From: sullivan@alw.nih.gov (Jim Sullivan)
Subject: Re: How to go low?
Organization: National Inst. of Health, DCRT, CSL
Date: Wed, 30 Dec 1992 13:23:51 GMT

In article <Bzy0wq.6yE@boi.hp.com>, bobpassl@boi.hp.com (Bob Passell) writes:
|> Another request for net.wisdom!
|> 
|> I have my house on the market, priced $100 dollars below
|> the nearest $100,000 that I think its worth (hint: way less
|> than 1/2 million, that's for sure ;-> ). My realtor says
|> that I need to go to $?79,900 in order to sell it. Personally,
|> I think she's wrong, and I have some measure of respect for
|> her telling me news that I don't want to hear. However...

One thing to keep in mind is that potential buyers are more than likely
keeping to one figure and below (i.e. $180K or less) and hoping to get
about 5% off the price through negotiation.  If your realtor thinks
that your house will sell for $150K dollars, he will suggest a price 
about $150K+5% (about 159.9K).  If you go much above this, say to $180K,
then you will attract those who are looking for a $170-180K house but
will not buy yours since it is only worth $150K.  You will also *not*
be attracting those who are looking for a $150K home since you are setting
a price out of their range.  Thus, a sale would be unlikely.

By choosing a price to the nearest $100K, it sounds like you are
assuming that all buyers will consider your home.  Only buyers looking
for a home within about 5% of your price will consider it.  Of course,
if you don't care whether you sell your house soon or next year, then
you can do this and hope someone comes along who is willing to pay
your price.  But your agent might be looking at scaring away buyers who
would pay a true market value ($?79K) and loosing buyers who
show up to consider your home looking for a $?99K home.

It is also important to keep in mind that when a buyer has an
agent working for them, the buyer has access to the MLS.  The
buyer will say what they want in a house (location, style, price)
and the agent will bring up *only those* listings.  Thus, if your
house is listed well over it's market value, then it is more than 
likely to be above a cutoff price (usually 5-10% above the price
the buyers are willing to pay).

|> 
|> 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?

I don't know of any disaster except that a new house on the market
is a hot item.  It demands immediate attention by potential 
buyers and other agents.  Once the house has been on the market
for a while, it becomes evident that either the price is too
high, or something is wrong with the house.  Buyers who look
at a house that has been on the market for more than 6 months
can't help but wonder why no one else has bought it.  It is also
emboldens the buyer to bid a very low price, since there is probably
no one else bidding on the house.  I know that when I look
for houses, these are my thoughts when I see an old listing.
|> 
|> Homes in our area sell for just about what we're asking all
|> the time, in an average of 90-110 days. We've been on the 
|> market for 95 days and have had lots of activity but no
|> offers. I have called a sample of the realtors bringing
|> clients through and not one of them has said "lower the
|> price, stupid" even though I've led them to the point 
|> where they could graciously say so. I'm not in a hurry,
|> but cripes, I _do_ want to sell the house.

Well now you're saying that your present asking price is 
probably a good price.  You have done the right thing by
comparing your home to others in your neighborhood.  We were
in the same situation a year ago.  Lots of activity means that
people think your home is worth seeing but if no one is saying
that the asking price is too high, then I'd keep it where it
is.  It is the holiday season and people have kids in school
so they may be looking with the intent of buying this spring.
If you can wait until April to get a contract, then I'd wait.

-- 
Jim Sullivan 		[ The future ain't what it used to be ]
National Institutes of Health
Bethesda, MD 20892
Phone: (301) 496-5362
FAX: (301) 402-2867
Internet: sullivan@alw.nih.gov
Newsgroups: misc.consumers.house