Home Sellers Continue to Bring Prices Down to Attract Buyers

BUT - Increases in interest rates are negating real savings.

I stopped at a home in San Ramon yesterday where a Realtor was taking her sign down off a 4 bedroom home that had been on the market for several months. I asked her what was up and she said the owner is going to rent it - we could have had it sold, but he wouldn't listen to me on pricing.

According to the real estate agent, she had suggested setting the price at $629K when she listed the San Ramon house. The seller wanted it listed at $689K. He wouldn't budge, so she agreed with the understanding if there was no action in two weeks, they would do a major price reduction. 

This is a fairly standard tactic when dealing with sellers who wish things were different - let the market demonstrate what the home is worth to a buyer. If the traffic is insignificant, then the price is out of touch with the reality of the market.

The San Ramon Realtor told me that the two weeks went by and the seller would only lower the price $10K. Thiat is not a major price reduction. Well, after several $10K price reductions, the house continued to sit there with no interest until the listing contract ran out and the seller decided to rent.

This is a story we hear more and more these days - sellers chasing the market down and losing money. I understand that sellers want to get top dollar for their house, but top dollar is based on what the market will bear, not what the seller wants to get. No amount of marketing is going to sell a $600K house for $700.

These sellers would not buy an overpriced home. What makes them think they can sell an overpriced home? The real estate agent told me that if the home had been priced right, she could have had it sold. I believe her because we closely monitor that neighborhood. Pricing it at $649K initially would have brought the traffic and an offer that could have been negotiated into a sale.

Getting back to the headlines of this article - buyers are a rough bunch these days - back and forth, back and forth. And all the while, interest rates fluctuate, lending guidelines change and qualifying for a loan is a crap shoot.

It's a great time to buy real estate in San Ramon, Danville and the East Bay. The people that are going to walk away with their dream homes at a great price are those that take decisive action while the window of opportunity is open.

Using the figures above - a 10% decrease in price can be negated by an interest rate hike. Sometimes savings money costs you more than money - like your dream home or the deal of the century.