Agressive Price Drops Needed in Some Austin Areas

I received the below email message this morning from another Realtor. To place this into context for those who may not know, when a Realtor opens a MLS Lockbox with our electronic Supra key, the listing agent is notified (if they have properly registered the lockbox online and attached it to the specific listing) of the showing. Therefore, they have a log of the agents who have shown the property. From this list the agent can seek feedback or send out messages like the one below (edited to retain anonymity). Let’s have a look at what it says:

This message is being sent to all agents that have either previewed or showed a client the property at {Property address} in {Subdivision}. The owner of this property has just reduced the price another $10,000 to ${new price} – the fourth lowest price home in {Subdivision} – and the lowest price per square foot of any property in it’s size. Please keep this property in mind for any of your present or future clients that it may be a good match for this property.

At the time my buyers (who closed on the house they did buy yesterday) viewed this home over a month ago, it was one of many that were priced way too high. It’s been dropped by $20K since then.

We actually made offers on two other over-priced homes, based on what I determined to be the market value, and both of those offers were rejected without counter-offers. One eventually sold (for too much) and the other hasn’t sold. A third one was accepted, but after the inspection repairs were factored in, it became over-priced as well so we dropped that one and moved on. The 4th house was the charm for that buyer.

The point is, had this home and others we saw in February been priced correctly from the start, my buyer may have closed on one of those homes instead of the properly priced home we eventually found. Now, even after dropping the price, homes that started too high have what I call “market fatigue” as the days on market have built up, and they have additional homes on the market to compete against.

We are in a tricky market at present. Occasionally a seller gets lucky and finds a buyer willing to pay over-market, but it’s not something that happens often. Serious sellers and agents have to take a real hard look at current inventory levels and current activity when pricing a listing. Dropping the price later doesn’t always do the trick.

By the way, this agent is doing a good job for his seller by sending out a notice like this. I don’t personally have a buyer at present for whom that property is a match, but it does remind me of the home, and every small thing like this that an agent can do helps the sales effort.

Posted by Steve
8 years ago
Steve

Steve is a Real Estate Blogger, Husband and Dad, UT Austin Grad, Runner, Real Estate Broker and owner of Crossland Team and Crossland Real Estate in Austin TX.

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Anonymous - 8 years ago

Steve-
Do you care to list the areas which you feel are overpriced and by what amounts?

Thx.

Reply
Steve - 8 years ago

Hi Anonymous,

It’s not so much a specific overpriced area as it is the specific homes in an area. Even Hot areas such as South Austin have overpriced homes, and the slower areas, such as Lakeway, have homes that sell within a week because they are priced right. Some areas have more overpriced homes than others. It really does come down to the house itself.

This is why it is so very important that buyers and their agents really scrutinize the market when coming up with an offer price.

Steve

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jim - 8 years ago

There should be another blog post that discusses the other side: buyers who seem to think Austin market is in bad shape and any seller is desperate and will accept lowball offers.

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Sam Chapman - 8 years ago

The Lake South area needs a price adjustment. There are way too many $750,000+ homes on the market. Builders who overbuilt specs over the last two or three years need to just take less than what they are asking.

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