Price reductions are always a dreaded conversation that I have to have with my sellers. While a property may have been priced correctly in the beginning the real estate market is constantly changing. My colleague, Phil Faranda, has done a brilliant job of illustrating how necessary price reductions are and why! Please take a moment to read over Phil’s post – it is well worth it!
Thanks for the post, Phil, and the opportunity to reblog!
With a median home price hovering near $700,000, even a modest price reduction on a Westchester County home can be tens of thousands of dollars. I have to approach a reduction with the diplomacy of a funeral director but be as convincing as a physician imploring his patient to quit smoking.
No one could predict after the stimulus where prices would go, but it is clear that what few buyers we have are skimming the absolute cream off the top and leaving the rest. They even fight over the good stuff, creating an illusion of urgency in isolated precincts. Overall, sadly, median home price is an illusion; it is a metric of the value of those few, unique sought after homes that people watch even when they weren’t on sale. They needed nothing. They were priced to the bone for their category.
Money lost in a price reduction was never your money. It was an illusion. It didn’t exist. I find myself, more and more, explaining to mournful sellers that the $25,000 that went down the drain when they went from $624,900 to $599,900 was a paramour that never loved them. She never cared, Johnny. The baby wasn’t yours. She wanted to close the Copa and make sure you never worked in this town again. For God’s sake man pull yourself together, it was all an illusion.
You know, that sort of thing they cover day 2 in licensing class. Or not.
In 2005, 852 single family homes sold in Westchester County with a median price of $732,000.
In 2010, 424 single family homes sold in Westchester County with a median price of $715,000. 428 people got nothing.
The pool of able buyers has shrunken by an absurd amount. Millions of prospects have vanished due to either their own disasters or the new draconian lender underwriting guidelines. What few buyers remain are skeptical, drunk with options, terrified of making a mistake, have no confidence in the future, and are heavily invested in the group think notion that they must get a steal or they will be exposed to grave financial risk. You know, all those happy things perspective home buyers have always focused on.
Here’s the reality: If you are multiple listed, staged well, tidy, and have been on the market for 60 or 90 days with no offers or few lookers, the market has spoken; you need to reduce your price. You aren’t the McClotchkees down at the end of the cul de sac who sold in the first 30 days. They had something, or ten things, you don’t have. And the only adjustment you can make to the buying public is price. A feature ad won’t do it. A newspaper display ad won’t get it done. Busting your agent’s chops to chase down Gladys Pflarphlingston for feedback on a showing 2 weeks ago won’t do it. If you are on the MLS, I can show you how many people have clicked on you online and clicked off every week since we listed. You aren’t a secret. Quite the opposite: with public searches, serious prospects can tell me their opinion of your toothpaste.
If we are in showing condition with my marketing and you aren’t sold, the faster we address price the faster we’ll sell. The money you are asking for is not on deposit in the bank of buyer opinion.
- We Are Westchester County & Hudson Valley NY Real Estate. Reach Phil at (914) 723-8900.
- J. Philip Faranda, Broker-owner, J. Philip Real Estate, LLC. 2010 Vice President, Westchester-Putnam Multiple Listing Service.
- I am one of New York’s premier short sale REALTORS.
- J. Philip Serves Briarcliff Manor, Ossining, Croton, the River Towns, Westchester County, and the bedroom counties of New York City.
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