I have this conversation at least once a week with a client or potential client. A drop in the price of the home can mean a number of things. If you’re super analytical, like me, you’ll undoubtedly try to dissect the situation every which way possible as to why the seller lowered the price; desperate seller, failed deal(s), no activity etc. Note that a price drop is only important if you as the buyer have interest in the house. Otherwise, it’s really irrelevant. On the other hand, nothing makes a home more attractive than competitive price.
You want to know why the seller dropped the price on the home. As someone in the business, a price drop usually, and I mean usually, means 1 of 2 things.
1-The seller is trying to sell the home–not that difficult to decipher. She realized, hopefully with her agent’s help, that the home was never going to sell at that price. And therefore, a price adjustment was necessary. Or
2-The seller accepted an offer on the home, but it really was not what she was hoping for, and therefore dropped the price to see if she can get a better offer. This is completely legal. It’s just part of the game. Is it ethical? Well, that’s a whole different story. This act of ’treason’ can backfire. This price drop will put pressure on the buyer to move along at a faster pace because now other buyers may express interest in the home. On the other hand, a buyer with a short temper and unwillingness to play games will simply walk away from the deal.
As a professional operating under the strict code of ethics while simultaneously assuming everyone else does the same. I would venture to guess that the cause of the price drop is first reason above. Especially in this market. I don’t think anyone would be stupid enough to pull such a underhanded scheme. Then again, it wouldn’t surprise me.
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my guess is that they are trying to get a better offer…not necessarily a higher one, but one with better terms. Perhaps, an all cash or one with a higher down-payment. i would recommend that you don’t panic–especially since you can’t control it. push forward…it’s not like buyers are lining up to buy homes these days. I believe in Karma…if they take another offer versus yours, and that deal falls through, then you can pick up the house a month from now for $180k. best of luck!
We just put an offer of 200k in on a freddie mac owned home listed at 212. our agent submitted the offer friday. now mls was updated sat morning (the next day) at 199,900. It still shows active. We are in Northern California Sierra Foothills and typically an mls will switch to “pending” when an offer is accepted. I have a message in to our realtor but we are very curious to find out why the price drop after our offer? it is a fixer and we also have sec 1 repairs and seller (bank/freddie mac) covers 3% of closing in the offer. it has been on the market for 89 days and was price dropped in early feb from 238k to 212k. Since our options of USDA or FHA loans both would require sec 1 repairs is it possible this is a last ditch from the bank to find a buyer who could buy “as is”?
Neva, we have a funny and awkward period here called “Accepted Offer” right before conditional contract. Unlike most areas, an offer in these parts is verbal and non-contractual. Either party can walk away.
The seller under scenario 2 may have received an offer and wants to lower the price to pull in better offers, but if the seller accepted an offer – it’s a legal contract and should be placed as “under contract” and not doing a price reduction.