Real Estate question: lower the asking price or spend to repair

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ono8ono
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Real Estate question: lower the asking price or spend to repair

Post by ono8ono »

I have a house on market. Realtor suggested to repaint the roof and repave driveway or to lower the asking price. I wonder which way is better? Is it better to spend $20,000 to fix up or to lower the asking price by $20,000? Thank you. :confused
delamer
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Re: Real Estate question: lower the asking price or spend to repair

Post by delamer »

How long has the house been for sale?

Has your realtor received negative comments about the roof/driveway?
Topic Author
ono8ono
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Re: Real Estate question: lower the asking price or spend to repair

Post by ono8ono »

Thanks for your time.
House has been on market since 12/1/18.
Realtor's suggestion was after inputs from broker's open house. Thanks.
delamer
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Re: Real Estate question: lower the asking price or spend to repair

Post by delamer »

ono8ono wrote: Mon Apr 01, 2019 3:25 pm Thanks for your time.
House has been on market since 12/1/18.
Realtor's suggestion was after inputs from broker's open house. Thanks.
I’d make the fixes in that case. With 4 months in the market, the issues are clearly a hurdle that is turning off buyers.
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FrugalInvestor
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Re: Real Estate question: lower the asking price or spend to repair

Post by FrugalInvestor »

delamer wrote: Mon Apr 01, 2019 3:38 pm
ono8ono wrote: Mon Apr 01, 2019 3:25 pm Thanks for your time.
House has been on market since 12/1/18.
Realtor's suggestion was after inputs from broker's open house. Thanks.
I’d make the fixes in that case. With 4 months in the market, the issues are clearly a hurdle that is turning off buyers.
16 months unless the OP made a typo. May need to do both.
Have a plan, stay the course and simplify, but most importantly....Ignore the Noise!
delamer
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Re: Real Estate question: lower the asking price or spend to repair

Post by delamer »

FrugalInvestor wrote: Mon Apr 01, 2019 3:40 pm
delamer wrote: Mon Apr 01, 2019 3:38 pm
ono8ono wrote: Mon Apr 01, 2019 3:25 pm Thanks for your time.
House has been on market since 12/1/18.
Realtor's suggestion was after inputs from broker's open house. Thanks.
I’d make the fixes in that case. With 4 months in the market, the issues are clearly a hurdle that is turning off buyers.
16 months unless the OP made a typo. May need to do both.
December 1, 2018 is 4 months ago, not 16.
Gufomel
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Re: Real Estate question: lower the asking price or spend to repair

Post by Gufomel »

FrugalInvestor wrote: Mon Apr 01, 2019 3:40 pm
delamer wrote: Mon Apr 01, 2019 3:38 pm
ono8ono wrote: Mon Apr 01, 2019 3:25 pm Thanks for your time.
House has been on market since 12/1/18.
Realtor's suggestion was after inputs from broker's open house. Thanks.
I’d make the fixes in that case. With 4 months in the market, the issues are clearly a hurdle that is turning off buyers.
16 months unless the OP made a typo. May need to do both.
Time is flying quickly, but it ain’t 2020 yet.
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FrugalInvestor
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Re: Real Estate question: lower the asking price or spend to repair

Post by FrugalInvestor »

Sorry, my mistake. I'd do the repairs.
Have a plan, stay the course and simplify, but most importantly....Ignore the Noise!
J295
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Re: Real Estate question: lower the asking price or spend to repair

Post by J295 »

Repairs.
SoonerD
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Re: Real Estate question: lower the asking price or spend to repair

Post by SoonerD »

Do you have great confidence in your realtor as an expert? If no, fire her and hire the best realtor available. If yes, ask her which way to go and why, then act on her recommendation.

I would not rely on BH strangers. I hire professionals who are top performers and trust their guidance. This decision requires intimate knowledge of your market, house, state of disrepair, etc.

I’ve bought and sold many as a former RE investor and ALWAYS used trusted professionals to manage my deals.
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snackdog
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Re: Real Estate question: lower the asking price or spend to repair

Post by snackdog »

The answer is market-specific. In a hot market, you need to inspect and address all issues before listing. In a slow market, you can get away with more depending on how long you want to wait for the right buyer.
jminv
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Re: Real Estate question: lower the asking price or spend to repair

Post by jminv »

ono8ono wrote: Mon Apr 01, 2019 2:24 pm I have a house on market. Realtor suggested to repaint the roof and repave driveway or to lower the asking price. I wonder which way is better? Is it better to spend $20,000 to fix up or to lower the asking price by $20,000? Thank you. :confused
It’s hard to say without seeing the house. Is the condition of your roof and driveway poor or is it a minor cosmetic issue (cracking in driveway for example?). The 20k in work is to enhance the curb appeal to make the home sell more quickly but will not return 100% of the cost. I’d only do it if it was objectively an issue cited by real life buyers who have seen your house. Not what other realtors at a get together came up with. I doubt it is the #1 issue a buyer would cite. If i were going to pick between the two, id do the roof since a roof that looks cosmetically poor can lead people to think it will need to be replaced at high cost soon and is something that can’t be deferred for long (a driveway can). There’s also the issue of your house being overpriced and maybe a buyers view that there will be too much of a difference between what you want and what they’ll pay. So I’d probably do the roof and drop the price 10k.

What is clear, though, is this is supposedly based on feedback by other realtors at an open house, not actual potential buyers. Sometimes realtors will do this as you approach the time when you can switch realtors since it now becomes your fault that the house has not sold yet, rather than theirs. I had a realtor try to get me to do 100k of work on a 400k house during the recession. I knew the 100k in work would probably bring at max 50k value but would get the agent their commission. I switched realtors and dropped the price 20k. Sold shortly thereafter. This and other houses I’ve sold and bought make me distrust anything coming from a realtor. They want your commission and they’re not on your side.
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Sandtrap
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Re: Real Estate question: lower the asking price or spend to repair

Post by Sandtrap »

Try lowering the asking "half the cost" of doing all the repairs.
And, then holding a bit firmer once offers are received.

How many solid offers have you gotten since first listing?
(big question)

How far away from asking have these offers been?

Customer/buyer feedback is more important than realtor (salesman) feedback.
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Topic Author
ono8ono
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Re: Real Estate question: lower the asking price or spend to repair

Post by ono8ono »

Thanks for all the replies. Really appreciated!

I haven't received any offer yet. I had about 4 showings so far.

I figure the realtor is not on my side. Realtor gets $150 to $200 less for each $10,000 drop in price.
Jim21713
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Re: Real Estate question: lower the asking price or spend to repair

Post by Jim21713 »

Some things to consider:

Did the realtor recommend the current asking price based on neighborhood comparable recent sells? Have you seen these "comps" and believe they are accurate?

Is your market a buyer or seller market at this time?

Do you happen to have a recent appraisal?

Do you have hard estimates for the $20K of work? Likely these things cost more and take more time than initial guesses. If you have an actual quote for the work you have better info to make a decision.

Most seller / realtor agreements are for 6 months so the agent is hoping you will do something to improve the likelyhood of sale before the agreement expires. I'm sure you would like it to sell also.

You might want to reduce the price by say $10K first for several months, then consider additional reduction to $15K or $20K or performing work.

You might also consider changing agents / brokerage if you don't feel you are getting good service.
liberty53
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Re: Real Estate question: lower the asking price or spend to repair

Post by liberty53 »

Just from a financial basis it's better to lower the price. Lowering the price reduces the real-estate commission, local taxes, and any potential capital gains you may have to pay on the sale price. It probably helps keep the appraised value lower for the buyer as well depending on the state/town.

You also save on the aggravation of getting the repairs done - getting quotes, inspecting the work, etc.

The same thing applies with "credits" to the buyer - sometimes the seller gives a credit back to the buyer for repairs or other reason, when it would have been better to lower the sale price.
jminv
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Re: Real Estate question: lower the asking price or spend to repair

Post by jminv »

ono8ono wrote: Mon Apr 01, 2019 5:01 pm Thanks for all the replies. Really appreciated!

I haven't received any offer yet. I had about 4 showings so far.

I figure the realtor is not on my side. Realtor gets $150 to $200 less for each $10,000 drop in price.
The low number of viewings suggests it is probably a cost issue - house is priced above what it should be. Cut the price. I commented earlier about maybe doing the roof combined with a cut, but I'd probably just cut to get a sale now.

As far as the commission, studies have shown that realtors prefer to sell your house more quickly even if it lowers their commission through a lower price. This is because the marginal decrease in commission is outweighed by the time factor. At the extreme, you see realtors try to get their clients to set a price that will sell their house within a day or two. This is the opposite of what people commonly believe, ie, that realtors care about the extra 150-200 for months more work and possibly losing the listing. Of course, not all realtors are average.
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ono8ono
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Re: Real Estate question: lower the asking price or spend to repair

Post by ono8ono »

Thanks for all the insights and advice!

Just one more question: 4 months had passed and my property still not having any open house. Only 1 broker's open house took place 3 months after the listing started. Am I dealing with a good realtor ?
kelvan80
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Re: Real Estate question: lower the asking price or spend to repair

Post by kelvan80 »

How did you find your realtor? What was the feedback on the four showings? How did you set the price?
delamer
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Re: Real Estate question: lower the asking price or spend to repair

Post by delamer »

ono8ono wrote: Mon Apr 01, 2019 6:18 pm Thanks for all the insights and advice!

Just one more question: 4 months had passed and my property still not having any open house. Only 1 broker's open house took place 3 months after the listing started. Am I dealing with a good realtor ?
I have a friend who is a successful realtor. She says that the main benefit of an open house is that she meets future clients, not that they sell the home.

But clients like her to do them, so she does one shortly after listing.

I doubt that one 4 months in is going to be helpful.
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F150HD
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Re: Real Estate question: lower the asking price or spend to repair

Post by F150HD »

may want to list the area you're in. Where I am, we got bombed w/ snow and cold in January & February, people don't go house shopping then (not typically) so Jan/Feb don't really count much IMO

else, feel like I'm missing info here?
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8foot7
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Re: Real Estate question: lower the asking price or spend to repair

Post by 8foot7 »

Open houses are for realtors to meet new buyers they can represent and rarely result in a sale. Many realtors will make a big deal of doing them every couple of weeks (look! I’m actively marketing this for you!) but in reality it’s 90-95% a way for them to find new folks to represent.
donall
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Re: Real Estate question: lower the asking price or spend to repair

Post by donall »

Coming in to spring market now, lower price a bit and see what happens. Listing in December or January can result in a stale listing.
staythecourse
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Re: Real Estate question: lower the asking price or spend to repair

Post by staythecourse »

I would be surprised if a house buyer didn't put a bid because of the house roof color or condition of the driveway. Those are not issues that a buyer thinks about first when making an offer. They may be issues, but that wouldn't prevent an offer and THEN negotiation of lower price vs. credit back for those type of repairs.

I am sure there are other issues at play. I would delve a bit deeper.

Good luck.

p.s. If you make me choose I ALWAYS pick lower the price. The price and location is what real estate begins and ends with everything else is important, but BELOW those two.
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JoeRetire
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Re: Real Estate question: lower the asking price or spend to repair

Post by JoeRetire »

ono8ono wrote: Mon Apr 01, 2019 2:24 pm I have a house on market. Realtor suggested to repaint the roof and repave driveway or to lower the asking price. I wonder which way is better? Is it better to spend $20,000 to fix up or to lower the asking price by $20,000? Thank you. :confused
This is a question for your realtor.

If spending the $20,000 would help your house sell, and you could get back $20,000 or more, then it clearly makes sense to have the repairs done (assuming you have $20,000 available).

If dropping the price by $20,000 puts your house into a category where it will sell quickly, then it may make sense to drop the price.

Talk with your realtor for guidance. A good one should be able to tell you how to decide for your particular market.
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jfn111
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Re: Real Estate question: lower the asking price or spend to repair

Post by jfn111 »

Open Houses- We usually do these to keep the seller's happy. We do sell an occasional house because of the open, maybe 10-15%. (I'll pickup an occasional buyer to represent at about the same percentage.)
Carefreeap
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Re: Real Estate question: lower the asking price or spend to repair

Post by Carefreeap »

jfn111 wrote: Mon Apr 01, 2019 7:31 pm Open Houses- We usually do these to keep the seller's happy. We do sell an occasional house because of the open, maybe 10-15%. (I'll pickup an occasional buyer to represent at about the same percentage.)
Lol, I sold two directly due to an open house during my time as a licensee (about 5 years) including my own. :D I generally would pick up one qualified buyer every other Open House (including broker open houses). I really liked them and worked them. Not only were they advertised but I would go door to door in the neighborhood and made sure I had high quality refreshments. I still feel they are an important part of the marketing process.

To the O.P. Generally speaking if you don't have an offer within 30 days your home is priced too high. There are exceptions of course and if your house is a family type house putting on the market Dec 1 is one of the worst times to sell. Generally speaking you want to put a family house on the market in April or May.

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