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Drop the price? Need your suggestions!
Here's a bit of background:
We listed our house at the end of January for a price that our realtor suggested. We didn't get many showings and quickly learned that we were a bit overpriced (and also listed at a bad time in the market for our area)! We dropped the price in the fall but then took the house off the market in late December. We relisted it in the middle of January in line with the comps in the neighborhood (which was another drop in price).
Since we relisted the house, we've gotten numerous showings but no offers. We're planning on closing on our new construction home in the middle of April, so I'm starting to get a little nervous. We have enough saved up to carry both houses for a little bit (interest only new construction loan until the house is built), but I don't want to go through our savings.
In the past week, all of the comps in our neighborhood have dropped their price 5K. H and I are debating if we should drop the price once again. This would be our last and final price drop and we should still have about 2K of "wiggle room" if we don't get full asking price. We'll be moving in with my parents when we close so we'd be able to save money while we're living there (which would help make the price drop a bit easier to swallow).
Suggestions? Advice? After 7 months, I'm just ready to get this house sold!
Re: Drop the price? Need your suggestions!
I don't have any thoughts dropping your price but $2k (or even $7k) isn't a lot of "wiggle room". You said all the comps in your neighborhood dropped in price which I assumes mean they are active on the market. BUT what is selling? What is the selling price? That's what you need to get your price around especially in a neighborhod where the homes are very similar in price/size/rooms/etc.
What's your plan if the house doesn't sell? If you can't carry both mortgages for more than a few months (which would honestly scare the crap out of me which is why we sold and then bought) then you should either cut your losses now and drop the price or find a renter to cover most of the costs.
ETA: Even if you get a full price offer tomorrow you probably wouldn't close until April 1st on the sale. You said you are closing on your new house mid-April so there's not really any time to "save" money by living with your parents.
It might be good to view the other properties and see what they have that you don't. Who has the best big ticket items - new roofs/siding/hvac/windows, updated bathrooms and kitchens, finished vs unfinished basements, etc. Better yet, have a friend do it and let you know where your house ranks. If you're serious about selling, you need to factor that into your price since buyers do.
Has your listing agent gotten feedback from the people who had showings? What did they say?
Thanks for the reply. Our realtor is checking on the homes that have sold tomorrow and we'll discuss this with her tomorrow. I'm nervous being so close to our bottom line in case we need to negoitiate.
We're not buying a home - we're building. We close on the new construction loan in mid-April and they only pull what is needed at the time (10% at the start). We pay interest only on the amount that they pull until the house is finished (October) and then we start paying the mortgage (principle + interest). The interest only loan will be only a couple of hundered until early fall. We have more than enough in savings to cover us until then. If it looks like our house isn't selling, the builder will slow down our build to give us time to sell. They could stretch it out up to 12 months. I would have waited to build, but there was another offer on the lot we wanted and couldn't pass it up.
We're going to end up living with my parents for 4-5 monts (until our house is finished in October) so we'll have some time to save up some money.
Everyone loves the house but are worried that the closets are too small. The house was built in the 1940's so the closets aren't huge. It's really nothing that we can change, which makes it frustrating!
That is annoying. I love older houses and I love big closets, but I definitely realize that they rarely go hand in hand. One house that I saw highlighted their "HUGE floored attic storage" in their listing in an attempt to overcome the small closets. It could work.
What happens if your house sells for $10k or $15k below what you are asking now? Would you not have the extra cash to bring to the closing? If so, you really need to think about whether or not you can afford the new house.
My suggestion, if everything else in your area dropped the price 5k and you want to close by April, then drop your price 10k and be the "deal" on the market. Hope that you will get close to your asking price, and find a way to come up with the cash at closing.
This is what you should be basing your pricing strategy on. Did the realtor not show you recent sold comps when you were discussing your initial price? Seeing what has sold recently and baking in a bit of the current market comps (making yourself seem like a deal compared to that) is the magical number IMO.
Drop the house your selling to below the comps that have sold.
Are you currently selling/building in a market that is still declining?
You might have the luxury of time as far as slowing down the build, but in a declining market, you would have to deal with the appraisal value going down on the home for as long as it sits. Also, when it comes to new construction, you want to make sure your home will appraise for at least the cost to build it, which, again, can be risky in a declining market.