Home Selling in Batavia>Question Details

Christopher C…, Home Owner in Cortland, IL

If I "Go All-In" and price-drop to the lowest point I possibly can, am I expediting a sale or simply being foolish?

Asked by Christopher C Weiler, Cortland, IL Thu Jun 9, 2011

Ive been on the market about a month. 3 showings, no offers. Im currently one of the lowest-priced condo-units in my area, but my competition seems to have taken-note because there's been a lot of price-drops in the last week.

Im thinking seriously about dropping my price to the lowest point I can possibly go. (I dont owe a mortgage, so Im determining price based on what I walk away with to put down on my next property). If I did this, I would be priced nearly $16K lower than my next competitor and the cheapest in my entire area by about $7K. Basically Id be priced along the lines of the Short-Sales around me.

My question is, am I being foolish to go this low in one big drop? I want to grab attention and get sold by season's end, and my agent feels this is the best way to do that. My fear is that by going this low, Im actually undervaluing the property and hurting myself...especially if an offer doesnt come in a month or two. Any insights? Pros vs Cons?

Thanks, as always!

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Hi Chris

Actually, I think your plan is a good one,

You really can't, imo, underprice a home....just like water, it will seek its own level......what you can hopfully do is create excitement as agents tell their buyers about a "great reducton", a "great value".... and a motivated seller..
In my area, this type of pricing has often created a flurry of activity that results in a quicker sale.

Now......understand that there are no guaranties...............the price you are considering might not be as low as you think it is.....you will only really know once you test the market......but the hope is that it will open the floodgates to encourage offers to come in.

A real estate guru in my state, by the name of Jeffrey Otteau, advises that sellers price homes much below the lowest priced competitor.....you want to capture the very next buyer that comes along. Let your condo stand out from the rest.

If you reduce it, and still don't get any offers.........it means either there are absolutely NO buyers currently out there.......or, you still haven't hit that special number that will bring the offers in.

This is not a market for the weak of heart..........I suggest you follow your agent's advice, and go for it!!

Good luck!

Debbie Rose
Prudential NJ Properties
1 vote Thank Flag Link Thu Jun 9, 2011
Thank you everyone for the feedback and insights. Those who are on here regularly know I've asked A LOT of questions. Please feel free to follow my Trulia blog, as this is where Ill be updating this home-selling journey I'm on. I've only been listed 31 days, but this journey began nearly 6 months ago with renovations, credit repair, & staging. HGTV has been an awesome companion, along with sites like this.

Here's hoping the journey doesn't last for years, as a few of my neighbors have already. Thanks for answering an ancy first-time seller!
1 vote Thank Flag Link Fri Jun 10, 2011
Christopher -

In all deference to my esteemed collegues, local markets are different. Price is king with buyers.
If you have had 3 showings in a month - which is great, there is one of two things wrong. Price is too high or there is a problem with the property that makes it unattractive to buyers. If you have eliminated the latter, it must be the former.

Couple suggestions. First, I hope you are working with an agent who can help you determine the correct fiar market value. If you take a page from the bank's playbook, they price at fair market value or under to achieve a multiple bid situation. That can and does happen. And remember, you don't have to accept any offer, you are in control of that, at least. But fair market value is also good.

I would ask the showing agents for feedback or have your agent ask. They will tell you the truth. One agressive strategy if you have 3 interested people is to make an offer to the buyer and see what they say.

And don't forget that the price, one agreed, must appraise out, so fair market value is rarely a bad idea and you won't undervalue.

Bonuses are tricky. Some brokers require a split of cash bonuses, considering it commission. It just depends. Sometimes gift cards as bonus works better. But the buyer get's nothing of that and price is king. I would try and work it out with price first in a way that makes you feel comfortable.
1 vote Thank Flag Link Thu Jun 9, 2011
That's certainly 1 way to do things, but it's not the way I'd do it if I were in your shoes. Keep in mind that your competition--including the banks--might subsequently drop their prices lower than your bottom-line figure, and lots of Walmart's competitors have gone out of business by trying to battle Walmart for the cheapest prices.

Instead, I'd recommend another strategy (from an investor's perspective) that would eliminate--or at least severely reduce--a lot of your competition. Assuming that your sales price is based upon the current market value of your property, you could keep your price where it currently is, and offer to sell it with seller financing. You already mentioned that you only need enough to put down for your next property, so you could require your buyer to put enough down to cover your down-payment (and optionally your closing related costs).

Many lenders have increased the stringency of their underwriting criteria for condos right now, and they most likely won't seller finance any of their listings, so their pricing will be less of a factor. The majority of the rest of your competition most likely won't also offer to sell their properties with seller financing. So after having nuked your competition, your listing should sell pretty quickly provided you and your agent market it correctly.

Additionally, reach out to at least 1 of the active REI clubs in your area, and let the investors there know that you're selling your property with seller financing. I'd be surprised if you didn't receive at least 1 offer within the next week.
0 votes Thank Flag Link Fri Jun 10, 2011
Chris - thank you for the "best answer" - glad you found my response useful.

Good luck, and please stop back, and let us know how things turn out for you!

Here's hoping for a quick sale!
0 votes Thank Flag Link Fri Jun 10, 2011
You answered your own question by saying: Basically Id be priced along the lines of the Short-Sales around me. Approximately 50% of all sales in Kane Co are distressed sales. Short-sales ARE your competition. IF you were a buyer and an equally nice home was available short-sale versus traditional, as long as you had the time, you'd take that route too! Who wouldn't want to save the extra money?? Remember, value IS determined by the buyer. In my opinion, there is never such a thing as too low. IF you should price your home lower than fair market value, the buyers would see that immediately and the demand from multiple-offers would drive the price naturally back to where it realistically should be. Does that make sense? And finally, ask yourself, how badly do you want to sell? Are you ok if it doesn't sell? And then follow your answer with the correct line of action...Good Luck!!
Good Luck.



Diane Morales
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0 votes Thank Flag Link Thu Jun 9, 2011
I think you should listen to your agent. Obviously you chose him/her because you felt they knew what they were doing. You can get the answer you want if you ask enough people. As a townhome owner myself in Batavia, I am very disappointed at where the values have gone. It has to be a "deal of the century" for the buyer. Sad but true.
0 votes Thank Flag Link Thu Jun 9, 2011
My broker loves to tell the story of when he was buying houses, fixing them up and selling them. He said he would price the homes right at fair market value. No messing around, leaving "wiggle room" with the price. He says he was inundated with showings and always sold first and fast! He didn't undervalue, he priced right where the market dictates.

Refer to your CMA that the listing realtor would have done. If he used sold listings as comparables, then the suggested price of the CMA would be a good indicator of the market in your area. I suggest going with the price suggested by the Market Analysis done by the realtor. Unfortunately, short sales and foreclosures make up a large part of most every market these days. If you want to sell, you need to compete with these.
0 votes Thank Flag Link Thu Jun 9, 2011
You might want to try offering a bonus to the selling agent. It's cheaper than a price reduction and it may get you some results.
Web Reference: http://www.321property.com
0 votes Thank Flag Link Thu Jun 9, 2011
Prices are dropping everywhere. Based on what I'm seeing now, the expected 5% home price this year is optimistic; I expect prices to drop at least 15% this year alone, at least in the west and southwest suburbs. The economic news overall is not good.

I would drop the price, but try to leave yourself at least 10K of negotiating room.
0 votes Thank Flag Link Thu Jun 9, 2011
I guess I should've been more specific. I'm staged & decluttered to the 9s, fresh paint & curtains, etc. There are literally a half dozen units on my street for sale, tthough, and some have been sitting as much as a year. I don't want to still be here dealing with this next summer.

I just wanted to know if there's a such thing as being too aggressive on price.
0 votes Thank Flag Link Thu Jun 9, 2011
BEFORE DROPPING YOUR PRICE... You need to assess what your house is worth in todays market. You want to make sur eit is priced at or just below market value. You then need to walk through your house and look at it through the eyes of a buyer, do you see anything worng??? clutter, anything broken, anything need repairs, pet or smoke odors??? Make teh house appealing and price it right, then make sure your agent is marketing it to the most potential buyers who are the possible buyers for your type of home and in that price range.

http://www.trulia.com/blog/scott_godzyk/2011/06/the_top_5_th…


Please see my blog with tips and advice to assist you in selling your house ...The TOP 5 things you should do "right now" if no one is looking at your house
Web Reference: http://www.ScottSellsNh.com
0 votes Thank Flag Link Thu Jun 9, 2011
Chris -

It could go either way. You need an educated agent that is following a home index accurate to the Batavia area and pulling SOLD comparables relative to your condo. Regardless, if priced too high (even by a little bit) and you may be forced into finding that you are chasing the market.

Make sense? If you need anything further, let me know!

Sean
0 votes Thank Flag Link Thu Jun 9, 2011
We are seeing homes that are selling at or near the asking price. This however, is not the norm since buyers are looking for, expecting, and finding extraordinary values. Homes that achieve this are the exception and are priced "in step" with the buyer's expectations.

Selling property today is all about creatin opportunity for the buyer. This may require throwing out what we know about recent local market activity and putting ourselves in the buyer's shoes. Unfortunately, this often means that unless you are able to compete with "foreclosures" you can plan on a long and difficult journey.

Good luck,

Bill
0 votes Thank Flag Link Thu Jun 9, 2011
Simply being foolish, do not drop your price instead try this:

Open house, what an awesome idea, but how do you make it even better?
It is simple, get with other neighbors on the street and talk about a Yard Sale day.
Plan a weekend where several of you neighbors will agree to have a yard sale, have one yourself and get some of the stuff you don't want to go, but most of all have your open house at the same time. Your signs should read: Street Yard Sale & Open House.
It is a greatway to announce you have your house for sale. It will get lots of traffic, and you may even make a few bucks for the day as well.

Try and be sure that your neighbors have a multitude of items for sale, Baby Stuff, Toys, Furniture, Tools, Fishing and Hunting items and more.
Go to http://www.vistaprint.com and have a cheap set of business cards made up include details of the home, address and contact numbers and also Asking Price, usually 250 card will run you about $10 including shipping. Ask each of you neighbors to throw a card into the bag with each sale.
Ask you neighbors to tell everyone at their yard sale that you have an open house going on the same day and just go on over and ask for a walk through.
Have your Realtor there for the day to help answer all questions and to possible help with writing an offer for interested parties
Most of all, have fun and enjoy the day!
Good Luck!
0 votes Thank Flag Link Thu Jun 9, 2011
The only isssue with this is what do you do if an offer comes in, but not at your new listed price (which is the lowest you will go)? Buyers will want a deal and whatever price it is listed at, they will want to negotiate.
Web Reference: http://www.janetford.com
0 votes Thank Flag Link Thu Jun 9, 2011
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