The old phrase "time is money" is more true in real estate than most industries. The longer a home sits on the market, the lower the final selling price relative to start price. This is true in Los Altos and the rest of Silicon Valley. In this part of the world, a home priced right relative to location and condition will sell in a week or so. Ongoing negotiations might push that sell date out to 3-4 weeks. However, if there's no activity - no disclosure packages downloaded, no offers (verbal or written), and few or no duplicate showings, then it's time to drop the price.
Stage 1: Reduce the price after 14 days on market
A price reduction in the first two weeks is ideal because the home is still "fresh" in the eyes of the market. Consider it a "do over" because you priced it so high. Buyers will forgive that little indiscretion just this once. If you push the reduction to 30 days or more the home will no longer have the same fresh feel and buyers will wonder what's wrong. While the listing is still considered "new" and buyers are intrigued with it, keep their attention with a price reduction. The percentage of the reduction depends on how far the asking price is over the suggested valuation. If the original suggested listing price was $1,398,000 and it's priced at $1,600,000 (with no buyer prospects), then the price needs to come down to at least $1,498,000 and would be better at $1,398,000.
Stage 2: Reduce the price after 45 days on market
As a rule, if a home is listed for more than 10% over the comps it will lose over 90% of potential buyers. They skip it because it's overpriced. In stage 1, I used the example of a home priced at $1.6M that should be $1.4M and suggested an initial price drop of $100K. By cutting the overpricing in half, I recaptured half the buyers. However, pricing within 3% of the anticipated selling price will get me over 90% of the buyer market. So if the home has been on the market for over 30 days, it's time to get the price down to exactly where it needs to be. This is because buyers now regard the property as being stale, possibly with problems, and likely to offer less than the asking price. In Los Altos, 45 days on market is still not too long so coming down to the market price will likely get at last one offer.
Stage 3: Over 60 days on market
At this stage, the home starts to lose value. Looking at Los Altos homes on the market longer than 60 days, many receive offers and ultimately sell for less than the original target listing price - market value at the beginning of the listing. This isn't always true, but often. Pricing right to begin with prevents losing value. It also makes a strong case for making fast price reductions. Keeping the Los Altos buyer pool engaged is critical in retaining value. The home in the examples above might ultimately sell for $1.35M which is abotu 97% of the target asking price but that means it would lose $50K from what it could have gotten in the first place. It's important to price right to begin with but if not, fast price reductions are essential.