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?

‘Needing’ to sell to avoid negative equity, or to get the next property they want, is why people often don’t reduce their property…. but of course, if the market doesn’t change, taking that view means they eventually have to accept they won’t be moving, or to reduce it in order to sell.

Ultimately I think it takes some people longer to get their heads around market conditions and to work out what’s most important to them - moving or not moving. Those who realise moving is the priority above all else, will reduce the price to achieve that end. People who need to move because of work, family situation, other really pressing things, will reduce the price eventually. Others just stay put. Often they re-market again a few mo this later and by then the market has shifted or they have got their heads around the reality of the value.

I think another big thing is people who spend vast amounts on improvements of their choice in an area of lesser demand- be that the town /area or a particular street - the fact is you may well not get your money back as people buying in those areas often only want to spend a certain amount or can get mortgages to a certain level- so when everything else around you is £300k say and you want £420k because you've done a loft extension and had all new windows- you might struggle to cover off your improvements- whereas in an area that's always hugely in demand and where people move to with better income levels then you are way more likely to sell . I know people do this because they think they won't move which is reasonable, but don't be suprised if other people won't pay the price of your improvements.

People don’t sell at a lower price because they don’t have to. In most cases they don’t need to sell, there’s no rush, so if they don’t get the price they want/need they will just sit tight and wait until they can get that price.

We're tracking our neighbours sad decline.
Bought in 2001 for buttons. Lots done in the first five years, sad decline since.
He was a bodger, she had no taste.

So in their heads they worked hard and it's their dream early retirement, good life, project.

They wanted £665,000 in September, it's now dribbled down to £599,000 it's probably worth £400,000.

But the market for tiny bedrooms, dark living spaces, pooky kitchen is small. The plumbing is seriously awful - think toilet in orange pine cupboard in a bedroom, shower in another corner.

I think the whole extended family and the estate agents tell them what they want to hear.

We are thinking about listing but in our part of SE London, nothing is really coming on the market.

We had the EA’s out to value, first one quoted what I thought was ‘ambitious’ shall we say, but second one quotes the same. I’m not convinced but then I would be silly to market it for less than they suggest, in case there is someone out there willing to pay that price?

I agree. Just decide how long you'll test the market before reducing unless you want to end up chasing the market down.

And remember that if there's nothing coming on, the EAs will be desperate for your business and something new to sell.

Well not indefinitely you can't. You need the sale completed inside 18 months. What if, six months from now, it's valued at £40k less than now?

Most EAs will value high to get the instruction, then beat the vendor down gradually over time. Getting the instruction is the most important thing, because you can't make the sale if you don't get the instruction.

People are idiots because they always go with the EAs that convince them they will get them the highest price rather than will meet their sale expectations (speed for example).

The housing market is pretty sticky. It's not like shares where changes in a business are reflected instantly in the share price. It takes a long time for market sentiment and changing conditions to filter down into vendors price expectations.

What we are seeing in the marker at the moment is price discovery for the new marketplace, which is being heavily impacted by mortgage rates. Successful vendors will bear that in mind and price accordingly. Unscuccessful ones will either stay on the market and not sell, or "chase the market down" - lower their price in too small amounts so they are always above where the market value is rather than lowering their price below the market to make a sale.

My guess is there is a lot of people who will refuse to price to make a transaction in this marketplace - but these people don't make the market.

Honestly? Probably let it out. We'd recoup the 18K in a year,

Most estate agents are absolute crap.

When listing ours the EA asked what we wanted to put it up for. We made a guess. I then looked at a nearby house, much better than ours, going for only 10k more. So I said let’s drop it by another 10k. EA said ‘yes, I thought your initial price was too high but didn’t want to be the first to say it’. Why not?? I felt like saying, isn’t that what you’re paid to do? 🙄

Stuff is definitely hanging around longer than it was- I think there's not so much demand. People aren't buying to be landlords, and it's hard to get a mortgage right now.

So if you really want to sell, you probably have to price to sell. And for someone who e.g. is a cash buyer, it's a buyer's market. But it's hard for FTBs to get a mortgage right now too. So in effect, sellers are probably chasing fewer buyers, and some people need to sell financially, or have to sell because they need to move etc.

But as others have said, lots of people can afford to sit tight, see if things improve etc. It's perhaps not so long until a general election, for example.

I also genuinely think a lot of people who aren't really watching the market (I am, because I'm looking to buy, and have been "researching" for about 6 months now) haven't really realised it has changed.

I think people get too attached to what they think their house should be worth, rather than what they need to make the next move. Especially if you’ve been somewhere for more than 5 years, the chances are you’ve made a reasonable amount of money and can afford to not chase absolute top dollar to make the next move.

We sold last year before mortgage rates went mental, and other people in our old street are struggling to sell as they think their house should get the same price as ours, despite the mortgage market being totally different.

No. They are paid to get the instruction. Because in order to make the sale, first you have to get the instruction.

Generally people want the highest price possible, not the most realistic price. The person that tells them they can get the highest price will generally get the instruction. Estimating the lowest price that will get the instruction, but is not so stupidly high as to be completely unrealistic is where the skill lies.

People hate being told that their house is worth less than they think it is - see reactions and comments on "Why won't this house I bought for 20K in 2018 and now want to sell for 200K sell, even though I've put a big clock on the wall?"

Then after x weeks on the market and it doesn't sell they will try to lower your expectations. But from a point where the contract is signed and their position is more secure. IME anyway.

The house we're buying has sat on the market on and off for a few years now. I know the circumstances - her kids moved out as they grew up, she was looking to downsize if the circumstances were right - so she's listed it off and on to see if she got an offer that appealed to her. Was only really living in half of it, but didn't NEED to sell as such - but seems to quite like property redecorating and projects... so was happy to sit and ride out the market.

With reference to the tired decor - when we bought this place there were two houses up for sale on this street (we knew the circumstances as we already rented here)... one had been renovated a lot by the residents and looked much nicer in terms of being all modern and shiny and pretty but had a smaller kitchen (huge thing around here where all the kitchens have been extended over years) and the other was, well, in the 1980s. We ended up going for the 1980s one for the kitchen size essentially and bloody hell we dodged a bullet. Yes, the shiny one looked better aesthetically, but the work the previous owners had done had all been front show and bodged and the new owners have had some horrendous bills to un-do the bodging and get it back to actually not being a death trap. We've had to live with tired decor while we got around to having the money to do different jobs - but the tired decor was safe and actually functional.

Reason we know that in such detail is that the house between both of them is a builder who has done the work on both properties!

Well then I guess you've answered my question. Some people don't care whether the house sells or not. They set a price and happily wait many months or even years to achieve it. They won't reduce if it falls in value as they don't need the equity (for another house purchase or to invest) and if necessary they will rent it out and wait for the market to recover. I am not sure how typical your situation is, and it is definitely not the case for the house I started he thread about (still empty, increasingly dilapidated, still for sale at a mad price).

Often they can't. They are mortgaged you to the holy

Personally I don't understand why people want to hang about wasting time with an unrealistic asking price. Even if you do decide to let the house out, that's a hassle in itself. In 2019 we wanted to move nearer our daughter and slightly downshift. Our house was a period cottage with a big garden, our agent called it a Marmite house!!! Anyway we were committed to moving so put it on at a realistic price (we bought in 1996 mortgage free so had good equity in it), it sold in a fortnight - we found another suitable house - ironically in a much cheaper area - all done in five months - and it was only that long because we agreed to a delay for our buyers due to professional reasons with their relocation.

People are going to be caught out now - chasing the market down. The era of cheap money was never going to last for ever and the Government have run out of tools to prop up the house market. The next year or so will prove interesting. Those who price realistically will be ok - they should be able to buy their onward purchase for less. Having said that, nothing is shifting in our village at the moment (Gloucestershire).

I definitely think there are a lot of people who haven't quite got their head around the idea that house prices can go down as well as up.

Obviously, there are a lot of people sitting tight at the moment, which means less buyers, and less people can get access to credit. But to me (in the area I am looking) it seems like there is still a steady supply of property coming onto the market. Some of it may be people needing to move etc, and I think some of it may be buy to let landlords selling properties etc.

And the properties on the market are hanging around for longer, so those who can buy have a fair amount of choice.

As others have said though, there are equally people in a really difficult position, because they don't have very much equity at all, and they can't absorb the loss.

Local EAs tell me that the biggest problem they have at the moment is unrealistic sellers. They don't realise, or don't want to believe, that the market has changed. There are buyers out there but they know it's a falling market and won't overspend.

My biggest irritation is when a house comes on that needs a lot of work but for about £10k less than the immaculate one next door. I wish you could leave anonymous comments on Rightmove.

Indeed @donttellmehesalive , our house was valued at 175k, its been on at a fp of 170k for a while now. Another similar style of house came on recently at offers over 165k - ours is quite modern, new kitchen etc but other house is very dated and needs probably about 30k of work done to it.
A couple who came to do a second viewing our house, and who claim to have a very limited budget, wanted to hold off on making a decision until they had viewed the do-er upper. Will be gutted if they pick that over ours!

I agree that people are struggling to get their heads around the fact that this is the new normal. I always hear these two rationales:

1. I'm happy to wait for the "right" buyer. If you live in a unique house in a rural location this a reasonable strategy. But most houses in the UK are not unique. And as houses stay on the market longer and supply creeps up buyers will have more choice. It's unlikely someone is going to come along and "fall in love" with a bog standard 3 bed semi when they are looking at 10 other similar properties in the local area. It will come down to which house offers the best value for the price.
2. I'm happy to wait for things to improve/go back to normal. It's very unlikely we will go back to emergency interest rates. Also, a generation of people are learning for the first time that owning a home comes with financial risks. I'm in the my 30s and know many people that overstretched themselves because in five years the property will be worth more and it will all work out. Now they are dealing with increased mortgage payments and/or a fall in prices. I think this will stay with people my age for a long time and they will be more cautious in the future.

I think it's also because the numbers are so much bigger than when selling anything else. For example, often when selling furniture I will end up reducing the price by 10%, so that's £20 if I'm selling for £200. That seems sensible to get it sold. But when 10% is £20K then I think people lose sight of the 10% reduction and just see the £20K hit.

There’s a house near me that they put on the market on and off. It’s £750k. I’ve never seen a house anywhere near that amount of money near us, usually £500k would be the very very top.
It’s a nice large Victorian house and they have spent a lot of money on it. However, who is going to buy that. It’s on a very busy road, it’s on the wrong side of the road for the catchment to the good primary (us too!). It’s not a great area, there’s not lots of amenities. Lots of good secondaries but no outstanding.
In the countryside around us you could buy something very special for that kind of money.

I think people put offers in on other houses and need their house to sell to make up the difference. And the circle of inflated prices needs to keep going for one to pay for another.

Its like that Sarah Beeney programme where people thought they should get back all the money they paid out for stuff.

I use the property track extenstion so can see each price change on properties in my search radius. As a buyer, there is something psychologically off putting about the properties that are slowly coming down in price a month at a time.
Not sure why? It puts me off the house, which is irrational and possibly self defeating. I just see the succession of little green arrows pointing downwards and think 'ooh, I wonder how much further it might go...'

If something is realistically priced (from my perspective based on what is selling quite quickly round here) on first listing I am interested and arrange to view immediately so as not to miss out.

I ignore houses that don't sell and re-list with a higher price (that little red up arrow!!). I just assume the sellers are deluded and will be difficult to deal with.

We sold to rent. Motivated to buy, not particularly fussy, but this market makes me nervous.

offers over means nothing. we bought or first place 18% less than the "offer over"