Advice from Estate Agent

[BlueberryMuffin817]

Considering the amount of "why isn't my house selling" posts we get around here, I thought I would see what the people thought about some advice I heard this morning.

I was listening to an interview with an estate agent in the US where prices have started coming down (they are probably a few months ahead of us). The estate agent advised that if you have not had an offer in two weeks you should reduce the price and that the reduction should be at least 8-10%. The EA said that a larger reduction looks better to buyers than lots of smaller ones, and that it's better to accept quickly that the market has changed and make a bigger reduction to get an offer rather than hanging around on the market for ages as buyers will start to wonder if there are issues with the property or the seller.

I suppose this makes sense. With the uncertainty around interest rates and the economy the days of buyers maxing out their mortgage is probably over, so unless your property is very low priced, knocking off £5k probably isn't going to make it suddenly affordable. And if I was making an expensive purchase of something like a designer handbag (which is a much smaller investment than a house!) I'm probably not going to be enticed to buy it if it's 2% or 5% off. A discount of 10% might get me to start paying attention. I think sometimes as sellers we get caught up in the monetary value of a reduction, but in reality, with how expensive homes are today, sometimes even a 50-100k reduction is only a small percentage off the asking price.

What does everyone else think about this?

I agree that a bigger reduction is needed if you're not getting offers. You need to move it into a new price bracket to increase appeal.

I am not sure about two weeks though. I think I'd give it longer than that, depending on local market.

The reduction needs to be at least 2% to make it show up in the alerts on RM, which you probably wouldn't achieve by dropping £5k, then another £5k etc, unless right at the lower end of the market. We dropped ours by 6%. Our EA was also rather disparaging about properties that were hanging around for ages with a steady reduction taking place - gives the impression you can just wait and see how low it'll go.

You also need to look at the price boundaries for the search filters on the property portals. A drop of 2% probably keeps you in the same range, so not actually visible to any new buyers, whereas if you drop to the top of the next band down (which we did) you suddenly show up in a load more searches.

I think a percentage of reducing by 8-10% seems to be successful going by my local market.

So, a £200k house that hasn't sold will reduce by £20k, but a £600k house will be reduced by £50k.

I think this "around 10%" seems to be the norm.

I agree it has to be a big enough reduction to make potential buyers really notice and reconsider whether it’s worth it. Our estate agents advised us to drop 5% and then another 5% when flat still didn’t sell. This is in central London where the market has been flat since Covid. I think that was good advice

I think it depends also on what the house is. If it's a relatively standard house in an area with lots of demand it is probably right. The bigger drop may well promo more people to be interested and give you the opportunity to get the price up through 'best & final offers' competition.

If the house is unique / in an area where there's much less demand, you are likely to have to wait much longer for a potential buyer - so I wouldn't be rushing to drop the price for that sort of property.

It's called "chasing the market down" when a seller drops by tiny price points over an extended period of time, not accepting a) their house is over priced or b) the market is taking a downturn.

I.e if they had just knocked let's say 10% / £50k off a £500k house early on, they likely will have got a sale between those price points fairly quickly. Instead dropping 20k here and there, over a longer time, they end up at a lower price as they "chase the market down".

The US market is entirely different to the UK market with a larger range of regional variation so cannot be directly compared to the UK market.

It also depends what price point you're at. We were selling at the above £700k level and at that level there's a limit to the number of buyers around who can afford it. It had already been viewed by anyone interested in that area and size of house who could afford around £750k with no offers, so dropping £50k meant it showed up in the next price band down on RM so a new set of people became aware of it.

It's different if you're selling a £200k house as there are a lot more people who can potentially afford it.

if you want to sell you need to price accordingly. with the winter of discontent approaching, you need to sell ASAP. Large mortgages will be unobtainable, big houses will cost a fortune to heat, food prices going up. The market peaked around 6 weeks ago. only one way it goes now

I hope someone tells the seller of a house one of my kids would like to buy. The sellers bought the house in March 2021 for 305K and have it listed for for 410k They haven't done anything to the house during the time they've owned it.

I'm looking around £350k-£400k and the price drops I've seen tend to be £25k. Nearly everything seems to be listed in line with Rightmove price brackets.

Pie in the sky. in 6 months will be worth less than they paid

This is true of properties I’m monitoring. One has been in for over 18 mths with a 25k reduction. It’s clearly overpriced. Another was under offer within a couple of days with a sizebale reduction. Buyers are savvy. Properties that are priced realistically are also selling quickly.

Agree with pp about the reduction has to be big enough to get the property back to the top of the Rightmove listings and ideally put it into the next price bracket down to attract fresh sets of eyes.

On the face of it 2 weeks sound a bit soon but as everyone has said already, it depends on lots of factors like local market, demand for the particular type of property etc.

It also depends on if you are getting viewings but no offer, or no viewings either. No viewings and it's clearly a price issue - if I was getting viewings though I'd hold the price a bit longer until the viewings started to dwindle, then reduce.

@Kup

How much would your dc be prepared to pay now?

I'm looking to buy, I've seen several houses like this. The whole market around here (central south east) is so bloody weird at the moment, it's hard to know what anything is *worth.

obviously things are only worth what someone is prepared to pay, but when you're offering it's quite hard to gushed just now. We all want a decent price for our property & we all want to buy a bargain 🤣🤣but seriously I'd just like to buy something for a fair price with neither party feeling unhappy!!

@Kup I've seen a few of these too, some with asking prices 30-40% higher than what they paid 18 months ago. We've viewed a few recently that, according to the EA, were purchased during Covid and the owner had grand plans to renovate, do loft and cellar conversions, etc but unfortunately ran out of money.

@SatinHeart I agree with this to an extent but I suppose it depends on why you are getting viewings and if the photos are realistic. As mentioned above, I viewed a house where the seller ran out of money to fund renovations. While the photos looked like the house needed updating it wasn't until we viewed that we saw the hall had been completely gutted and there were big holes in the plaster, the cellar stairs were falling apart and needed to be replaced, etc.

Because we have to travel to view anything we really scrutinise the listing photos, as well as the photos of when it was last sold if available. Sometimes at first glance it looks like the seller has done some work, but when you look closely they've just painted or put some laminate flooring down in a trendy pattern. The stuff that actually costs money to replace (low quality/dated tiling, showers, kitchen units) is still there and would become apparent once anyone viewed the property potentially leading to views but not offers.