Hopefully, this post will energize and empower all of us agents who may be hesitant to approach their seller about doing something drastic. What I mean is doing drastic price drop; specifically nearly 10% percent of the list price at ONCE.
I'm invlolved in the sale of a rebuild that I oversaw from its original purchase (I was the selling agent) through the construction phase and into its "list" phase. To get an idea of what was done you can go here www.334sussex.com to see the process. It was originally a very small cape, completely rundown and in need of removal/renovation. We saw an opportunity, as it was an estate sale, and purchased the property for about its assessed value. $193K to be exact. The investor who funded the project was a little skeptical about the market and we did alot of research and brainstorming to come up with the right architectural plan to best make use of the existing structure and its location in the neighborhood. Given the fact that we were limited to the footprint without needing a variance it was a bit of a challenge.
In the end, the project was completed and listed at $495K. The unfortunate timing of completion meant that the finished product came to market in the middle of August. This made for very few showings at both broker's opens and public open house events. Additionally, the relationship between some the two main investment parties had been deteriorating to the point when communication became strained between the two.
All during this process I had been absolutely obsessed with providing as much market data and information to the sellers in the form of my Top Producer Market Snapshots, my ReMax Web Lead tracking and even generating past year comparables with active, U/C and sold properties. This turned out to be critical when it came time to review the property's saleability. Since the property had been on for a month and there were few showings and leads, I suggested to the main principle that we should due a price "improvement" to generate interest in the next market of potential buyers. He wasn't sure how a price reduction (my words) would bring more buyers in so I explained to him how reducing the price is a tool to draw in a different crowd that might now be looking for homes in $500K range but would be looking in the $450 range or below. It was a little strange and somewhat humbling to me to realize that not every seller understands how a price drop works and in dawned on me that I can overcome their objections with some carefully scripted phrases backed with hard data.
After some discussion he desided to drop the price $70,000K to $425,000 from $495,000K!!
I alost fell out of my chair when he told me this and his rationale was spot on. He essentially felt that by underpricing the property he would be able to (hopefully) generated multiple offers that might bid up the price and so far he may be right. In the week after doing the "improvement" I'm averaging 3 agent showings a day, 10-15 web viewings and 1-2 buyer-direct calls. I'm also, as of this writing, expecting a written contract on my desk by the end of today with the possibility of a second contract by the end of the week.
Now, this situation may be unique and there will be many sellers who feel that the agent is the only one benefiting from the reduction (which is nonsense as nobody, including the seller sees any money until the property closes) but in doing an extraordinary amount of legwork helped the seller understand where his house should be priced according to what the buyers feel the house is worth, not necessarily what the sellers think. Hope this helps.
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