Old fashioned beliefs about dropping asking prices

RHemmings

I'm starting a new discussion here as I don't want to take personal bugbears into individual threads about people trying to sell their houses.

How should people selling houses view a dropping of the asking price. It seems from some comments that people consider this "losing money" in some way. E.g. dropping a house for sale for £200K to £180K is a "loss" of £20K. But if the house doesn't sell for £200K, and where there is little chance of the market catching up, then the £200K was never likely to change from theoretical to real money.

It's entirely possible, given that house prices may have fallen 10% in the last six months, that a quick cut of the price now may result in a higher selling price than holding out, even holding out for years.

I can understand how people might think like this, as in the recent past there was a sellers market where it was very likely that people would get their asking price, or very close to it. Even if they had to wait for the market to catch up. So in that situation, dropping an asking price is much closer to "losing money".

But in the current market, couldn't it be holding a high asking price that loses money due to a lower amount having to be eventually accepted.

I'm not, in this thread, most interested about the mechanics of selling houses. I'm more interested in the psychology, the way that an EA's valuation seems to get mentally banked, and that cutting a price is "losing" money.

redcar_2

I suppose it depends on whether you have only just bought and the agents price is likely to be close to the actual money you have put in in deposit and mortgage payments to date plus remaining mortgage value. I can see that being a psychologically hard price to drop the price below and I have a lot of sympathy for people in that position.

For those who are sitting on a huge *theoretical* market growth from a number of years ago then yes I think its silly to hold on to last years asking price.

lonestar1

Just flip your example around if you wanted 200k and only sold for 180k have you lost 20k or gained 180k

Pint pot is always half empty unless its my round inwhich case its half full

lethal0r

most of the sellers in my property bee search are chasing the market down. the number of houses in the search is slowly rising - from 155~ about 6 months ago to 165~ now.

about 5 or 6 sellers drop their price each week, but usually only by very small amounts. hardly any are selling. one has been on for 2 years, they've only dropped it £7k in that time. most have been on for a year+.

its clearly that pretty much everyone - if not everyone - views a drop as losing money.

RHemmings

Perhaps this is a hold-over from the boom years, when "equity" in your home was something that was assumed could never disappear.

Conrad

In the last crash it was exactly the same. I used to work in area with lots of Italians and they always said "Im not giving it away" and would refuse any reductions and simply not accept prices could ever fall. Oddly enough when it came to buying though, they ALWAYS went for maximum reductions giving all sorts of 'evidence' as to why a property was too high.

Humans are so odd

PasturesNew

They also believe it's just a blip. It'll be OK next month, or the one after that. Might as well hang on. It's really worth this much. Somebody will come along soon and snap it up.

They aren't so deeply entrenched in watching the market and reading the reports as people here. They aren't in possession of the economics driving it.

It's also a matter of ego and pride. They've been plumping up their chests for months/years, telling people how clever/rich they are at having bagged themselves this fantastic house ... and now it's worth £XXXX

Inactive

I agree with the OP, people do seem to get fixated on the highest value that their property ever reached, and are reluctant to face the reality of market forces.

harbinger13

'How desperate is the seller - for what do they need money now and not later' is the question the seller will have to answer to themselves - then it would be clear whether 180K cash in the bank is better or 200K in the future is better.

For most parts - most home owners live in reality but try to trade in virtual-ity (meaning they think their house is worth what they bought at + ... some amount more).

As houses are not thought of as commodities - there is more passion involved - the trade/economic theory is thrown out of the window. However when the attack of debt strikes - a loss in the family, loss in business, job loss, anything similar - that is when fire sale starts.

The builders are getting into this phase now or getting ready for it - at this time if one is buying it is possible you can get a fire sale bargain at Housebuilders - this is my deduction only. For eg Barratt's will certainly view 160K is better for me today than 200K a year down the line - because they are in debt!

From the movie 'The Departed'

YOUNG COSTELLO (CONT'D)
When I was your age, they would
say, we become cops or criminals.
Today, what I'm saying to you is
this: When you are facing a loaded
gun...
very close on COSTELLO, holding Colin's shoulder.
YOUNG COSTELLO (CONT'D)
What's the difference?

zappahey

We sold our house six weeks ago and we took the view that it was not "real money" until it was in the bank*. We pitched our house at more than £20k less than the competition and, almost without exception, everyone thought we were nuts. Now, a mere six weeks later, I would love to hear what they think as, even in that short time, sentiment seems to have really plummeted. My view is that you only make money on your house when you downsize or die.

Anyway, I think the OP is absolutely right that people have a view that, to take any less than what they think it is worth, then they are losing money. There seems to be some difficulty in seeing the big picture about the "cost to change".

*Though, two years ago, we had a few months in rented where the money really was in the bank, while we were house hunting so there, was a slight twinge

neverdespairgirl

PasturesNew wrote: »

They also believe it's just a blip. It'll be OK next month, or the one after that. Might as well hang on. It's really worth this much. Somebody will come along soon and snap it up.

You see that on these boards - people talking about renting out their flat / house for 6 months until the market is "back to normal"