Will lowering price cause faster sale?
We are soon going to relist our house after being on the market 7 months of last year. We are eager to sell and want to set an appropriate price. When we listed before we took our then agent's advice on pricing, didn't sell. We (not her) initiated too price reductions but nothing.
I am willing to relist at still a lower price *if* it will help sell. The thing is that looking at comps I'm unsure if further reducing the price will do anything.
In our market (we are in Texas), it seems strange to me but...prices over the course of 2010 were higher than prices in 2009. However, sales were down and inventory was up. I saw a graph over several years. Until a few years ago, sales each year basically increased as did price.
Over the last 3 years, sales have decreased (no great shock) but prices have gone up.
I looked at comps for all houses sold in the last year that are reasonably possible comps. The sales prices for houses sold within the last 3 months is not significantly lower than those in the early part of 2010.
DOM for sold houses ranged from 1 to 3 years! About a 1/3 were listed for 1-3 years. Most of these decreased their price from initial listing to final sale price by roughly 20 to 25%.
Another third were listed for 5 months to 8 months before selling. They sold for between 86% to 100% of their original listing price. The other third sold in less than 5 months from initial listing. They basically sold similar to the 2nd third. Therefore, it doesn't look like the houses that took up to 8 months to sell were overpriced as compared to those that sold more quickly.
When we bought in this area a little over 4 years ago (when the market was very good) we were told my multiple agents that houses often take a year or longer to sell here. The houses are mostly custom homes on acreage and each is unique and people are looking for specific amenities so even with a well priced house it could be awhile before a buyer came along who would want that specific house. That is, someone who has no horses wouldn't like the houses geared for horses but someone with horses wouldn't like the houses that focused more on a pool and guest house or a workshop.
All of these houses are in, say, the top 5% to 10% of cost for houses in this area.
Looking at the prices per square foot (even adjusting for differences in acreage) I do not find that the houses selling the fasted are selling for a lower price per square foot than the houses that took longer than a year to sell. Their is a wide variation in price per square foot (not surprising given variations in acreage and the houses themselves vary a lot).
For our specific house, we bought it within 2 weeks of it being listed. The owners we bought it from bought it fairly quickly from the prior owners as well. Yet, we get lots of feedback of people not liking the layout (it has very large secondary bedrooms, but no separate breakfast room and the kitchen and family room are smaller than what might be expected in a 4500 sf house).
Looking at comps it doesn't look like reducing price has necessarily helped people sell houses. Some of the houses that sold did have reduced prices but some of the houses that sold did not reduce prices and sold for relatively high prices. Also, many other houses are still listed or the listing expired. I see many of those houses didn't sell even if they did reduce their price or listed it at prices well below what other houses have sold for.
The point being this. I don't mind reducing my price to sell my house more quickly. My concern is that I could be reducing my price and it won't help my house to sell more quickly. That is, there are few enough buyers out there (inventory in this area is about 6 months as of end of 2010 when it was about 4.3 end of 2009) that reducing the price may not do anything.
What it looks like for some sales is that some people reduce their price and reduce their price and sell two years later. But then other people don't reduce their price...and sell two years later and they end up with a larger overall price than those who reduced their price.
Let's say I could list for X now and would sell 2 years from now for 90% of X. I would certainly list for 90% of X now and hope that I could sell faster. In fact, I would list for 80% of X if I could sell faster. I would take 80% of X in 3 months for 90% of X in two years. But, my fear is that I list for 80% of X...and get 80% of X in two years while I could have had 90% of X in the same period of time.
Any way to figure this out? That is, any way to figure out if listing for 80% of X would actually cause a faster sale or would I be reducing the price to sell in the same period of time I would be selling in without the price reduction?
I am totally willing to make a price reduction in exchange for selling more quickly. I don't want to do it if it won't cause a faster sale.