There it is: your home! Just sitting on the market. It’s been like that for some time now, and it’s starting to look a little … desperate. You consider reducing the price, but then you might be robbing yourself of thousands of dollars. But if you don’t, you could end up missing out on eager buyers with a slightly lower price point.
So when exactly should you lower that asking price?
We asked our experts for advice.
If 35 to 40 buyers have passed through your home and not a single one has placed an offer, it’s time to seriously consider a price reduction.
As a seller, you should be asking buyers and your brokers for feedback after private showings.
Pay close attention and see if there are any common positives or negatives in their responses, so if a current theme is “It’s a bit expensive,” then you’ll know it’s time to start a price drop.
How long has it been?
The thing that can cost you the most money is having your home stagnate on the market for more than 6 to 12 months.
Houses set at the right price will start getting offers within the first few weeks.
Are comparable houses selling left and right, but you haven’t received an offer yet?
If so, you may want to do more than just lower the price of your property, you might want to delist it for a short while off the market, do some touch-ups, and relist.
‘It’s almost impossible to underprice’ a home
Here’s something you should consider when debating the great price chop: The market will probably decide it for you anyway.
It’s almost impossible to underprice, because the market will bring it back up.
It’s actually a better move to slightly underprice your home than it is to overprice it, because you’ll have more offers to work with and you can work the competition into a frenzy.
It’s called leveraging power, If I’m a [motivated] buyer and I know there’s only three offers, I’m going be less aggressive than if you had 10 offers.
The golden rule: Know thy market
Above all else, you need to consider your market. There’s no universal timeline that will tell you when to reduce your price. But we advise you to consider these three key points:
How are comparable properties faring in the market?
Are they selling quickly or lingering on the market?
If they’ve closed, what was their closing price?
What is the average time a home stays on the market in your neighborhood?
If you haven’t reached that point, don’t reduce it just yet. Likewise, if you’re well past your selling date, it’s time to start cutting prices and maybe even delisting your home to improve it and get it back on the market.
How many homes had a price reduction in your neighborhood, and how long did it take for the price cut?
Did it help them sell?
Again, what was the sale price?
In other words, do your homework and work with the market don’t fight it.