No seller starts off the selling process with the thought of having to reduce their listing price in mind. The goal is to sell quickly and for as much money as possible, so the idea of having to lower the price is not exactly a pleasant one.
Unfortunately, there are some times when a price reduction may be necessary. The key is to know if it’s the right time to drop the price in order to gain some more attraction from buyers.
Here are some telltale signs that it might be a good time to lower the price.
The Home Has Been on the Market Longer Than Average in the Area
There are several key pieces of data that you should know before you list your home for sale, and the average number of days on the market in the area is one of them. It’s helpful to know how long it takes homes to sell in your community. That way you’ll have a good baseline to compare to.
If, for instance, it takes approximately 20 days to sell a home in your neighborhood, you can expect your listing to stay on the market around the same amount of time if everything about your listing is in good shape.
If your home continues to linger on the market while others are being snatched up very quickly, it might be time to take a closer look at your listing to see if there are any issues with it. If you notice that your listing price is not in line with what other similar homes in the areas are selling for, a price reduction may be in order which brings us to our next point.
You’ve Priced Too High From the Get-Go
One of the biggest mistakes that sellers make when they first put their home up on the market is list far too high for what the current market dictates. Overpricing will almost certainly result in a stale listing because savvy buyers who know what properties in the area are worth are not going to dish out more of their hard-earned money for a property than necessary.
That’s why it’s so important to find out what similar properties in the area have recently sold for, and establish your listing price accordingly. Unfortunately, some sellers do not heed the advice of their real estate agents and shoot for the stars in hopes of getting more money upon the sale of their home. But not only will sellers likely not be able to find a buyer willing to pay that much, but they’ll also be setting up their listing for an inevitable price reduction.
If you’ve discovered or accepted the fact that you’ve listed too high, a price reduction might be the first thing you need to do to rectify the situation and starts gaining traction in the market again.
The Market Has Changed
Real estate markets are not static. Instead, they are constantly changing, and with such change comes a fluctuation in sale prices. What may have been an appropriate listing price one month may be out-of-date the next. It’s important to keep your finger on the pulse of what the market in your area is doing in order to know whether or not your listing needs some tweaking.
It’s possible that the listing price you initially came up with closely matched the market at that time, but things could have slowed down a bit since then. Your real estate agent will keep tabs on the market and will be able to identify if a price reduction may be necessary.
You’re Very Motivated to Sell
Sometimes the motivations of the seller will dictate whether or not a price reduction may be warranted. If you’re in a major hurry to sell your home for whatever reason, a price reduction will almost certainly attract more buyers. Just be sure not to go too low, as you want to make sure that you’re getting what your home is truly worth.
Is it Time to Lower the Price?
If you’ve established that a price reduction is needed, put a sound price reduction strategy in place to make sure that you lower it appropriately. You don’t want to drop the price too far, but you also don’t want to reduce it by too little, either.
At the end of the day, the new listing price that you choose should be able to attract as many buyers as possible. Ideally, the price reduction will be just enough to catch buyers’ attention. But you don’t want to drop the price by too much, or you’ll lose out on a lot of cash. At the same time, you don’t want to lower the price by too little, as buyers might not even notice.
A price reduction shouldn’t have to happen more than once. You don’t want to have to keep dropping the price in order to find a willing buyer. That’s why choosing the right price is so important, so be sure that the new price you select is in line with the current market and is backed up by a comparative market analysis.
The Bottom Line
As a seller, you want to get the most out of your home sale as possible, but reducing the listing price is never a comforting thought. But sometimes it may be necessary in certain circumstances. Before you decide to lower the price, be sure to carefully assess all facets of your listing to make sure this is the right move to make, and always consult with your real estate agent before making any decisions.