Dropping listing price by 5% does it really bring in more prospects?

Asked by Mark Green, Maplewood, NJ Mon Sep 20, 2010

My home is listed at 745K in great condition and location . Have had only a few showings. I am being advised to drop price to 705K to get more showings. Similar house sold on street for 729 recently.

The question I have is whether buyers interested in this property not make inquiries if they did have a price target within 40 K difference.

I think from my point of view if I am looking for a house upto 710K budget and see something I like for 745. I will tend to negotiate as I see 745 and 705 within striking distance.

Am I thinking on the wrong lines.

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11
Ian A. Wolf, Agent, Morristown, NJ
Wed Sep 22, 2010
The key to pricing is that your home needs to be a good overall value to a prospective buyer.

Value is a combination of many factors and pricing is a part of that. Market dynamics are important also. Right now, you are priced higher than what the average homes sell for in Maplewood. That doesn't mean your home doesn't have the value, but what it means is that it may take longer to sell and have fewer showings because most buyers looking in Maplewood are looking in a lower price bracket.

The proper strategy is a combination of making sure the home demonstrates value, good pricing strategy, and patience. I will say this, buyers search in price ranges. If you visit any real estate website, you will get options in ranges. 705k is going to lose you all the buyers searching up to 700 or 699. You are much better off pricing at 699. It is not worth 5k to lose all those potential buyers. Also, psychologically, the home will look like a better value with a "6" instead of a "7" as the first number. Hope that helps, and good luck.
3 votes
Mark Green, Home Seller, Maplewood, NJ
Mon Sep 20, 2010
Great responses. Appreciate a lot.
2 votes
Keith Sorem, Agent, Glendale, CA
Mon Sep 20, 2010
Mark
What is one percent of your home's value
Let us say $7,290.
According to the link below your area is declining in value about 10% over the last 12 months.

So, by the time you sell, your home is going to be worth a lot less than those homes that sold at $729K. Figure 0.8% per month. If I am reading you right, you think your is probably worth $729k but you want the negotiating room. So as you dink around being overpriced for two months, all of sudden your home, which was worth $729K, it now worth, $5,832 per month less, or $711, 504 ( three months of decline at $5,832 per month).

I'd reduce is by 5% and HOPE that you get offers.

Even if you sold it over value, the appraiser will only give you market value credit....and in a declining market, they are REQUIRED to take market trends into account.
2 votes
Mark Slade, Agent, Maplewood, NJ
Tue Nov 9, 2010
Mark,

Not sure how the past 2 months has treated you with regard to your sale. As a fellow Maplewoodian, I found Your first answer was one of the best. I am trained in Advance CMA-comparable market analysis and would be happy to come by and help you out with a valuation based upon relevant comp sales (I don't use Actives nor UC's as they are not actual market transaction worthy) in the area, if you are still needing any further help.

Mark Slade
Keller Williams Mid-Town Direct Realty
T: 9177975059
e: marksladehomes@aol.com
http://www.goodhomesforgoodpeople.com
also, you might enjoy my new site: http://www.maplewoodnjopenhouses.com
1 vote
Diane Glander, Agent, Spring Lake, NJ
Tue Sep 28, 2010
That's a tough one.
If your comparables are selling at $729K, it would seem that you are in the right asking price range. HoIwever, something as small as an extra bathroom, a finished basement, or an upgraded kitchen can have an affect on value.
How is your marketing plan working? Are you visible in print and on the web? What is the feedback from the agents who are showing? When reviewing price, you should be reviewing both your marketing and the feedback comments from posssible buyers. Without good marketing, you may not be gettint the exposure you need.
I have found that at the 700K range, buyers will search in a $50K range. So, while a price adjustment may be necessary, it may not be enough. Many times agents are reluctant to ask for a large reduction in fear their sellers may balk at the idea. However, it might do you well to get under the next 50K pricepoint and go to $699K.
The only one who can truly advise you is your agent. He/she knows your home, the competition, and the advertising that's been done to sell your home. Address those in depth and you will have your answer.
Web Reference:  http://www.dianeglander.com
1 vote
Denise Guet…, Agent, Chester, NJ
Mon Sep 20, 2010
PRICE IS THE KEY! Pricing is so important in this market. I always advise sellers that it does not matter where you start it is where you end. Last year I was in a bidding war with 8 other offers on a property in Long Valley, NJ that was listed at $400,000. I previewed the home the first day and knew this was a phenomenal deal, called my clients and looked at it the same day. I told them that if they wanted this home they would have to come in at full price or higher. They wrote a full price offer but were told there were 7 other offers. I asked them how much they would be willing to pay and they wrote the offer for $425,000. We got the house and it appraised for $435,000. Please do not add room to "negotiate"...price your home to sell. If your home is a $710,000 home price it at $699,900 and you may get multiple offers. If you do not get multiple offer then your home may be worth less. There are plenty of buyers waiting to pull the trigger for the "deal". Maplewood is a great community and having the NYC direct commuter line is a definite plus. Just remember the market price of a home is the price that a buyer will pay and a seller will accept. I wish you the best of luck.

Denise Gueterman Weichert Realtors 142 Main Street Chester, NJ 07930
908-879-7010 Office 908-303-2472 Celll
1 vote
Marc Paolella, Agent, Succasunna, NJ
Mon Sep 20, 2010
Yes,

A common mistake. What about the buyers with a top end of $675 that might push to $695 to get your house if it is really a cream puff. They won't even look at it at $745.

Lower prices always work. You should be priced LOWER than the closed comps right now to stimulate offers. You have to be a value and a bargain, not just "similar". And if you are going to $705, just go to $699 to pull potential buyers looking below $700.

Forget "wiggle room". Just price to the market and plan not to wiggle too much.

-Marc

Marc Paolella
Relocation Director/Appraiser
Century 21 Joe Tekula Realtors
Phone (direct): (973) 584-4235
Coolest map-based home search: http://www.marcpaolella.com


Now is not a good time to be greedy is you want to sell.
1 vote
Bill Eckler, Agent, Venice, FL
Mon Sep 20, 2010
Mark,

Any decrease in the asking price is likely to generate additional interest....whether or not it's enough to attract serious activity is another story.

We are more inclined to consider pricing threshholds than the percentage reduction...all though both are good! It's very important for sellers to be aware of the median price for their location relative to their home.

Price plateaus are important as well because most buyers have an established top number. These top numbers are generally not numbers like $735,000, $775,000, or $715,000 but numbers such as $700,000, $750,000, or $800,000. Pricing a home at $745,000 will likely eliminate the buyer with the maximum limit of $700,000.

Intentional or not, the asking price can communicate a message to the buyer....something that all buyers should be aware....For example, a home with a price of $735,000 may be percieved by the buyer as the seller having no interest in dropping their price under $700,000.

My message is that sellers need to be aware that buyers can connect the dots when it comes to communication via numbers.

Respectfully,

Bill
1 vote
Robert North…, Agent, Maplewood, NJ
Thu Mar 3, 2011
We would all love to know if you sold your home and how much did you end up selling it for?
0 votes
Jennifer Bla…, Agent, Basking Ridge, NJ
Tue Sep 21, 2010
Yes - it will help - especially given the lower sale in your community. Check out this article for more information on "right pricing": http://baskingridge.patch.com/articles/how-to-price-your-hou…
0 votes
Dan Tabit, Agent, Issaquah, WA
Mon Sep 20, 2010
Mark,
If home in your neighborhood recently sold for $729k, and it was truly a comparable in terms of age, size, quality etc, then you are overpriced at $745k. Buyers are very jittery as a group and no one is willing to overpay, or take a chance of overpaying in the current environment. Whether $705k is the right drop or not, I don't think anyone other than you or your agent can decide.
Look at your active competition and see how well you stand up compared to them. Try to be objective, of course your home is better in your eyes, but you are not the buyer. To be successful in today’s market you have to be the best looking and best marketed home in a narrow price range. I would target to be just under your most comparable active comp. Best of luck
0 votes
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