the price down 50% on my two homes that they would sell quickly, but that would negate the reason that I bought them for in the first place. That is to make money on them. If I have to keep them as rentals, it's not what I wanted to do, but maybe what I'm going to have to do.

Dan: Sounds like a a bit of the marines in you! I agree with you and am almost to that point of making a decision on my two homes. Yesterday I read that nationally that the supply of homes on the market has ballooned to the highest mark in something like 15 years. My prediction is that number is going to be slashed here pretty soon when people come to the conclusion that I'm getting ready to and remove their homes from the market. My next door neighbor just did that last week. He gave up and decided to stay put.

Thanks for the comments.

Bob Mitchell

ValueList Real Estate Services, Inc.

Jun 26, 2007 03:39 AM

Ana Connell

G & C Properties - Burbank, CA

Burbank Real Estate Agent

Good post, I think if you can afford to ride it out, that's probably the best strategy for you.

Jun 27, 2007 03:33 PM

Ray Perry

CENTURY 21 The Neil Company Real Estate - Roseburg, OR

Realtor, CRS, GRI, e-PRO

I agree. I'm keeping two of my homes that are in a slow market. If I can't sell the other, it will get rented too. Good advise.

Jun 28, 2007 11:55 AM

Brigita McKelvie, Associate Broker

Cindy Stys Equestrian and Country Properties, Ltd. - Lehigh Valley, PA

The Broker with horse sense and no horsing around

Good post! If you can wait it out, go for it. If not, adjust to the market, or go to plan B - RENT.

Jul 12, 2007 05:21 AM

David Slavin

Keller Williams Premier - Katy, TX

CDPE, ABR, SRES Keller Williams Premier

Have you thought about buyer incentives? If the seller pays for the buyers closing costs may help get the buyers off the fence.

Jul 22, 2007 07:26 AM

Margaret Rodgers

Keller Williams Realty - Karns, TN

Realtor, AHWD

Not all sellers have to sell ,they just want to

Jul 22, 2007 07:59 AM

Marie Kletke

iNet Realty - Long Beach, CA

Broker - Long Beach Real Estate

As an agent, I usually give the seller the option of how they want to price their property. I show them the comps, in some cases, provide the appraiser's opinion! But the price also is dependent on the seller's purpose. You are a seller who wants to make money and can afford to wait. Then going for the higher, even higher than, the market would be your choice. I had a seller who was in foreclosure and needed to sell the property quickly before he received a notice of trustee sale. We knew that the property would sell quickly if the property was priced $100k below market so we listed it at $1.4 to $1.6 Million - which was also the appraiser's conservative analysis. We received three offers for $1.45 Million - We knew we could bring the agreed sales price up to $1.5 Million. Another realtor came in and assured the lender that the property will sell for $1.8 Million. The seller cancelled our listing without even looking at the offers on hand. I know this property will NOT sell for that much. The seller will lose his property and this agent will have done the seller a disservice. Not all agents are after the commission, but this agent obviously didn't care if he put the seller in jeopardy.

Jul 22, 2007 08:39 AM

Sandy Nelson

Riley Jackson Real Estate Inc. - Olympia, WA

your Olympia area Realtor

You're in a good position if you can wait and rent your homes out. Even if you don't come out even between rental income and mortgage expenses, it can balance out with your tax break at the end of the year, plus, your tenants are paying down the principle. As interest rates rise, fewer people can afford homes and need to rent, which, due to supply vs. demand, will increase rent prices. I have advised some clients to rent their homes out for a while, rather than sell, if it made better financial sense. Sometimes looking out for your clients means not making a sale.

Sandy

Jul 22, 2007 11:43 AM

Chris Liverett

Associated Brokers Of Pagosa - Pagosa Springs, CO

Pagosa Springs Real Estate

Bob,

Good post. It's all about the bottom line, what you have in it, and how deep your pockets are. This goes for any investor including yourself.... But you already know that

Jul 27, 2007 06:29 AM

Suburban Chicago Illinois Real Estate

Suburban Village Realty - Barrington, IL

Whatever is best for the client is the best policy.

Jul 27, 2007 07:23 AM

Anonymous

MARIA

I COME TO AN AGREEMENT TO SELL MY BUSINESS AND CLOSING IS ON MONDAY. I WANT TO KEEP MY BUSINESS CAN I SAY "I DON'T WANT TO SEE" OR IS IT TOO LATE?

Aug 05, 2007 11:02 AM

#22

Anonymous

MARIA

SORRY I MEANT I DONT WANT TO SELL..OOPS

Aug 05, 2007 11:03 AM

#23

R. B. "Bob" Mitchell - Loan Officer Raleigh/Durham

Bank of England (NMLS#418481) - Raleigh, NC

Bob Mitchell (NMLS#1046286)

Maria: If you don't want to sell your business, I would check with an attorney prior to closing and see what the attorney has to say. If the attorney can't find an out for you, I would contact the other party and attempt to negotiate a settlement with that person that would let you out of the deal. You never know, maybe they want out too and it won't end up costing you that much.

Bob Mitchell

ValueList Real Estate Services, Inc.

Aug 05, 2007 11:49 AM

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