Selling home: List higher and budge, or list lower no budge?

[z1ggy]

I'm meeting with my realtor tomorrow to go over paper work and start the process. The heart of my question is whether I should list for maybe 1-2% higher than market value and then negotiate down to the price I want, or list it for a lower price, but be firm.

Home in question is a 2 bed, 1 bath, in almost a move in ready condition. There's minor things I could see a buyer complaining about, like some fraying on my carpets, a stain on the basement floor, lacking some insulation in basement. Otherwise, important stuff like roof, windows, siding are all in great shape and are all fairly new (<10yr old).

I owe ~154k on the home. I am looking to sell for 160k. I'm estimating closing costs to be ~$7k, so selling for $160k will net me a break even (I'll get some money back from real estate tax prorate, home insurance, left over oil).

IMO, I feel like I am better off listing for $161-$162, then negotiating down to the $160k to make a buyer feel like they got a good deal. If I list right for 160 or so, but don't move an inch, they may feel like I am not working with them or hostile, etc.

 

[zardthebuilder]

how are houses selling in your local market? do most listings get contracted within the first week or so? in general, most people will want to negotiate. unless you are in a really hot market, i think it is rare that anybody pays full price.

another thought, you should understand how searches are done. if you price it at $162K, and the searches are in increments of $10K, then your property won't show up if somebody searches $120K to $160K. like all strategies... some people care about this, other's don't.

 

[z1ggy]

how are houses selling in your local market? do most listings get contracted within the first week or so? in general, most people will want to negotiate. unless you are in a really hot market, i think it is rare that anybody pays full price.

another thought, you should understand how searches are done. if you price it at $162K, and the searches are in increments of $10K, then your property won't show up if somebody searches $120K to $160K. like all strategies... some people care about this, other's don't.

So.... what's your actual advice here? I get conflicting views. You say, people want to negotiate, but listing for $162k is pointless...

PS, a website like Zillow, you can list an exact amount you want as a max price.

 

[cabri]

As stated unless you are in a HOT market, people are expecting you to list above the reasonable acceptance price; figure 5% at least.

So set you asking price for 10% higher and be willing to "compromise" down by 5-7%.
then you still have the 3% wiggle room.

Are you also taking into account the commission into your price break even point?

 

[z1ggy]

As stated unless you are in a HOT market, people are expecting you to list above the reasonable acceptance price; figure 5% at least.

So set you asking price for 10% higher and be willing to "compromise" down by 5-7%.
then you still have the 3% wiggle room.

Are you also taking into account the commission into your price break even point?

The market around me is ... unique. It's hot and cold at once I believe. Move-in-ready homes are a rare commodity and sell fast. I made the deal on this home 4 years ago, 3 days after it was listed. On the other hand, there are TONS of foreclosures and homes on short sale, all in rough shape.

Yes, I have. I accounted for state and local conveyance tax, 3% commission on the sale price, and ~$700 for lawyer fees. I owe ~154k on the mortgage, so selling for $160k get's me roughly to break even (maybe a few hundred would need to be owed).

 

[edro]

List it yourself with a listing agent for a flat fee to get on MLS and save yourself 3%.
I have done this twice and everything went perfectly.
You simply pay the buyer's agent their 3% and the buyer's agent and title company handle everything else.

 

[zardthebuilder]

there are a lot of variables in selling a house. and, you are trying to predict an outcome as best as you can. in many cases, there is no right or wrong way to do it. listing for $162k is not pointless, but the trade-off is that you might get a bit less visibility. realtor.com does have $10K increments. is 3% commission normal for your area? here, it is 6% -- 3% for the listing agent and another 3% for the buyer's agent.

here are a few scenario's:
1) your house qualifies as "move-in" condition. you list it at $160K. one or more buyers see the value of your price and agree to $160K. better yet, they go into a bidding war, and you end up with $165K.
2) you list it at $160K, and everyone wants to negotiate. on week 1, the first best offer is $155K. you decline, and they buy another property. a week later, the second buyer's best offer is $152K. then, what will you do?

cabri's strategy of adding a 10% buffer might be okay too. real estate is very local, and your agent might recommend $175K.

 

[Zorba]

Adding 10% is way too much in my experience and will scare off a lot of people. Especially since the market for a 160K house and 175K are fairly different, at least around here.

I would list a little high, because everyone will want to negotiate some. I learned the first time I sold a house odd increments can hurt you, so I stick to even 5K increments. Since most people will search in increments of 5K or 10K, being at an even 5K puts you at the top of the search results if sorting by price, where 162K may make you number 50 on the list. Also use a round number, not 164,990. 165,000 will show up on a search from 120K-165K and 165K-190K, where 164,999 would get filtered out on the later.

Even though people like to negotiate they are just as likely to settle on the correct price if you start a little over as if you started way over, IMHO. The difference is a little over you will get a lot more traffic, interest and offers than if you are way over.

Make sure your realtor posts onto Zillow and Trulia, this is not automatic.

 

[z1ggy]

there are a lot of variables in selling a house. and, you are trying to predict an outcome as best as you can. in many cases, there is no right or wrong way to do it. listing for $162k is not pointless, but the trade-off is that you might get a bit less visibility. realtor.com does have $10K increments. is 3% commission normal for your area? here, it is 6% -- 3% for the listing agent and another 3% for the buyer's agent.

here are a few scenario's:
1) your house qualifies as "move-in" condition. you list it at $160K. one or more buyers see the value of your price and agree to $160K. better yet, they go into a bidding war, and you end up with $165K.
2) you list it at $160K, and everyone wants to negotiate. on week 1, the first best offer is $155K. you decline, and they buy another property. a week later, the second buyer's best offer is $152K. then, what will you do?

cabri's strategy of adding a 10% buffer might be okay too. real estate is very local, and your agent might recommend $175K.

For scenario #2, I would decline that offer as well. I absolutely will not sell my house for less than like.. $159k. If my realtor tells me she thinks that's a pipedream, then I will probably decide to hold off altogether.

Adding 10% is way too much in my experience and will scare off a lot of people. Especially since the market for a 160K house and 175K are fairly different, at least around here.

I would list a little high, because everyone will want to negotiate some. I learned the first time I sold a house odd increments can hurt you, so I stick to even 5K increments. Since most people will search in increments of 5K or 10K, being at an even 5K puts you at the top of the search results if sorting by price, where 162K may make you number 50 on the list. Also use a round number, not 164,990. 165,000 will show up on a search from 120K-165K and 165K-190K, where 164,999 would get filtered out on the later.

Even though people like to negotiate they are just as likely to settle on the correct price if you start a little over as if you started way over, IMHO. The difference is a little over you will get a lot more traffic, interest and offers than if you are way over.

Make sure your realtor posts onto Zillow and Trulia, this is not automatic.

Hm, based on this, I may list for $160k, and be willing to only negotiate down to $159k if the negotiation is purely monitary, ie, it's not $159k plus fixing 4 or 5 different things for the buyer. I'm worried listing for $165k may be too high and scare people off, causing the house to hit on the market, or me doing a price reduction which shoes weakness, resulting in buyers trying to get even more money off.

 

[MixMasterTang]

Why are you selling? If you're not willing to sell below 159k and are going to list it at 160k I wouldn't even bother.

 

[cabri]

I doubt anyone will be interested in negotiations for $1K. That is less than 1%.

Listen carefully to what the Realtor tells you upfront and the practical reality, not a pipedream.

Then evaluate the worst case scenario that you can consider and will it work?

 

[Carson Dyle]

Sounds like you don't have to sell. You're not moving, not going through a divorce. So why not list it a little high and see what kind of offers you get? You can always lower the listing price at a later date. People do that all the time.

I couldn't imagine not listing a home for at least $10k above your desired price, not unless you were talking a home for under $90k, where I'd go with $5k.

 

[Zorba]

Hm, based on this, I may list for $160k, and be willing to only negotiate down to $159k if the negotiation is purely monitary, ie, it's not $159k plus fixing 4 or 5 different things for the buyer. I'm worried listing for $165k may be too high and scare people off, causing the house to hit on the market, or me doing a price reduction which shoes weakness, resulting in buyers trying to get even more money off.

I think 165K is a nice buffer for a bottom line of 159K. Gives a decent amount of room to move, and people will still look at it because it isn't way off. 160K gives basically no room to move, and people will ask for closing, appliances, repairs, etc.

FYI: My last house my realtor and I both thought would go for about 167K, after looking at all the competition, I really wanted to list at 175K and he wanted to do 170K. We compromised at 173K (against my even 5K rule, but whatever), got two offers in the first week and sold for full asking. Moral of the story? Pricing just a little high is okay.

My first house I listed for 10% more than it sold for, and I think that really slowed down the process and we probably ended up getting less for it. Although that was also in Ohio in 2009.

 

[z1ggy]

From what I've seen, Realtor.com and Zillow.com have the ability to type in any number for a price you want, there's no drop down bars in the 5 or 10k increments. Although, I do agree, I don't think a person would type in something like 150k-159,999, etc.

Additionally, when I bought this, I actually didn't ask to negotiate at all with them on price. It was listed for.. 156k and that's exactly what I bought it for. The only thing they had to do was fix a small crack in the basement wall, and leave me the dryer.

 

[NutBucket]

Well that's your fault not negotiating....whereas we paid 10% over list. That's how the cookie crumbles

 

[z1ggy]

Well that's your fault not negotiating....whereas we paid 10% over list. That's how the cookie crumbles

I suppose you're right. It was the nicest house I'd seen out of many houses, and I didn't want to lose it in a bidding war. It was move in ready which was extremely rare around my area in that price point.

Meeting with realtor today at 5pm. I'll update to see what she says. If it turns out I can't likely sell with out a pay off out of pocket, I may consider renting it (to my current roommate, or through work connections).

 

[NutBucket]

We offered list on ours but had an escalation clause. So we had the option to pay $1k over the max offer, which we did.

I had initially wanted to buy a home that needed updating (but still move-in ready) but looking back I'm glad my wife convinced me to go with what we bought. I love home improvement projects but ain't got no time fo' dat!

 

[z1ggy]

We offered list on ours but had an escalation clause. So we had the option to pay $1k over the max offer, which we did.

I had initially wanted to buy a home that needed updating (but still move-in ready) but looking back I'm glad my wife convinced me to go with what we bought. I love home improvement projects but ain't got no time fo' dat!

Yeah my home doesn't really need any "projects" done to it. Sure, the buyer could pull up carpet and just go with the (old) hardwood under it, or add in a nicer vanity, etc. But it doesn't need anything done in order to live in it. Kitchen and all appliances, etc are all up to date.

 

[zardthebuilder]

I owe ~154k on the home. I am looking to sell for 160k. I'm estimating closing costs to be ~$7k, so selling for $160k will net me a break even (I'll get some money back from real estate tax prorate, home insurance, left over oil).

Yes, I have. I accounted for state and local conveyance tax, 3% commission on the sale price, and ~$700 for lawyer fees. I owe ~154k on the mortgage, so selling for $160k get's me roughly to break even (maybe a few hundred would need to be owed).

there is a discrepancy between the two quotes above. are you planning on paying some of the closing costs?

 

[maddogchen]

ask for more and see what the market brings you

 

[z1ggy]

there is a discrepancy between the two quotes above. are you planning on paying some of the closing costs?

I will be paying my own closing costs... But not for the buyer. Here in CT, there is a 1% state and municipal tax on the sale price. Then, add in lawyer, 3% for realtor, and any small minor fixes, and you get right around $6,000 in closing fees. Before I was just guessing, I actually did the math out today based on the real tax info from my area. That's why there was a small discrepancy above.

I actually just checked my statement, I owe 151k, not 154 like I thought. So actually, I could accept a deal as low as $157k and break even.

 

[NoCreativity]

I know in MI it is typical for seller to pay all closing costs (buyer & seller). Obviously you can negotiate this but it's worth asking your realtor.

 

[cabri]

Double check the commission.

Normally, 3% goes to the seller agency and 3% to the buyer agency. = 6% of selling price

You will need to ensure that the total commission will only be 3%.

 

[z1ggy]

Double check the commission.

Normally, 3% goes to the seller agency and 3% to the buyer agency. = 6% of selling price

You will need to ensure that the total commission will only be 3%.

I asked, its 5%, not 3%.

Also, I'm not able to pay for buy closing costs. I mean, the market hasn't moved what so ever around here. If I sold it exactly what I bought it for AND paid buyer closing costs, I'd be in the hole probably $7-8k. Not happening.

 

[cabri]

I asked, its 5%, not 3%.

Also, I'm not able to pay for buy closing costs. I mean, the market hasn't moved what so ever around here. If I sold it exactly what I bought it for AND paid buyer closing costs, I'd be in the hole probably $7-8k. Not happening.

Based on your numbers, there is a good chance that you will end up having to bring some $$ to the table.

You have indicated 5% Realtor commission, 1% State. On a $160K sale that is $9.6K and that does not include other costs of yours.

You owe $154K.

You need to sell the place for at least $165K to have a chance on breaking even