The Truth About Home Price Reductions and Good or Great Deals

I read an interesting (okay, funny really) press release put out by Trulia announcing their “Hair Cut” search engine. Apparently this new option for searches will let you specify only to search for homes that have had a previous price reduction. I guess that means that you can specifically search for homes whose price has had a “hair cut”.
 
A quote from the CEO of Trulia:
“It doesn’t matter if your price point is $200,000 or $2 million, in these difficult times people are searching for the best deals they can find on homes. Our new price-reduction functionality makes it easier for people to find the home of their dreams without laboring through unwanted results.”
 
My first question is why would consumers want to limit their searches in this way? Not to see a potential home because that house hasn’t needed a price reduction? Sounds counter productive to me.
 
Is the CEO trying to say that homes who haven’t had a price reduction aren’t a good deal? The truth is that many homes that go “under contract” or “pending” status rather quickly (when they first hit the market), more often than not… did NOT need a price reduction. It was a great price to begin with!
 
Truth be told, a lot of times, the best deals to be had by buyers can by found by those properties that just hit the market! NOT the houses that have had 30 price reductions and been on the market for 2+ years. Stop and think about it. A seller lists their house for sale (for more than it’s worth). It usually sits on the market and can go through several price reductions until the asking price for the home reaches a point to where someone is willing to buy it. Just because a house has had a price reduction doesn’t mean it’s a good deal. All that means is that the previous price was higher than what someone was willing to give for it.
 
Now, you take a seller who lists their house at BELOW market value. Their asking price is LOWER than a price for which someone is willing to pay for that home. Would you think that those houses sit on the market for very long? Usually, they don’t.
 
Let’s do the math. As of right now, there are 337 homes marked as “pending” or “under contract” (meaning that someone has a contract to buy that house). Out of that 337, 120 homes have had price reductions, which means that about 64% of the house that are “under contract” (right now) had NO PREVIOUS PRICE REDUCTIONS!
 
Let’s go further and look at houses that only have been on the market for 45 days or less. There are 113 houses “under contract” (right now) that have been on the market for 45 days or LESS. Out of those 113 homes, only 8 have had a previous price reduction, which means that 93% of those homes had NO previous price reduction!
 
I quite don’t “get” what Trulia is trying to accomplish (with their new “hair cut” search engine) other than to drive people to their website so they can sell more advertising. In the ever increasing competitive online market place for home listings, maybe that company needed to make some “news” or just have a reason to issue a press release? Whatever the reason, be wary of the gimmicks that some of these websites try to tout as the next best thing because, in fact, it may not the best thing at all!
 
The figures and the math all add up. One of the best ways to find a great deal is to be informed… and fast. The sooner you know about properties hitting the market the more informed (and better positioned) you become.
 
If you’re a buyer looking for great deal, just know that many of those “great deals” don’t stay on the market long at all. In addition to knowing which homes hit the market fast, you need to be prepared to act fast. Getting pre-approved for a home loan is a major step you can take to set yourself up to be able to act fast… just in case you come across that great deal.
 
Since I’m a Realtor, I know you may take this with a grain of salt, but really, one of the best ways to find those great deals is to find an agent; an agent you trust AND an agent that keeps up with market constantly. I haven’t mentioned this yet, but sometimes those great and unbelievable deals never actually make it the MLS system (and thus, never make to websites like Zillow, Trulia, Realtor.com, etc…). Realtors do talk, and talk a lot, especially about any homes that they’re about to list…. that happens to be one of those great deals.
 
Find an agent you trust, one that can keep you informed and more importantly QUICKLY informed. Some of those websites I mentioned earlier are great for browsing and killing time, but if you’re serious about buying a house, the sooner you find your personal Realtor, the better positioned you’ll be.
 
If you’re looking to buy a home, you can sign up for my free email notifications of new listings. This service is free. If a home that matches your search criteria is listed on the open market, my system will automatically email you that listing. You’ll be notified on a daily basis. But if you prefer, I can notify you immediately! Warning: If you choose to be immediately notified (instead of daily), the number of emails can be numerous.
 
Sign up here – Waco Home Search
 
Just remember, often, the best tool you can use in searching for your first home or a great deal… is a Realtor.