You are getting more nervous each day. Since you have decided to sell a property the market has been declining. You keep dropping the price over and over again. It’s not selling. Now what?
Unfortunately, the above paragraph describes chasing the market down. Chances are, that you will never catch it. You’ll be stuck with this property until the market turns around and values regain their lost ground…which usually takes years – three to five years!
The hard-to-swallow solution is to price the property considerably lower than the current market price and do it today. Let it go. This may mean that you are going to lose money on it.
What does this mean? First is to agree that we are in a declining market and stop fooling yourself. The decline won’t last forever, but prices could continue their slow leak for quite a while longer, or they may totally crash within a very short time.
The bottom line is that whatever price you might get for your home today, you will probably get still less a month from now or two months from now.
That’s why you must bite the bullet and make that difficult decision.
You must decide to either keep the property for the duration or to drop that price really low and dump it. I know it’s difficult. I’ve had to make this decision on many properties each time the market headed into a downward spiral. It sucks.
The most introspective question you must ask yourself is: Do I really have to sell right now, or can I hold onto the property and wait three, four, or five years or more.
The quicker you make that decision, the better off you will be.
Can you rent the property out and break even? How about a lease/option to someone? Can you move into it yourself and call it home?
Let’s suppose that you actually need to sell the property. Maybe you have a high interest hard-money loan and cashflow won’t work. Maybe you are financially strapped and all your money is in the equity of the property. Maybe you are about to lose both this house and your own home because you can’t continue to make the double mortgage payments. What now?
Most of us have put a lot into our properties. Even in the best markets, we all have an inflated idea of the values of our properties. After all, we used better building materials, more visually pleasing wall & floor coverings, higher end appliances, etc., and we believe our property is priced appropriately. One major thing to understand is that most of the ‘people pleasing’ things that we have done to our property does not change the market value. What it does is makes our properties sell faster than all the others on the market – as long as our price is aligned with those properties that are not as ‘pretty’ as ours.
Now, with a growing glut of overpriced inventory, those properties that have all the ‘pretty’ stuff AND are priced below the others – will sell.
Especially as investors, we typically start out pricing things just slightly higher than market value – justified by the great work and excellent condition and those ‘pretty’ things. However, if we did this knowing that the market was headed south – we’ve made our first mistake. When you know the market is dropping, the initial pricing should begin below market.
Next, we start making a series of small price reductions – that basically go unnoticed. Weeks go by and our property is still hanging around with fewer and fewer interested buyers.
Unfortunately, the longer the property is on the market a secondary problem arises: the property becomes ‘stale.’ This means that each broker & each buyer, notices that the length of time on the market is considerable compared to others that have sold. The house gets a fictional stigma attached to it that something is wrong with the property itself – even though the only thing wrong with the property was its price. The longer the property is on the market, the more opinioned false stories begin to form in the minds of these agents and buyers. They begin to perceive that the property is not sold because of shoddy work, bad area, hazardous substances, hauntings, or a whole bunch of nonsense…and you keep dropping the property little by little.
You are chasing the market down and those price reductions are too little and now too late.
Here is a statement that you should imbed into your brain like a mantra: “The only reason that any property in any market that is properly placed on the Multiple Listing System does not sell is because of it’s price.” It doesn’t matter if the property is in excellent shape or it is a rat trap – if the price is right – in ANY market – it will sell!
If there is any ‘trick’ to selling any property in any market, it’s the ‘initial’ price. If it does not sell within the first two weeks, it was not properly priced. The longer it’s on the market, other complications arise – such as that staleness I talked about earlier. With more complications involved, you could then decide to slash the price far below the current market price and the property still won’t sell. Your property could eventually be priced 30% below the newer current values and still not sell.
As a broker, I’ve been involved with thousands of these decisions. As a real estate investor, I’ve experienced and realized firsthand how painful this can be. You can take my advice and learn from my personal pain and the pain of thousands of my clients.
If it doesn’t sell within two weeks of each price reduction, the price reduction was not enough. Unfortunately, you won’t know this until after the fact. This is what makes it even more difficult.
The bottom line is that if your property is not showing, it will not sell. It’s always because it is still overpriced. I know that people are not listening to my advice because I keep hearing the same, natural impulse when they say, “I’m not going to give my property away!”
I can sympathize with them. I’ve been there myself. I’ve had to ask myself this question many times over my long real estate investing career. I get it. I’ve also realized that I have to ask myself this one question and answer it honestly, and you also have to ask yourself: “Do I want to hold onto this for several months or more, selling it for even less – if I can sell it at all?
Racing down against the market is painful. Continuing the race becomes unbearable.
Make the decision to keep it or sell it. If selling it – drop the price way below the current market value. Give away your profit now (instead of later). Plan to even lose money on the deal if you must – but dump the property so that you can move away from the negative consequences on your own terms instead of the failing market’s terms.
It’s tough out there…don’t let it get tougher.
I’m here to help you to fulfil your dreams & goals,
So, I’ll See You Over the Top!
– Alan David Kosinski, Life Extraordinaire
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In each future article I’ll take you closer to more wealth through empowering and educational articles. Until then, see if you can discover ways to immediately implement what you learned from today’s message.
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