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LRS

Is There A Flaw In The Logic Of Aggressive Pricing?

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Hi All

Been trying to sell and buy for the past 4 months. We have reduced twice by £10k each time from £439,950 to £419,950. We’ve had 16 viewings of our property, but with no offers being made. The market here is dead, dead, dead…

We have now just been advised by our new agent that in order to get into the game, rather than being a spectator, we need to price our property much more aggressively by remarketing it at £399,950.

The agent’s logic is that if we price our property much more aggressively to get an offer then it puts us in a much better position to aggressively haggle down the house that we want to upgrade up to, to match the same percentage drop that we have taken on our house. As long as everyone plays by the same price reduction percentage rules then it could get things moving for everyone.

This does make sense as its all relative, but is there a flaw with this logic?

Thanks in advance.

LRS

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Hi All

Been trying to sell and buy for the past 4 months. We have reduced twice by £10k each time from £439,950 to £419,950. We’ve had 16 viewings of our property, but with no offers being made. The market here is dead, dead, dead…

We have now just been advised by our new agent that in order to get into the game, rather than being a spectator, we need to price our property much more aggressively by remarketing it at £399,950.

The agent’s logic is that if we price our property much more aggressively to get an offer then it puts us in a much better position to aggressively haggle down the house that we want to upgrade up to, to match the same percentage drop that we have taken on our house. As long as everyone plays by the same price reduction percentage rules then it could get things moving for everyone.

This does make sense as its all relative, but is there a flaw with this logic?

Thanks in advance.

LRS

Your house is too expensive. It is not by how much you reduce it but what you reduce it to.

.

When your house reaches a price at which a person wants to buy it and has th money to do

so it will sell.

.

For more information read my sig.

.

ST

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Hi All

Been trying to sell and buy for the past 4 months. We have reduced twice by £10k each time from £439,950 to £419,950. We’ve had 16 viewings of our property, but with no offers being made. The market here is dead, dead, dead…

We have now just been advised by our new agent that in order to get into the game, rather than being a spectator, we need to price our property much more aggressively by remarketing it at £399,950.

The agent’s logic is that if we price our property much more aggressively to get an offer then it puts us in a much better position to aggressively haggle down the house that we want to upgrade up to, to match the same percentage drop that we have taken on our house. As long as everyone plays by the same price reduction percentage rules then it could get things moving for everyone.

This does make sense as its all relative, but is there a flaw with this logic?

Thanks in advance.

LRS

I suppose it depends on how the property you are trying to buy has been valued. If it's been valued at £500k and that's a fair and honest valuation in the current climate then what right do you have, having taken a rough 10% cut on your asking price, to ask for the same reduction?

I think the 'everyone plays by the same price reduction percentage rules' is where it falls apart!

It's all smoke and mirrors, a house should have a value and that is that, not an asking price that you can then undercut with an offer of x% depending on various factors.

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Hi All

Been trying to sell and buy for the past 4 months. We have reduced twice by £10k each time from £439,950 to £419,950. We’ve had 16 viewings of our property, but with no offers being made. The market here is dead, dead, dead…

LRS

If your EA thinks taking 20K off a 420K house is aggressive marketing, he or she must have been in a coma for the last three months.

Are you sure the suggestion wasn't 20% off the current asking?. At that reduction, you might just be in the game.

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If you wanted to sell you should have made bigger cuts right from the start instead of chasing the market down with piddly 2% drops every month.

If you'd priced it at £420k 4 months ago you might have got an offer or 2, but the fact that you're drip-feeding your cuts means that you're simply following the usual trend rather than making a serious attempt at actually selling.

You need to make a much bigger cut and just get rid of the place, or 8 months from now you'll still be doing your 2% monthly drops with not much effect.

This is the graph you're up against as a seller, and you have to be ahead of it, or risk simply sliding down it gradually over the course of the next several ears without selling:

_44820230_house_prices_10_07_08.gif

There are 15 sellers for every buyer right now - if you want to get out without getting your fingers burnt too badly, you have to be willing to accept a kick in the balls now to avoid being castrated later.

You are also 100% right about having a lot of "haggle power" with the place you're moving into. Think of the problems you're having selling yours and realise that the seller of your new home is also having the same problems. Offer at least 20% below market value and see how it goes.

Have you considered renting instead of buying after you've sold? Sit around, let the interest from the capital pay your rent and see how the market goes?

As long as everyone plays by the same price reduction percentage rules

There are no "rules" in the property market, only those that people choose to restrict themselves with to their detriment.

As a potential FTB (about 5 years from now), I can honestly say that the tripling of house prices during this boom has had an absolutely crippling effect on my generation on the way up. Things are going to be just as bad for your generation on the way down.

People won't be sticking to the rules. Money talks, and if they lose 20% on their property they will be offering 30% off the next one they buy to justify that loss and feel like they've still made a profit. Housing in this country has been reduced to a cut-throat game, where a house is no longer considered shelter, but a speculative asset for people to make as much money out of as possible.

This post isn't intended to be harsh, just honest. Best of luck with your sale. :)

Edited by DementedTuna

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Hi All

Been trying to sell and buy for the past 4 months. We have reduced twice by £10k each time from £439,950 to £419,950. We’ve had 16 viewings of our property, but with no offers being made. The market here is dead, dead, dead…

We have now just been advised by our new agent that in order to get into the game, rather than being a spectator, we need to price our property much more aggressively by remarketing it at £399,950.

The agent’s logic is that if we price our property much more aggressively to get an offer then it puts us in a much better position to aggressively haggle down the house that we want to upgrade up to, to match the same percentage drop that we have taken on our house. As long as everyone plays by the same price reduction percentage rules then it could get things moving for everyone.

This does make sense as its all relative, but is there a flaw with this logic?

Thanks in advance.

LRS

If no-one is offering, the price is too high.

Prices are falling all the time. The market sets the rate. If you want to sell, cut by more. £10K off 440K is pretty small beer. Th enumber of buyers out there is TINY. Stick it on for £350K and offer low low low for your next place

Or slice £10K off for the next year :rolleyes:

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80K off and you might get a sniff

maybe you should LISTEN to your agent.

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I suppose it depends on how the property you are trying to buy has been valued. If it's been valued at £500k and that's a fair and honest valuation in the current climate then what right do you have, having taken a rough 10% cut on your asking price, to ask for the same reduction?

I think the 'everyone plays by the same price reduction percentage rules' is where it falls apart!

It's all smoke and mirrors, a house should have a value and that is that, not an asking price that you can then undercut with an offer of x% depending on various factors.

Surveyors will overprice to allow for reductions, as in my sig. So people should offer way way below the surveyors price.

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If you wanted to sell you should have made bigger cuts right from the start instead of chasing the market down with piddly 2% drops every month.

If you'd priced it at £420k 4 months ago you might have got an offer or 2, but the fact that you're drip-feeding your cuts means that you're simply following the usual trend rather than making a serious attempt at actually selling.

You need to make a much bigger cut and just get rid of the place, or 8 months from now you'll still be doing your 2% monthly drops with not much effect.

This is the graph you're up against as a seller, and you have to be ahead of it, or risk simply sliding down it gradually over the course of the next several ears without selling:

_44820230_house_prices_10_07_08.gif

There are 15 sellers for every buyer right now - if you want to get out without getting your fingers burnt too badly, you have to be willing to accept a kick in the balls now to avoid being castrated later.

You are also 100% right about having a lot of "haggle power" with the place you're moving into. Think of the problems you're having selling yours and realise that the seller of your new home is also having the same problems. Offer at least 20% below market value and see how it goes.

Have you considered renting instead of buying after you've sold? Sit around, let the interest from the capital pay your rent and see how the market goes?

There are no "rules" in the property market, only those that people choose to restrict themselves with to their detriment.

As a potential FTB (about 5 years from now), I can honestly say that the tripling of house prices during this boom has had an absolutely crippling effect on my generation on the way up. Things are going to be just as bad for your generation on the way down.

People won't be sticking to the rules. Money talks, and if they lose 20% on their property they will be offering 30% off the next one they buy to justify that loss and feel like they've still made a profit. Housing in this country has been reduced to a cut-throat game, where a house is no longer considered shelter, but a speculative asset for people to make as much money out of as possible.

This post isn't intended to be harsh, just honest. Best of luck with your sale. :)

I could not agree more.

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Thanks to everyone for your direct and honest feedback.

I think you have all uncovered my distinct ignorance regards the current state of the ‘selling’ and ‘buying’ situation in the UK.

Things are obviously far more desperate then EAs and the press are alluding to. Visions of Mad Max or 28 Days later start to spring to mind, with the whole of the capitalist world crashing into oblivion…!

Below is a brochure article direct from a big name EA in the Southeast regards “how to move things forward”. (I’ve changed the numbers to represent my own situation. The articles original percentage was 10%)

“Trading Up”

“When prices are down it effects the whole market and therefore it is likely that the house you are buying will have dropped further in real terms than the one you are selling”

“For example, if you are selling a house that was worth £439,000 at the peak of the market but is now worth £399,000, you would have a ‘loss’ of £40,000 or 9.75%. But if you were trading up to a house that was worth £640,000 that had come down by the same 9.75%, it would now cost £578,000. You would have a saving of £62,000 on the new house, resulting in an overall saving of £22,000.”

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Thanks to everyone for your direct and honest feedback.

I think you have all uncovered my distinct ignorance regards the current state of the ‘selling’ and ‘buying’ situation in the UK.

Things are obviously far more desperate then EAs and the press are alluding to. Visions of Mad Max or 28 Days later start to spring to mind, with the whole of the capitalist world crashing into oblivion…!

Below is a brochure article direct from a big name EA in the Southeast regards “how to move things forward”. (I’ve changed the numbers to represent my own situation. The articles original percentage was 10%)

“Trading Up”

“When prices are down it effects the whole market and therefore it is likely that the house you are buying will have dropped further in real terms than the one you are selling”

“For example, if you are selling a house that was worth £439,000 at the peak of the market but is now worth £399,000, you would have a ‘loss’ of £40,000 or 9.75%. But if you were trading up to a house that was worth £640,000 that had come down by the same 9.75%, it would now cost £578,000. You would have a saving of £62,000 on the new house, resulting in an overall saving of £22,000.”

Why don't you try having an open day so you can hopefully get some feedback from potential buyers if there are any out there?

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Hi All

Been trying to sell and buy for the past 4 months. We have reduced twice by £10k each time from £439,950 to £419,950. We’ve had 16 viewings of our property, but with no offers being made. The market here is dead, dead, dead…

We have now just been advised by our new agent that in order to get into the game, rather than being a spectator, we need to price our property much more aggressively by remarketing it at £399,950.

The agent’s logic is that if we price our property much more aggressively to get an offer then it puts us in a much better position to aggressively haggle down the house that we want to upgrade up to, to match the same percentage drop that we have taken on our house. As long as everyone plays by the same price reduction percentage rules then it could get things moving for everyone.

This does make sense as its all relative, but is there a flaw with this logic?

Thanks in advance.

LRS

Your not in Aylesbury are you trying to sell via Connells are you? I have offered 30% BMV (STR, big deposit, it's our birthright dont you know) on a house on for £420k that has been steadily dropped by £10kish a pop after first being marketed @ £455k in March.

The dumb thing is Connells told me that they vendor was offered £420k on April but refused, wanting to hold out for higher, and is now getting upset they have no offers @ £420k. EA is right, stop chasing the market down, take a big drop and pass the discount upwards.

M

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Hi All

Been trying to sell and buy for the past 4 months. We have reduced twice by £10k each time from £439,950 to £419,950. We’ve had 16 viewings of our property, but with no offers being made. The market here is dead, dead, dead…

We have now just been advised by our new agent that in order to get into the game, rather than being a spectator, we need to price our property much more aggressively by remarketing it at £399,950.

The agent’s logic is that if we price our property much more aggressively to get an offer then it puts us in a much better position to aggressively haggle down the house that we want to upgrade up to, to match the same percentage drop that we have taken on our house. As long as everyone plays by the same price reduction percentage rules then it could get things moving for everyone.

This does make sense as its all relative, but is there a flaw with this logic?

Thanks in advance.

LRS

There's no easy way to say this LRS, but the estate agent lied to you when he/she gave you the valuation.

everything sells, but only if the price is right.

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I suppose it depends on how the property you are trying to buy has been valued. If it's been valued at £500k and that's a fair and honest valuation in the current climate then what right do you have, having taken a rough 10% cut on your asking price, to ask for the same reduction?I think the 'everyone plays by the same price reduction percentage rules' is where it falls apart!

It's all smoke and mirrors, a house should have a value and that is that, not an asking price that you can then undercut with an offer of x% depending on various factors.

No-one seems to have responded to your post and I can only assume that's because they thought you were having a laugh! But, I don't think you were.

Firstly, your comment that "a house should have a value and that is that" is a strange one. Who, d'you think, is going to produce this perfect 'valuation' and does it mean that a prospective buyer can buy the property only at that price? What if no-one will? What use the 'valuation' then?

'What right has the OP to seek a reduction in the price of his proposed purchase?', you ask. We'd say 'Every right', because he/she can offer anything they like. The vendor has the right to reject it.

To repeat, for the umpteenth time, the definition of 'market price' - 'It's the amount that a willing buyer and a willing seller agree on and are able to proceed on.' Any other 'valuation' is merely an estimate.

p

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  • 399 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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