Do you think lowering price in the slow winter months is effective?

Question

Hi all,

Just curious on others opinions. We have a house that's been for sale since October, realtor is asking if we want to lower price again since the traffic has been slow lately.

My initial thought is that it's just due to the time of year, so I'm thinking lowering price won't do much to bring people out into the freezing cold (Northern IL, Southern WI) anyway. We were getting great traffic right up until Christmas, and had an offer that unfortunately fell through, so I don't think we're overpriced.

So my gut says wait till Spring, what do you think?

Thanks!

Joel Owens · Answer

Matt rent ready and sale ready are two very different things.

Is the house paid off?? If you are carrying a mortgage for say the next 6 months you have to calculate carrying costs paid out each month with 4 months before putting on the market plus another two if you get it under contract right away to close it.

You still might be better off selling today it just varies. Another thing is if the property sits vacant you have to worry about vandals. If you get a renter to do a 6 month lease they could do damage to the property and you have to spend thousands to get in sale ready condition again.

Account Closed · Answer

@Matt Overbee  in the winter, there are indeed less buyers, but with that being said, there are less homes as well. If your place didn't sell in October, let alone get an offer, it is overpriced.

You are an investor, turning the money and keeping it moving are CRITICAL. It isn't just about weighing holding cost vs a higher price, but also the opportunity costs missed because you are missing another deal.

I have never sold a flip for full rehab, I always list it lower, and offer incentives to the selling agents. (Note a selling agent represents BUYERS, the listing agent reps the sellers).

Matt Overbee · Answer

Thanks @Adam Hoem for sharing, good to know it was helpful in your situation.

Adam Hoem · Answer

Hey Matt,

Just want to drop my two cents. I was just in a similar situation. I placed my last flip back on the market the first week of November at $304k (my gut said that was a bit too high, but my wifes gut won this time). We had a ton of intrest in the house and all the agents and buyers thought that it was priced right. After two full weeks with no offers we decided to drop the price down to $299k. Still we had a ton of intrest but no offers. Now we are right in the middle the Holiday season. The showings did slow down and we dropped the price one more time to $295k. Within a couple of days we got an offer in, we countered and came to terms right before Christmas.

I was feeling the same way. I felt that the home was priced right but maybe it wasn't selling due to the time of year. I even contimplated taking the house off the market and waiting until after the new year.

On a side note I have dropped the price on a house that was sitting and received multiple offers which drove the price back up. Good Luck Matt.

Bryan L. · Answer

I'm a Realtor as well as an investor (investor first), and I here the old "wait till spring" saying all the time.  Usually when people say this they are thinking in their mind "April or May".  And they are usually speaking about an initial listing instead of a price drop.  Anyway, I tell people to forget that "spring" thing because people will start getting income tax refunds in February and that money will be burning a hole in their pockets.  So, redefine your beginning of "spring" to be February.  Make your decisions based on that time table rather than April or May.  Unless you have a $250,000 listing where the income tax refund thing will not be as important.

Matt Overbee · Answer

Thanks @Gerald Harris for your input as well, I appreciate it.

I'm taking the RE License exam soon, can't wait to have that information at my own finger tips. :)

Gerald Harris · Answer

Hey Matt

Being a former real estate agent at this time you could lower price, but we are coming into spring.   If you were getting great traffic before Christmas the buyers will come.  Typically the number 1 reason a property does or does not sell is price.   If you do have some concern have your agent pull up sold and pending comparables in the last 90 days, within a 1 to 2 mile radius of your home.  This will give you an indication of what is going on in your areas.   Pendings will show the type of fluctuation and activity of peoperties getting ready to close.

Matt Overbee · Answer

That's a great question @Duncan Taylor.

I will have to inquire about that!

Duncan Taylor · Answer

What kind of traffic pattern is your agent seeing on other properties?

Matt Overbee · Answer

Thanks @Joel Owens for your thoughts.

It's not paid off, so there's definitely carrying costs. I would be all for lowering the price if I was confident that it would bring out more people. I just don't think anyone wants to go out in the Polar Vortex regardless of price. :)

Maybe I'll give it a few weeks and reassess at that point.

Do you think lowering price in the slow winter months is effective?

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