Your home has been on the market for a few weeks now with no offers coming in, despite all the showings that have been booked. What could be the problem?
Getting feedback from prospective buyers is important in order to gain valuable insight into potential issues with your home that warrant attention. Maybe the problem is as simple as improper staging. Perhaps there’s a foul odor in your home that’s turning buyers off. Or maybe there are many components in the home that need repair.
These are all simple fixes. But what if the issue is the actual listing price of your home? If it’s been priced above what the current market dictates, that could be precisely why the listing is lingering without a bite.
Pricing your home appropriately from the get-go is a critical step in the listing process. The right price is one that’s in line with what other similar homes in the neighborhood have sold for in your market and accurately reflects your home’s value. By pricing right, you’ll be better able to attract more buyers shortly after your listing goes live.
If you overprice your home, buyers who are in the market to make a purchase within the actual market value of your home will miss your listing completely. You’re much better off pricing correctly at the very beginning rather than trying to go for top dollar in order to maximize the number of qualified buyers that your home attracts.
When priced right, homes shouldn’t take any more than 30 days to sell, on average. If it’s been weeks since you’ve listed, a price reduction might be warranted. No seller wants to have to reduce the price of their listing, but if the price is realistically too high for the current market, no prudent buyer will willingly pay more than what a home is truly worth.
When Should You Reduce Your Listing Price?
Before you drop the price on our listing, take into consideration any seasonal factors that come into play, whether it’s a buyer’s or seller’s market, and the average time to sell similar homes compared to how long your listing has been on the market.
During slower times of the year, it might not be uncommon to only get a handful of showings within a month’s time. Back-to-school focus, holiday vacationing, consumer confidence, the economy, and other factors can lead to a sluggish market. You don’t have to quickly reduce the listing price on your home during slow periods, unless you’re in an urgent need to move.
On the other hand, properties are snatched up just as quickly as their listings go live during a hot seller’s market. In California, the market seems to be a perpetually hot one, so if your home isn’t garnering many showings or offers after weeks have gone by, the price is something that you seriously need to look at.
Another important consideration to make is how your home stacks up compared to others on the block. If your home is a unique one that only appeals to a limited pool of buyers, it might take a little longer than usual to find the right buyer.
For example, maybe your home only has two bedrooms and you live in a three-bedroom area, or perhaps your home is a bungalow in a two-story neighborhood. If your home is missing a crucial component, you might need to stick it out a little longer – within reason – until the right buyer emerges. Just make sure you follow the advice of your real estate agent in terms of just how long you should hold out before a price reduction is called for.
How Far Should You Drop the Price?
If you and your real estate agent have determined that a price reduction is necessary after careful consideration, your next step is to determine exactly how low you should go. At this point, it’s critical to implement a sound price reduction strategy to make sure that the price you pick is the right one.
At the end of the day, the price cut must be in line with what the current market in your area dictates and will help attract qualified buyers in the area. Essentially, the new price that you select should appeal to a larger pool of buyers. Obviously, the lower you drop the price, the more it will attract buyers. After all, buyers are always looking for a good deal. However, you don’t want to drop the price too far or you’ll be leaving money on the table.
Having said that, the price reduction should be just enough to trigger a response from buyers and attract their attention. Merely decreasing the price by a couple thousand dollars, for instance, isn’t going to have much of an effect on boosting showings and bringing in the offers.
Lowering the price in small increments is a big mistake. Small reductions won’t generate very much excitement and won’t attract a new set of prospective buyers. Not only that, buyers who’ve already seen your home will take notice of this and exploit the situation to give them more negotiating power.
Of course, you should listen to the advice from your real estate agent who will provide you with a sound suggestion based on a comparative market analysis (CMA). By taking a look at what similar homes in your neighborhood have recently sold for, you will have a much better idea of where to price your home at that will make it more competitive, which is the price it should have originally been listed at in the first place.
The Bottom Line
A price reduction isn’t a decision to make lightly. However, after ruling out all other potential reasons why your home is still sitting on the market with little action and determining that the home is overpriced, dropping the price down to fair market value is likely a wise decision. Obviously, pricing right from the start is always the best decision. Sellers always want to get the most money for their homes, but overpricing is not the way to go about it.
