The Money You "Lost" in Your Price Reduction Wasn't Real

By
Real Estate Broker/Owner with J. Philip Faranda (J. Philip R.E. LLC) Westchester County NY License # 49FA1074963
https://activerain.com/droplet/Wy

Westchester Real Estate MarketWith a median home price hovering near $700,000, even a modest price reduction on a Westchester County home can be tens of thousands of dollars. I have to approach a reduction with the diplomacy of a funeral director but be as convincing as a physician imploring his patient to quit smoking. 

No one could predict after the stimulus where prices would go, but it is clear that what few buyers we have are skimming the absolute cream off the top and leaving the rest. They even fight over the good stuff, creating an illusion of urgency in isolated precincts. Overall, sadly, median home price is an illusion; it is a metric of the value of those few, unique sought after homes that people watch even when they weren't on sale. They needed nothing. They were priced to the bone for their category. 

Money lost in a price reduction was never your money. It was an illusion. It didn't exist. I find myself, more and more, explaining to mournful sellers that the $25,000 that went down the drain when they went from $624,900 to $599,900 was a paramour that never loved them. She never cared, Johnny. The baby wasn't yours. She wanted to close the Copa and make sure you never worked in this town again. For God's sake man pull yourself together, it was all an illusion. 

You know, that sort of thing they cover day 2 in licensing class. Or not. 

In 2005, 852 single family homes sold in Westchester County with a median price of $732,000.

In 2010, 424 single family homes sold in Westchester County with a median price of $715,000. 428 people got nothing

The pool of able buyers has shrunken by an absurd amount. Millions of prospects have vanished due to either their own disasters or the new draconian lender underwriting guidelines. What few buyers remain are skeptical, drunk with options, terrified of making a mistake, have no confidence in the future, and are heavily invested in the group think notion that they must get a steal or they will be exposed to grave financial risk. You know, all those happy things perspective home buyers have always focused on. 

Here's the reality: If you are multiple listed, staged well, tidy, and have been on the market for 60 or 90 days with no offers or few lookers, the market has spoken; you need to reduce your price. You aren't the McClotchkees down at the end of the cul de sac who sold in the first 30 days. They had something, or ten things, you don't have. And the only adjustment you can make to the buying public is price. A feature ad won't do it. A newspaper display ad won't get it done. Busting your agent's chops to chase down Gladys Pflarphlingston for feedback on a showing 2 weeks ago won't do it. If you are on the MLS, I can show you how many people have clicked on you online and clicked off every week since we listed. You aren't a secret. Quite the opposite: with public searches, serious prospects can tell me their opinion of your toothpaste.  

If we are in showing condition with my marketing and you aren't sold, the faster we address price the faster we'll sell. The money you are asking for is not on deposit in the bank of buyer opinion.

 

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Re-Blogged 38 times:

Re-Blogged By Re-Blogged At
  1. John Juarez 09/10/2010 08:38 AM
  2. Roger Johnson 09/10/2010 09:14 AM
  3. James Grant 09/10/2010 09:14 AM
  4. Pat Haddad, ABR, CRS, ePRO, GRI 09/10/2010 12:18 PM
  5. Gregory Bain 09/11/2010 01:49 AM
  6. Sally English 09/11/2010 01:54 AM
  7. Dennis Martin, J.D. 09/11/2010 03:28 AM
  8. Brian Eddins 09/11/2010 03:58 AM
  9. Becky Schertenleib, Nan Wimmers 09/11/2010 04:13 AM
  10. Barb Szabo, CRS 09/11/2010 04:29 AM
  11. Leesa Finley 09/11/2010 04:37 AM
  12. Kathy Kenney 09/11/2010 04:50 AM
  13. Michelle Fradella-Barfuss 09/11/2010 05:01 AM
  14. Debbe Perry 09/11/2010 05:08 AM
  15. Melissa Brown 09/11/2010 05:35 AM
  16. Donna Bosze 09/11/2010 06:16 AM
  17. Lisa Wiseman 09/11/2010 07:08 AM
  18. Nancy Murray 09/11/2010 07:29 AM
  19. Kathleen Koulouris 09/12/2010 03:02 AM
  20. Susan McCall, Independent Listing and Buyer Agent 09/12/2010 01:39 PM
  21. Judy Graff 09/12/2010 02:34 PM
  22. Maya Thomas, Broker 09/12/2010 06:09 PM
  23. Jan Rankin Richmond 09/13/2010 03:50 AM
  24. Ty Lacroix 09/13/2010 04:24 AM
  25. Rebecca Diamond 09/13/2010 07:57 AM
  26. Kim Southern- "Sold" with Southern Hospitality 09/13/2010 08:24 AM
  27. Dan Edward Phillips 09/14/2010 08:53 AM
  28. Phil Stevenson, CRMP 09/16/2010 08:44 AM
  29. 1~Judi Barrett 10/03/2010 02:04 PM
  30. Victor Zuniga 10/03/2010 02:31 PM
  31. Ralph Janisch ABR CRS Broker 10/03/2010 03:18 PM
  32. Michelle Gibson 10/21/2010 02:54 PM
  33. Valerie Keener 01/25/2011 08:13 AM
  34. Todd & Devona Garrigus 01/25/2011 08:26 AM
  35. Eric Crane -- Your Full Service, Discount Fee Realtor® 06/09/2011 06:43 PM
  36. Jill Watts 06/09/2011 06:54 PM
  37. Michelle Cherie CarrCrowe Just Call...408-252-8900 06/09/2011 08:01 PM
  38. Anne M. Costello 06/09/2011 09:51 PM
Topic:
Home Selling
Location:
New York Westchester County
Groups:
I Love NY
"Whacked"!!!
Club Chaos
Bananatude
40 Somethings
Tags:
pricing
whining
screaming
westchester home values
copa cabana
moe green

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Rainer
20,494
Evelyn Black
Comey & Shepherd, Cincinnati, OH - Cincinnati, OH

Loved it!  A serious subject, very entertainingly written!

Sep 14, 2010 06:28 AM #206
Rainmaker
217,470
Yvette Chisholm
Long & Foster Real Estate, Inc. - Rockville, MD
Associate Broker - Rockville, MD 301-758-9500

Of course you need another comment!   This seriously deserves the feature...thanks for such a well written post.

Sep 14, 2010 07:18 AM #207
Rainer
258,739
Mick Michaud
Distinctly Texas Lifestyle Properties, LLC Office:682/498-3107 - Granbury, TX
Your Texas Lifestyle is Here!

Contrary to poplular opinion, there is something you can do to get the house sold w/o playing the price card.  Its called adding value.  But that's a post for another day. 

Sep 14, 2010 07:29 AM #208
Rainmaker
100,160
Andrea Curtis United Country Premier Properties Certified Military Relocation Professional
United CountryPremier Properties - Harker Heights, TX
U C INTERNATIONAL DIRECTOR OF MILITARY PROPERTIES

Phil great post.  Buyers are becoming more choosy these days.  I would like to say to the guys who think Realtors need to be run out of business..or that we hyped the price etc.  I noticed that you said you were entrepreneurs.  Ok well then you know the market will do what the market will do.  Example If you bought a cabbage patch kid or beenie baby at their height you won't make a profit selling them now and most likely take a loss.   I didn't go on a no engineer rally when that bridge collapsed in MN.  So don't paint all Realtors with the same brush.  It sounds like both of you had problems in the past with a Realtor...then do the right thing for EVERYONE.  In my state we start out with arbitration and go from there.  As a Realtor I work hard to try and weed out the bod apples.  Unfortunately most people just take their toys and go home and never report the problem.   Sorry about the rant.  I will inhale now and let someone else comment

Sep 14, 2010 09:07 AM #209
Rainmaker
511,053
Robert L. Brown
www.mrbrownsellsgr.com - Grand Rapids, MI
Grand Rapids Real Estate Bellabay Realty, West Mic

What was once is not now. All across this country of ours. A very sad state of affairs. Timely post.

Sep 15, 2010 01:28 PM #210
Rainmaker
270,036
Phil Stevenson, CRMP
PS Mortgage Lending 305-791-4874 or 888-845-6630 - Miami, FL
"Mortgage Nerd" in Miami, Florida and Texas

Great post, and very true.  You cant lose money you havent made, and that also goes for commissions.  Sometimes I have people in my ofice who get mad when they have to cut commission to match the competition, but they really didn't "lose" anything.

Sep 16, 2010 08:38 AM #211
Ambassador
201,021
Tammy Pearce
Haute Realty 214-994-6474 - Dallas, TX
Tammy Pearce

This is a great post applicable to every market I read about and work in. 

Sep 17, 2010 02:58 PM #212
Ambassador
201,021
Tammy Pearce
Haute Realty 214-994-6474 - Dallas, TX
Tammy Pearce

This is a great post applicable to every market I read about and work in. 

Sep 17, 2010 02:58 PM #213
Rainmaker
402,393
Marnie Matarese
DWELL REAL ESTATE - Sarasota, FL
Showing you the best of Sarasota!

I am sure that you are a very good realtor but I think you have missed your calling.  Go write a book!  Love your style and enjoyed reading a post that was so well written.  I am going to share it with three of my sellers who just don't understand price reductions.  I could never have said it so beautifully and to the point.  This is one of the reasons I just love Active Rain.  So many professionals sharing their experiences.  Thanks.

Sep 18, 2010 01:16 PM #214
Rainer
311,830
Michael Delaware
North Sky Realty LLC - Battle Creek, MI
REALTOR®, CRS, GRI

It is so true!  Wonderful post!  I laughed and could not think of a better way to put it.  You just nailed this one.  It is all an illusion, and a pipe dream.  Come to earth and touch reality.  It is 2010.

Sep 20, 2010 09:28 AM #215
Rainer
96,246
Ross Therrien
Prudential Verani Realty, Londonderry,New Hampshire - Londonderry, NH
Realtor, Broker Associate

Sometimes the homeowner just doen't want to listen. As soon as one lists the property its overpriced.

Sep 20, 2010 02:41 PM #216
Rainmaker
21,815
Deidre Berry
WOW Real Estate - Florence, AL
Realtor - Florence, Alabama

A lot of sellers need that reality check...I'm bookmarking your post so I can go back and have the right words to say the next time I'm going round in circles!

Oct 01, 2010 11:28 AM #217
Rainmaker
334,052
Ty Lacroix
Envelope Real Estate Brokerage Inc - London, ON
Phil, well put and a seller has to realize that the market dictates the price, not them! Ty
Oct 23, 2010 10:42 PM #218
Rainer
60,032
Dennis & Terri Neal
RE/MAX, Big Bear - Big Bear Lake, CA
Your Home Sold in 45 Days or We Se

Reality is finally intruding on many peoples illusions.

Nov 19, 2010 07:29 AM #219
Rainmaker
234,780
Patricia Beck
RE/MAX Properties, Inc., GRI, CDPE - Colorado Springs, CO
Colorado Springs Realty

Listing agents need to remind their sellers of this if they still think their home is worth what it was valued at when the market was better a few years ago.  "The market has spoken" - I love that! advertising more is not going to make a difference if the home is overpriced in the first place!!

Dec 06, 2010 11:27 AM #220
Rainmaker
238,192
Donna Paul
Keller Williams Realty Gold Coast - Dix Hills, NY
Long Island Home Specialist,All About Real Estate

Philip: how did I miss this one... This is really tells the homeowner the truth in pricing their home.. In the end it tells them that times are changing....

Jan 01, 2011 10:03 AM #221
Rainmaker
678,889
William James Walton Sr.
WEICHERT, REALTORS® - Briotti Group - Waterbury, CT
Greater Waterbury Real Estate

Ah, Philip, you've actually given me more to work with on my next seller post.

How is it that sellers are being so oblivious to the signs all around them? One would think that the sheer number of homes still on the market would tell sellers that what they want in terms of price isn't always going to happen.

Jan 13, 2011 03:15 PM #222
Rainmaker
611,939
Todd & Devona Garrigus
Garrigus Real Estate - Beaumont, CA
Broker / REALTORS®

Philip - Great blog and congrats on the feature! This is a great way to say to over-priced sellers what we always try to convey. That money was never real to begin with! I've re-posted your blog... and so has everyone else, apparently! :)

Jan 25, 2011 08:23 AM #223
Ambassador
2,084,067
Michelle Cherie CarrCrowe Just Call...408-252-8900
Get Results Team...Just Call (408) 252-8900! . DRE #00901962 . Licensed to Sell since 1985 . Altas Realty - San Jose, CA
Family Helping Families Buy & Sell Homes 40+ Years

This is one of the hardest truths for sellers to swallow.

Jun 09, 2011 07:56 PM #224
Rainer
61,634
Beth Spradley
Beth Spradley, LLC - Cape Coral, FL
Selling Homes & Investments in Florida and Alabama

I just happened to do a search of my email and came across this post while trying to work my website.  It is funny how random things like thathappen because I needed these words!  "Diplomacy of a funeral director", not bull that I feel like being right now!

Sep 07, 2014 03:01 AM #225
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