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K Hovnanian, one of the largest
homebuilders in the country recently did a nationwide sale event
called "The Deal of the Century". It included steep discounts of up
to 25% or $100,000 in an effort to clear out inventory. In places
like New Jersey and New York those discounts amounted to almost
$150K.
And, it worked! They got contracts
for 1700 homes and have deposits on 400 more. They've almost met
their quarterly sales goals, all in one weekend.
There are a lot of analysts talking
about how this proves there is pent up demand out there. Duh! Who
didn't know that?! Buyers will buy at the right price! Of course
they will!
Here's the problem. How many home
sellers are in a position to reduce the sales price by 25%? And, if
they are in a position to do so, will they? So far, the answer has
clearly been "no". Most of the people I meet with about selling
their homes these days don't have the kind of equity that would
allow them to do that. They don't deal in volume and can't make it
up by selling 100 houses!
There's an old saying in the real
estate industry that "price cures everything." meaning that if I
get the price of your house low enough it doesn't matter what's
wrong with it. And the saying is true. Which is not to say that it
should be your mantra in getting homes sold. In my opinion it
usually makes much more sense to correct anything objectionable in
a home, improve the look of the place and try that first. And, in
this market, maybe you lower the price some AND do that
work.
I can lower the price of your home
to $1000 and I guarantee I will sell it and sell it quickly! That
doesn't mean it's the best strategy.
But, heck, if you can discount your
home 25% I absolutely believe it will get your home sold. I'm not
holding my breath, though. I suspect the typical homeowner isn't
going that low until the rush of foreclosures forces his or her
hand!
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