$100,000 Price Reduction on Beverly Drive

Remember this little incident I caused over at Overheard? Apparently the ruckus even made its way on to a real estate blog in San Diego. To summarize, a FSBO at Beverly Dr. and Preston Rd. in Highland Park was asking $2,250,000. After 2 months and no sale they listed with an agent and increased the asking price by $200K to cover the commissions. I called shenanigans saying buyers would see right through their ruse. It stirred up some serious emotions to say the least.

Today the MLS shows the property reduced $100,000 off their original $2,495,000 asking price and it has been on the market for roughly 2 months. So they are now at $2,395,000 which is still $145,000 more than what they were asking during their FSBO days. It didn't sell then after 60 days on the market and now they have been on the market for 2 more ,months at a higher price and have just reduced $100,000.

Some of you might be waiting for the "I told you so" but it's not coming. All sellers in this market can learn from this example. In both good and bad markets, Dallas will never be a real estate market where you can test the buyers and hope a hedge fund daddy will simply pay you what you're asking, just 'cuz. Most buyers in the Park Cities are smart and their Realtors should be even smarter.

Now we'll just have to wait and see how my $1.9 to $2 million dollar sales price prediction holds up.

Another Example of a Poor Business Decision

This home in Preston Hollow sold in February 2006 for $815K. It was vintage early 90's and desperately needed updating, but otherwise a solid home. The new owners did a nice job renovating the home and it looks like it shows great. But why the heck-fire would they be trying to sell - and expect to make $200,000- after owning the home for just 2 years? That's $100K a year people!

Are they flippers? Are they sellers just looking to move up, down or sideways? Do they have to sell or do they just want to sell? Are they being relocated?

I just don't get it. They have already reduced their asking price to $1,025,000 down from $1,070,000 and been on the market for over 4 months. Considering there are 173 homes for sale between $900K and $2 million in Preston Hollow it just doesn't make good business sense to be selling their home right now unless they are willing to get a little bit more realistic with their price. But this is exactly why there are so many homes on the market because no one lives in their home long enough to earn any equity and they expect the buyers to be ignorant of the fact that they bought the home for $815K 2 years ago. Seriously folks, you need to start paying attention.

RE: $2 Million Dollar Price Reduction

You remember this post about the home that has been on the market for over 520 days, right? They reduced to $9,999,000 (down from the original asking price of $11,995,000) just the other day. Well today, I saw that they have relisted the home with a new days on market at the $9,999,000 price. I wonder if they read my blog!

$2 Million Dollar Price Reduction

This home was listed on 9/26/06. Yes, as in 2006. It's been on the market for 520 days and recently reduced again. This is how the pricing history breaks down.

9/06: $11,995,000

9/07: $10,999,000

2/08: $9,999,000

I've seen this house and it's fabulous. You'd be hard pressed to find a better location in all of Texas. But did they really miss the mark by $2,000,000? Is this a prime example of how overpricing will kill a listing and cause it to end up selling below it's true market value?

I realize many of you are saying, "Jeff. Don't be silly. Pricing rules are completely different when it comes to ultra high end real estate." And I would say you are somewhat correct. But if this home had come on the market at $10.5 million in the beginning, would it have stayed on the market for 520 days? As it is now, they probably stand to end up taking far less than what they could have had they been priced competitvely in the beginning. Pricing strategies work for high and low end real estate regardless of what market Steve Brown thinks we're in.

"The Golden Hour" When Selling Your House

The Golden Hour is a term used in emergency medicine where it is "widely believed that the victim's chances of survival are greatest if they receive definitive care in the operating room within the first hour." In real estate we have our own version of "The Golden Hour" but we should call it the "Golden Fortnight", or the first 14 days after a listing goes on the market. When a home goes on the market it immediately attracts all of the qualified buyers that have been looking for homes in that area and in that price range. If 2 weeks pass and buyers have gone through the home and you have no offers, you have missed your Golden Hour and may end up chasing the market unless you take immediate action.

You haven't had 10 people look at the home in the first 14 days? Then you are probably over priced. Buyers don't look at over priced listings. And yes, that even applies to homes over $1 million dollars.

After the first 14 days you start getting those buyers that have been looking around but are probably 60 to 90 days out from buying a home.

After 30+ days you begin to attract those buyers just entering the market and could be more than 90 days out from making an offer on a home.

If you do not receive an offer on your home after 14 days on the market you need to reduce your asking price substantially. $5,000 isn't going bring buyers back in your home. With these types of reductions you will end up chasing the market and will end up selling below market value when all is said and done. Don't believe me? You know that house that has been on the market for 268 days at $299,000? What is they reduced to $289,000? No buyer is going to give them any where near that price.It's a stale listing now and they will eventually pay the price for not positioning itself correctly when it was first listed.

Price Reductions: Naughty or Nice?

Good article in DMN today. My good friend and fellow Realtor, Lydia Player, gets it right in the article with this quote, "You don't need to wait around for six months to decide if your price is right," said Dallas agent Lydia Player. "If we don't get an offer in the first few weeks, we need a price reduction."

People that stick with the same price for 6 months are asking for trouble and an even lower sales price. Do you really think a buyer that knows your home has been on the market for over 200 days is willing to pay you what you're asking? Think about that. So if your house has been on the market for 3 weeks and 15 agents have shown the property but no offers, guess what? The market is telling you your house is overpriced. Yes, we know you added a pool and a Viking range and faux finished the dining room but again, the market is telling you your home is not priced correctly for the current market. And 3 things affect value. Price, Condition and Location. If your home is in a good location and in good condition then that leaves...the price.

And don't blame your agent for asking to reduce the price. They are doing their job by communicating what the market is saying about your home. That is the sign of a good agent to have the cojones to call you up and say, "We missed the mark on price and now we need to make an adjustment." I could end this by using Dr. Phil's "It's time to get real" mantra. So I won't. But you should!