Why don't people reduce if the house isn't selling?

[donttellmehesalive]

Around here, it's a buyers market now. Everything has been on for months, lots coming back on, most reduced. I've only seen one sold in the past month in my price range.

But I'm fascinated by those properties that went on in the second quarter, were wildly overpriced, and are still there or reduced by a tiny amount. Some houses have come on in the past week for more than they were on for in March or April.

I always assumed they were people who were chancing their arm and didn't really care if they sold or not, or would only move if they sold for a lavish amount.

But I was recently talking to a neighbour who has been on for a year. She went on when everything was selling, but for about £100k more than the house was worth. Over the year, she's reduced by about £10k per month. It's now £120k less than it was on for last October, but there still isn't any interest and she says she's desperate to downsize and move near family. Why not price to sell in the first place? Do people take bad advice from optimistic agents, or what?

My neighbour has just reduced her house again.

It was on for £560k but now it's on for 'offers over £550k'. Does this sort of marketing make a difference? I'd have thought anyone wanting to offer over £550k would have done so when it was on for £560k.

It's actually a lovely house. If she'd put it on for £580k a year ago it would have sold straight away but she tried £680k and it was just too much. It's reduced by £10k a month since then.

@rainingsnoring I agree we can't know what the market will be like in 2032, but I am pretty certain that whatever it's doing, our house will have wide appeal and sell quickly -- if we price it correctly.

That is a weird reduction @donttellmehesalive. It has to be more than 2% to trigger it as 'new' on Rightmove so that won't boost it.

£550k does, however, bring it to the top end of the next price band down on RM which means it'll show up on some people's searches (those looking at 'up to £550k') when it wouldn't have done before, and would only have been visible to those searching below £600k.

Personally, I set our search criteria to include the band above what we could afford just in case something came up that we could have negotiated on and also as a comparison, but not everyone does that, so it's possible some more people will now see it.

Yes, I suppose that makes sense.

I just assumed everyone was like me and searched the band above what they can afford anyway, in case a property has hung around for ages and might be open to offers or on the brink of reducing.

Well, things "zoomed up again" after 2008, didn't they?

The thing about property values is:

• everyone needs a place to live
• most people would rather pay off their own mortgage vs pay off a landlord's mortgage by renting
• there is a shortage of desirable property in desirable locations

Rates will fluctuate; the market will stagnate or slow, perhaps even fall; but prices will always tend in the long-term to go upwards rather than downwards because these 3 things will always remain true.

So I think your view that "there's no basis" for property values to increase long-term is wrong.

@WoolyMammoth55 is right. There are three houses built on a site that was originally planned to have 18 ugly little bungalows. Now 18 ugly little bungalows might have been better socially -- as in more housing
for more people.

Exactly 'if you price it correctly'
I hope it works out well for you whatever choice you make.

We dont have to be greedy on price; we've lived here 25 years. We like it as does our heir, who would love to stay.

@WoolyMammoth55 - this has been discussed ad nauseam on other threads if not this one.
Prices zoomed up after the 2008 crash (from 2012 or so) because of many billions of £ worth of QE and because the BOE lowered rates to zero! People had access to cheap credit so they borrowed to the max and it paid off for many (lucky them).
That is clearly NOT going to happen now as we have very high inflation and all the central banks are raising rates. To make matters significantly worse on top of the underlying trend, the gilt yields have recently doubled making UK borrowing far, far more expensive and making the country poorer. Frankly, we are about to have an economic crash; the situation is very concerning.

Obviously people need a place to live and it may be true that people would rather pay a mortgage than rent (at least in the UK) but, if people cannot afford ridiculously inflated house prices, the values fall to what is affordable.
Once a plateau is reached after this 'crash', I can't see house prices growing in excess of incomes again. As I said, there is no underlying economic basis for higher house prices.

I work for a new build company and regularly part exchange properties and I can't get over how deluded most vendors are. In the last few weeks we have made two offers for part exchange following two valuations from local agents (both saying the same) and both vendors (different properties) have felt their property was worth 30k more, one even said it was a mockery at how much we were offering. One of them had been on the market since July at £325,000 and they are refusing to reduce, the highest we will offer them is £300,000 following the estate agents valuation.

If you are to ask an agent for a realistic valuation they will tell you, what do they gain out of for sale boards? They want to sell the properties as that's where they earn their commission. It's not about 'just getting it on the market'.

We're looking to relocate next year.

I booked a viewing for a small development week after next - didn't get asked to prove funds or anything. Has the market changed or was the thing of people having to have sold their house before they could get a viewing just talk?

Also, are people taking offers now? There's a house on for £350k that I would want to make some changes to (knock the kitchen into the garage and get rid of the conservatory and grey everything) but I wouldn't want to pay that and spend 20-30k on top.

In theory we're moving to a very popular area of the UK but I am seeing price reductions on Rightmove.

I've seen a few like this one put their house up in January 2022 , supply was shit they put it on for 420k in 2019 you could buy exactly the same house for 275k so vastly increased. Must have been downvalued massively as it's fallen through at least 3 times. Come back on with a different agent for offers over 410 had to reduce to 385 sold again must have been downvalued again and it was back on for 375 it's been been sitting there at that price since beginning of August and there's lots more supply now.

"Well, things "zoomed up again" after 2008, didn't they?"

They did din`t they, and I bet it was all down to wage rises and "supply and demand" ? LOL.

People like that just don`t have the first clue how lending affects house prices, they are way behind the curve now and will just be chasing the market down. Last good exit point was the stamp duty holiday, some would claim that was a deliberately designed exit point for the smarter money, leaving the really financially dumb to pile in.........

My house cost approx 500k. My mortgage is 450k and my deposit was 50k. So I can’t sell for less than 450k otherwise I’ll be in negative equity. Also I had to spend 20k on new windows and doors, repairs to the roof, etc. So ideally I need to sell for 520k otherwise I’m significantly out of pocket.

I would probably advertise my house for 520k and settle for offers over 500k. But if the house value dropped below 500k I would not drop my price because I can’t afford to be out of pocket. I’d just keep advertising it at 500k and sit tight, keep paying the mortgage and wait until that price is achievable.

Sometimes they need it to sell for a certain amount not to be in negative equity. Other times, they want to fund their lifestyle with increase in property value.

Couple on our street were approaching retirement age and decided to downsize. Put their 3 bed semi on market for £750k (London), they had paid under £200k to buy it 10+ years ago. No offers for over a year and they said they couldn't afford to drop below 710🙄It was delusional to think it would go for that much - they had done no more than superficial renovations in the time they owned it so unextended with one bathroom, as a buyer I would have been looking to redo electrics etc within the first 5-10 years of buying. They recently accepted offer for 610 but had they been a bit more realistic to start with, they could have got 650 or over.

The counter to this is all the frustrated “buyers” round here who want a bargain and see stuff listed at prices that they consider to be too high and don’t want to offer because they have been waiting for a crash for the last 2 years that still hasn’t come.

these people want to move or buy, but want to pay 2020 prices

a lot of the stuff that has come back on recently is people who have seen the news and are now waiting for the “crash” again. I doubt it will happen- and while these people procrastinate the market will move on. Again.

@MintChocCornetto people are always open to offers.

I view pretty much anything I like the look of regardless of whether I think it’s over priced or not- if I like the look of it and think it’s overpriced by 100k I’ll just offer what I think it’s worth. It’s worked for me in the past

Well a house is only worth what a buyer is willing to pay. If the house has been on for a long time without any serious offers, it's too expensive. The vendor can reduce to something a buyer is willing to pay or wait indefinitely. In a rising market, the market might catch up with them I guess but what they want to buy has also increased. Or in a stagnating or falling market, they'll wait and wait, like the house that prompted this thread.

I've got my eye on a house, it's a probate sale and it's been on for a year. Seriously overpriced even a year ago, total wreck and needs about 150 - 200k spending on it. After a year on the market (a year stood empty with the oil fired boiler switched off, guttering leaking down the walls, more of the pointing falling out etc. The vendors declined an offer from someone else at 70k less than asking last month but have finally dropped their price by 50k (which isn't enough in my opinion) but also bonkers, if they'd just accepted that offer they would have it sold by now.

I'm horrified at idea of putting in a new kitchen/bathroom only for buyer to rip it out immediately because not to their taste. Makes me feel ill to think of that waste. So I will end up selling 'for less' as a result. I can live with it.

In '90s, My (divorcing) parents chased prices downwards. House was originally listed for about $700k, I think the highest they were offered was ~$625k. They said too low at the time. Repeated offers going downwards, ~18m later they finally agreed sale for $425k. Ouch. They just both wanted enough to buy again.

I'd say people have their heart set on how much they need to buy next property. If they need a high value sale to buy next one, they won't budge.

Not budging is what I don't understand though. Their aspirations are unrealistic and unrealisable. Either give up and take it off the market, or reduce if you really do want/need something or somewhere else.
As you say, so many people end up chasing the market down and they really just needed to be shrewder from the beginning.

We're in an area of South London that things would traditionally sell almost straight away and where prices have been climbing for years. Some things are being reduced (that have literally been on the market since last Autumn) but some just aren't. Mostly bigger houses aren't, which makes me think people want to downsize but aren't in a massive hurry. I think they will be waiting a while until people are willing to offer what they are asking, but their choice. We're hoping people get a bit more desperate to sell into the Spring.

FWIW my parents are trying to sell my grandparents' old house currently, they reduced it after less than a month after it first went on the market as they are motivated to sell and not have to rent it out.

Ok. so we're about to put a house on the market for 400K. The neighbour has one on at 340K. Ours is walk in don't need to do anything, the neighbours needs work.

We're buying a new build in a completely different part of the country (well technically another country) and plan to be mortgage free with 100K in the bank.

On the face of it we need to sell.

Except, we can afford to pay both mortgages if we have to. As we only have 7 years left on the house we are selling, for every £1350 of mortgage we pay each month, £1100 is going off the capital and only £250 of interest. So we can sit and wait - the longer it takes to sell, the lower the mortgage at the end of it.

Our only constraint is 18 months from when we move into the new build in order to get the second home stamp duty returned to us. Once it does sell, both mortgages are cleared and we're laughing.

So you may say why sit and wait but some people can.