Don't be timid, be bold!
I really think that seller's need to be aware that price reductions are not giving up, they are exactly what Alan says in his blog below. They are trying to "gain a buyer". But, as he so well explains, there is a time and place...
At some point, in a Realtor's professional life, there will come a time when they have to broach the subject of a price reduction with a seller.
Price reductions can be an excellent tool in a home seller's toolbelt. It shouldn't be the only one, but it's often an important one. And when it comes time to reduce your price, there are a number of things to take into consideration. You oughtn't just be reducing the price willy-nilly. (yes, I said "willy nilly"!)
1) Are any of the comparables in your area / price range selling?
Let's say that you're selling a 3-bedroom bath and a half single family home. And there have been no other sales in the last 30 days of homes with 3brs and a bath and half. Not a single one of those has sold regardless of their prices. Then I think it's fair to say that "price" (in an of itself) was not the factor in the home not selling and a price reduction is not called for.
If, however, there were three similar sales, and all of them were priced below you, and the homes are truly comparable to yours... then you should be thinking about a "strategic reorientation of your pricing". (Doesn't that sound so much better than price reduction?)2) What will we gain (that's right... GAIN) by reducing our price?
What is the purpose of reducing our price? Your home has been sitting on the market without an offer for X days. If you're going to reduce the price, you want to reduce it so that it'll be exposed to a new group of buyers. Because the folks who've been viewing in online and on the MLS have already determined that at your current price, they don't want to view it, and/or they don't want to buy it.
So, we need to reduce the price "enough" to make it visible to the next group of buyers. If you're currently priced at $279,900... reducing your price to $279,000 will not be enough!! This is important enough that I'm going to repeat it... "if you're priced at $279,900... reducing by $900 will not be enough!". You need to reduce enough to become visible to a group of buyers who hasn't yet seen your property.... and they're possibly searching the internet between $275,000 and $300,000.... so in order to become visible... you're going to need to drop AT LEAST below $275,000. And honestly, even that is probably not enough.
If my client was willing to pay $260,000... your listing price of $279,900 wouldn't have slowed us down... and the reduction to $275,000 probably wouldn't change their minds. I generally recommend reducing your price enough to make it attractive to the next buyer, which will probably require at least a 5% drop (so from $279,900 to $269,900!)... and don't worry about reducing it too much... if you've really reduced your price too much, you could induce a little bit of a feeding frenzy, and the purchase price might pop over your newly attractive list price.
So, what do we stand to GAIN? We stand to gain a buyer, by making our property attractive to them.3. Make sure that any buyers who've already seen the property are made aware of your new strategic reorientation of your price. (See, it's starting to grow on you already). I know that they may have give you feedback that said "we've just begun our search... not ready to buy", or "the property just didn't suit them". But maybe, just maybe you could END their search right now, or the reason that your property didn't suit them was because it was priced too high. Don't be timid, be bold! Call them and tell them about your new, exciting price!
Unless your property is listed for $18,000, a $900.00 reduction in price is a waste of everyone's time and effort.
(278 -6)
the weekend wasn't kind to meALAN MAY, Realtor®
Specializing in Evanston Real Estate and North Shore Real Estate
Coldwell Banker Residential Real Estate, 2929 Central Street, Evanston, IL 60201
847.425.3779 Cell: 847.924.3313 Email: Almay@aol.com
Evanston Real Estate & North Shore Real Estate
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