From: tanner@bcsaic.boeing.com (Jim Tanner)
Newsgroups: misc.consumers.house
Subject: Re: How to go low?
Date: 7 Jan 93 08:44:55 GMT
Distribution: usa
Organization: Boeing Computer Services, Seattle

In article <1993Jan5.181636.3435@elroy.jpl.nasa.gov> sns@bondi.jpl.nasa.gov (Sam Southard) writes:
>In article <Bzy0wq.6yE@boi.hp.com> bobpassl@boi.hp.com (Bob Passell) writes:
>>I think we could "drift" down a little, to $?94,300 for a
>>while before going to $?79,900 as she suggests. She is 
>>adamant that this will only bring disaster, but she won't
>>explain why. Keeping in mind that her contract is up on 
>>12/31/92, and I'm willing to spend another 20 days at
>>$?94,300 before I go to $?79,900, what is this disaster
>>that awaits me if I drift lower? I hope she's not trying
>>to bargain-price it in hopes of flogging the thing before her
>>contract expires, because that's a sure way to lose me 
>>as a customer. Has anyone else faced this situation before?
>
>Well, no one else has mentioned this, so I thought I might.  I've faced the
>situation before, on a much larger scale, thankfully from the other end, and it
>was a disaster for the seller.  First a little background.
>
>I bought my house in Pasadena, in October 1991.  For those of you unaware of
>the unfortunate circumstances around here, house prices have been dropping for
>a while.  The drop in my neighborhood seems to have stopped right about the
>time I bought my house (or it's since recovered).  The most recent home sale on
>the block is the same floor plan (and it's not a tract - the builder built four
>houses on the block, with only two of them the same), except that my house has
>a two bedroom addition and a game room behind the garage sold in three weeks
>for about the same price as I paid for my house.
>
>However, before 10/91 some heavy depreciation had been occurring for the last
>3-5 years.  My house was on and off the market for almost 5 years before I
>bought it.  I paid $x25,000.  The price when it first when on the market was
>$y00,000, where y = x+2.  Yes, 2 - the owner originally wanted $175K more for
>it than she got for it.  And x isn't that large.
>
>What happened was the owner had lived in the house for 30 years.  I think she
>had become very attached to the house and didn't want to devalue it, so she was
>always 10-25% above the market.  By the time she accepted coming down another
>increment, the market had moved down even more.
>
>It could be that your realator is trying to avoid such a situation.  Of course,
>with only 20 days left in the listing I think it's more likely that he's trying
>to get a smaller commission instead of no commission.

I had the same experience, buying a house that had been on the market
for a year in a falling market, with the seller always having the price
too high for the market at any particular point in time.  We made a low
offer in April 91 but negotiations went nowhere; in August we made
another offer after the listing changed to a new agency and the price
had continued to drop, and we ended up paying $26k less than our first
offer, which was $130k less than the seller's original asking price.
If he'd priced it right at the outset he could have sold it 8 months
earlier for probably $50k more than he got.

The moral?  If you are in a falling market price your house
realistically, so you can sell before the market falls much further.
If you are _confident_ that your market is stable or possibly even
rising, your strategy _may_ work.

However, the realtors we've dealt with all said that the highest
probability of selling a house is early (first 2 months) in the
listing period, when the house is "fresh" to the rest of the realtor
community.  If it's priced out of line they tend to mentally write it
off and not bother keeping track of your slowly dropping price, hence
they tend to not consider your house when trying to match available
houses with buyer clients.
Newsgroups: misc.consumers.house