Listing price: reduce or be patient!

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Listing price: reduce or be patient!

Kyle Glasgow
Flipper/Rehabber · Brooklyn, NY · Member since 2017 · 22 posts · 5 votes

Just listed my first flip. My agent did the comps and after doing my research I instructed her to list a bit lower. The property is at 20 DOM now and there has been 4 viewing with no offers. This flip is in Baltimore city. Should I reduce the price at this point? I’m highly motivated to sell.

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Theresa HarrisPro Member
Member since 2019 · 15k+ posts · 11k+ votes
7y

If the average DOM is 120 and you've been listed for 20 days, wait a bit.  The time of year also plays a role.

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  • Ryan KellyBusiness Member
    Real Estate Broker · Austin, TX · Member since 2018 · 1k+ posts · 1k+ votes
    7y

    If you aren't getting offers within two weeks, adjust your price or time will naturally reduce it for you (meaning buyers will put in no offers or continually lower offers). Good luck with the flip!

    [email protected]512-674-5478
    Ryan Kelly Group - Keller Williams5112 Reviews
    WebsiteView Page
    0Reply
  • William C.
    Real Estate Agent · Souderton, PA · Member since 2016 · 591 posts · 414 votes
    7y

    I'd be willing to bet a large sum of money that when you do drop the price, one of the 4 buyers that already looked at it will be the one to buy it.  That is of course they have not already bought something.  Which is another reason it should be dropped now.

    0Reply
  • Eric L.
    Rental Property Investor · Royersford, PA · Member since 2018 · 25 posts · 19 votes
    7y

    @Kyle Glasgow Was the home a cash purchase? If so you could look into delayed financing to cash out a portion of your purchase + closing costs. This would at least give you some breathing room if you do not anticipate a quick sale.

    0Reply
  • Kyle Glasgow
    OP
    Flipper/Rehabber · Brooklyn, NY · Member since 2017 · 22 posts · 5 votes
    7y

    @Eric Lui

    It was a cash purchase. I will look into cash out financing.

    Any recommendations on banks that are best fitted for this type of financing. My credit isn’t the best because I have maxed out all my credit cards doing the rehab

    0Reply
  • Eric L.
    Rental Property Investor · Royersford, PA · Member since 2018 · 25 posts · 19 votes
    7y

    @Kyle Glasgow

    I would start out by calling banks, credit unions, and mortgage brokers to determine if they offer delayed financing. Don't waste your time driving to each bank when this can be handled over the phone or by email. If you've owned the house for at least 6 months, you could do a cash out refi at ~75 or 80 LTV on the appraised value.

    If you are going to have your credit run several times then I would try to get that done within a week so that it doesn’t damage credit any further.

    I use Greenway Mortgage because they’ve always offered the lowest rate. You’ll need to fill out the application to get the conversation started.

    https://app.greenwaymortgage.com/app/signup/p/greenwaymortgage/b/middletown?campaign=pre

    If you qualify, there are credit cards that offer no transfer fee and 0% APR during an introductory period.

    0Reply
  • Chris Hake
    Investor · Madison, WI · Member since 2019 · 15 posts · 16 votes
    7y

    There have been a lot of great suggestions and advice. My one question is what do the numbers on your deal look like? Again, if you are a flipper then our model is get in, get out and don't be greedy. As many suggested, there are several things you can look into to see if you can make some adjustments to figure out why, but at the end of the day flippers live to get in and get out. Make adjustments as needed to make that happen. NEXT. Good luck.

    0Reply
  • Lee Bell
    Real Estate Appraiser · Isabella lake, CA · Member since 2018 · 628 posts · 491 votes
    7y

    20 days is not that long, plus has your weather not been extra cold?

    I say wait a bit and let it warm up. But if it does not move, then reduce the price.

    My feeling on range pricing is the agent seems to not have a clue what it is worth.

    And I am only going to pay attention to the low number.

    0Reply
  • Luciano A.
    Developer · Houston TX · Member since 2018 · 423 posts · 400 votes
    7y

    @Kyle Glasgow

    Market is just starting to get hot again after the holidays. One thing to consider is stage the property. If bedrooms look small put a full air mattress and boxes under it to create a box spring look with bed sheets and cover. Staging helps to give buyer an idea. You can hire a company or do yourself but use proportion furniture to fix property and rooms. Clean simple like they do in new construction model homes.

    If you reduce this early when average is 120 days u can put yourself in situation were buyer comes in asking for lower price and closing cost help. You might be better suited to do that if you don’t reduce. Wait 60 days before dropping unless competition is lower price per square ft than yours. Or take off market and wait til amid March.

    you only need one buyer to fall in love and want to buy.

    Best of luck

    1Reply
  • Kyle Glasgow
    OP
    Flipper/Rehabber · Brooklyn, NY · Member since 2017 · 22 posts · 5 votes
    7y

    @Chris Hake

    Purchased for 19k, Repairs were 69k

    So I’m 88k all in. My target profit is 25k ( started off to be much more but repairs kicked my behind) . With closing cost, realtor fees etc a SP of 125k is needed to meet this goal.

    1Reply
  • Eric L.
    Rental Property Investor · Royersford, PA · Member since 2018 · 25 posts · 19 votes
    7y

    @Kyle Glasgow

    Delayed financing will have closing costs and won't work with numbers you've just shared. So a HELOC may be a better option since closing costs are insignificant and the LOC will be based on your appraised value. Univest offers a LOC on investment properties up to $100k.

    0Reply
  • Matt Honeyford
    Investor · Rochester, NY · Member since 2017 · 206 posts · 175 votes
    7y

    @Kyle Glasgow

    It depends on your areas absorption rate (amount of time it takes for something to sell). If the average days on market for your area is 30 days, then I’d wait it out. But if properties are going under contract day 1 on the market like they are in Rochester NY, then you should reduce the price.

    Couple additional things: We pay for high quality photos and create marketing pieces and push it out to our market. We also offer home warranties with our properties.

    The thing that concerns me about your property is that you’ve only had 4 showings. Price may be the issue.

    Hope that helps.

    1Reply
  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    7y

    @Kyle Glasgow Ask your realtor to do a brokers open. 

    0Reply
  • Lee Nestlerode
    Rental Property Investor · Chapel Hill, NC · Member since 2019 · 42 posts · 23 votes
    7y

    @William C. Do you really believe real estate is an efficient market? I would say it is one of the least efficient markets and least transparent of major asset classes, which is why I am so interested in it.

    0Reply
  • William C.
    Real Estate Agent · Souderton, PA · Member since 2016 · 591 posts · 414 votes
    7y

    @Lee Nestlerode at the risk of starting an all out 'theoretical' debate about the efficiency of the market as a whole......I will simply agree with you that it is not on a marco level. But, a rehabbed home listed on the MLS in todays day and age, creates an extremely efficient market for those buyer and sellers. We could debate the rest of the market as being inefficient. But this house, easily comparable to homes around it, which needs no work for the buyer to move in, is plastered on the internet on 1000s of sites. A home buyer in that zip code, shopping for a home that is move in ready is well aware that he is selling a move in ready house. the further a home gets from new construction, and the further the sale gets from the MLS, the more inefficient the real estate market gets. But we are talking about pretty much one of the most efficient, straight forward deals out there. That is my point.

    For example, do you really think the reason that home has not sold yet is because consumers are not aware it is for sale? I would beg to differ. I might be wrong, but that's been my experience so far. Does it have zero views on Zillow? My MLS can actually track how many buyers the listing was directly sent to. In other words, the EXACT buyer pool that is waiting for a home in that price range, and the listing is sent right to their inbox. Is that number zero?

    So i don't disagree with you, I would just argue inefficiency in the marketplace is the last thing thing that is keeping this home from selling.  And DOM is a direct correlation between list price, and market value.   No one can "market" a home so much as to make it sell for more than it is worth.  Thats not to say, there isnt strategies you can use when listing a home that will help it to sell for more.   We are just well beyond that point a day 21.  You can only make a first impression once.  The secrets out, the market knows it overpriced.  Now its a race to the bottom.  

    0Reply
  • Lee Nestlerode
    Rental Property Investor · Chapel Hill, NC · Member since 2019 · 42 posts · 23 votes
    7y

    That is a super interesting perspective and had not really though about the Real Estate market with higher liquidity around new construction and lower liquidity as you get further away. I was actually thinking it was the opposite. All the investors after lower quality homes looking to add value and renovated homes as less liquid because primary home buyers make emotional decisions so need to find the right buyer. I'll need to think about that one more.

    I was not speaking to the specific house at all, as I don't know the property or area. I just know contracts i have been involved with historically, the best deals have come from sellers who really wanted out now, not in 1-3 month. It was a very different market then so perhaps that does not work today.

    While I do believe the MLS is getting the property in front of all potential buyers right now. I would question the demand in February. If there is much pent up demand in the market already, then I agree completely that it is price related. Then I would ask how far of is the price? If i was ready to pay $125K for a house I would be looking at everything between $100K and $150K.

    Thanks for your perspective.

    0Reply
  • Matthew DrouinPro Member
    Developer · Rochester, NY · Member since 2016 · 406 posts · 339 votes
    7y

    @Kyle Glasgow

    I agree with @Tchaka Owen make sure the property is presented in the best light possible. Just because you think it shows well doesn't mean it does. Ask another investor for their objective opinion. Every product needs a hook and so do properties. Secondly, what are the ADOM (average days on market) for your market. If the ADOM is greater than 30 days. I wouldn't panic if your house has been on for 20. If the average is 5 days like the desirable areas in my market then it's time to pull the listing off of the MLS and consider a drastic price adjustment. Maybe change up the primary picture so it catches the eye.

    Regardless of whether you drop the price too much, the market tends to “find” the price for your property. Sometimes you might even get multiple offers which creates fear of loss; a great motivator.

    Keep us in the loop!

    Podcast Guest on Show The $150K “Stolen” Rental Property and How to Avoid a Real Estate Scam
    1Reply
  • Matthew DrouinPro Member
    Developer · Rochester, NY · Member since 2016 · 406 posts · 339 votes
    7y

    @Kyle Glasgow also at 120 days average days on market. That would be a market I would avoid flipping in. Hate to be a Monday quarterback but...

    Podcast Guest on Show The $150K “Stolen” Rental Property and How to Avoid a Real Estate Scam
    0Reply
  • Kyle Glasgow
    OP
    Flipper/Rehabber · Brooklyn, NY · Member since 2017 · 22 posts · 5 votes
    7y

    @Matthew Drouin

    This is my first flip. Made lots of mistakes but I’ve learned a lot in the process.

    Currently at 21 DOM. I’m going to re-list in 9 days with a 10% price reduction. The open house will be held a few days after this is done. This should make the listing pop again..(change the lead pic) .

    Thanks for all the help guys.

    0Reply
  • Matthew DrouinPro Member
    Developer · Rochester, NY · Member since 2016 · 406 posts · 339 votes
    7y

    @Kyle Glasgow

    Whatever the outcome of this venture. Make sure you take notes on the legends and most of all DONT GET DISCOURAGED! You’ve made the step which 99% of prospective investors don’t. You took action!!!

    Podcast Guest on Show The $150K “Stolen” Rental Property and How to Avoid a Real Estate Scam
    1Reply
  • Michael T.
    Los Angeles, CA · Member since 2018 · 326 posts · 279 votes
    7y

    @Kyle Glasgow you're at 21 days which is not a lot of time on the market for your location, however, if you are truly motivated to sell and have had only four showings in this time frame then you will need to lower your price or have your agent put much more effort into selling your property.

    You shouldn't wait another two weeks to do an open house, if you're motivated and need to sell ask another agent in the market to host an open house this weekend.  

    If the open house doesn't produce good results this weekend and at least one offer then the next week you'll want to lower the price and then do another open house.

    0Reply
  • Victor S.
    WorldWide · Member since 2016 · 1k+ posts · 1k+ votes
    7y
    Originally posted by @William C.:

    @Lee Nestlerode at the risk of starting an all out 'theoretical' debate about the efficiency of the market as a whole......I will simply agree with you that it is not on a marco level. But, a rehabbed home listed on the MLS in todays day and age, creates an extremely efficient market for those buyer and sellers. We could debate the rest of the market as being inefficient. But this house, easily comparable to homes around it, which needs no work for the buyer to move in, is plastered on the internet on 1000s of sites. A home buyer in that zip code, shopping for a home that is move in ready is well aware that he is selling a move in ready house. the further a home gets from new construction, and the further the sale gets from the MLS, the more inefficient the real estate market gets. But we are talking about pretty much one of the most efficient, straight forward deals out there. That is my point.

    For example, do you really think the reason that home has not sold yet is because consumers are not aware it is for sale? I would beg to differ. I might be wrong, but that's been my experience so far. Does it have zero views on Zillow? My MLS can actually track how many buyers the listing was directly sent to. In other words, the EXACT buyer pool that is waiting for a home in that price range, and the listing is sent right to their inbox. Is that number zero?

    So i don't disagree with you, I would just argue inefficiency in the marketplace is the last thing thing that is keeping this home from selling.  And DOM is a direct correlation between list price, and market value.   No one can "market" a home so much as to make it sell for more than it is worth.  Thats not to say, there isnt strategies you can use when listing a home that will help it to sell for more.   We are just well beyond that point a day 21.  You can only make a first impression once.  The secrets out, the market knows it overpriced.  Now its a race to the bottom.  

     That's a lot of generalizations/assumptions regarding this particular situation. we'd need to see what the houses around for listed and sold for, their condition, dom, etc. to be able to arrive at some sort of conclusion. If Kyle can shoot me a dm with the address of the property, we can have our answer pretty quickly.

    1Reply
  • William C.
    Real Estate Agent · Souderton, PA · Member since 2016 · 591 posts · 414 votes
    7y

    @Victor S. I already referred to the "local market conditions" in my first post. Quite frankly, I wouldn't be flipping houses in a market that is not absorbing property within the first week, of course assuming it was priced right.  But that's a discussion for another day.  This reply was to Lee who did not agree that the real estate market was efficient.  So I was just asking some questions in regards to the efficiency of most markets in the US right now. Pretty darn efficient.  Sure, hundreds of variables that lead to a sale,  Id argue its not the inefficiency in this case  Doesn't mean Im right.  BUT it's also my opinion that the buyers that are interested in buying this house have already seen it, saved it, and they are just going to wait until it reaches a price they think is market value.

    Would be interested to follow this thread and see how it ends.  I vote price drop, now.  Let's hope Im wrong and he gets a full price offer today.  Only time will tell.  If you were a buyer, would you offer full price on day 21?   I just look at everything from the opposite perspective, if Im buying, I think like a seller, if Im selling I think like the buyer.

    0Reply
  • Kyle Glasgow
    OP
    Flipper/Rehabber · Brooklyn, NY · Member since 2017 · 22 posts · 5 votes
    7y

    @William C.

    772 Linnard St

    Baltimore MD 21229

    0Reply
  • William C.
    Real Estate Agent · Souderton, PA · Member since 2016 · 591 posts · 414 votes
    7y
    Originally posted by @Kyle Glasgow:

    @William C.

    772 Linnard St

    Baltimore MD 21229

     WOW!  Amazing job on the finishes.  Exterior leaves a bit to be desired but that's no secret.   What are homes doing within .25 of that address?  Your agent should be able to show you all the info you need to know regarding price.  Its so simple that people usually over complicate it and get it all wrong.

    How many are for sale, renovated like yours?  How many are listed that need updating?  How many have sold in the last 60 days?  How many are pending right now?

    I'll see if I can get some of these answers via Zillow, but just so everyone knows Zillow can't proivide 100% accurate info like the MLS and public records can so thats why an agent needs to pull the reports.

    0Reply
  • Victor S.
    WorldWide · Member since 2016 · 1k+ posts · 1k+ votes
    7y

    So, from a first glance it does not appear to be overpriced. Nice rehab, btw! (good pictures also)

    you do have some competition, but some have been sitting a while (overpriced at listing):

    https://www.redfin.com/MD/Baltimore/811-Mt-Holly-S...

    https://www.redfin.com/MD/Baltimore/704-N-Grantley...

    some more recent ones listed:

    https://www.redfin.com/MD/Baltimore/742-N-Grantley...

    https://www.redfin.com/MD/Baltimore/760-N-Grantley...

    as far as sold ones that are comparable (i am not familiar with your area, so didn't venture too far):

    https://www.redfin.com/MD/Baltimore/801-Wildwood-P...

    https://www.redfin.com/MD/Baltimore/1002-Lyndhurst...

    https://www.redfin.com/MD/Baltimore/831-Mt-Holly-S...

    again, i don't think you're overpriced. winter time and some competition nearby, imho. 

    @William C. Redfin for the win! (took me less than 5 mins to do the above). Good luck doing this with Z ;)

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