We all know what a challenging market this has been and continues to be. Pricing is important, but then again it always has been. Even in a great market we still had sellers that were asking too much and buyers would pass the house by. The difference is that then there were lots more buyers so the chances were a little better.
When I go on listing appointments something I point out to the seller is that the number of showings or lack thereof is a clear indicator of what the buying public thinks of the list price.
If there are lots of showings and no offers, then the price is too high.
If there are no showings at all, then the price is too high.
Inevitably there are discussions about lowering the price, and the question of how much it should be lowered always comes up. Generally speaking, unless the home is high end, I would recommend 5K to 10K. Often the sellers tell me that they only want to drop it 2K and in some cases even less. The reduction does depend on the price range but let's say your home is listed at $200K and it's time for a price change. Logic would tell you that dropping it to $198K will simply not do much good. That's a 1% drop in price.
Let's say you have your eye on a new car priced at 30K and the dealer says he simply cannot go any lower. A few days later you get a call that the dealer is willing to drop the price by 1% to $29,700!! Hardly worth jumping up and down about. But let's say that the dealer says, "I've looked at the numbers again and I can make this deal with you for $28,500 (and I'll throw in some free floor mats) which is a 5% price adjustment, it may start looking a little more attractive.
The same is true when adjusting the price on your home. If you drop your $200K price by 5% it drops it to $190K and now all the buyers that looked at it might be tempted to take a second look and you will may also attract some new buyers who passed it up because they simply thought the price was too high for the area or their price range.
If you have had showings and no offers, it is time to reduce the asking price and keep the momentum going.
If you have not had any showings, it is time to reduce the asking price and kick start that momentum.
Sunset Beach and Beyond Realty - Sunset Beach, NC
Professional Help with Rapid Responses...
Barb ~ Agree with you percentage of the drop and give me 10K ~ Cute title ~ Absolutely love the easy way you explained it for the public to understand ~
Feb 28, 2011 12:18 AM
Prudential Homesale Services Group - Harrisburg, PA
Harrisburg/Hershey Realtor
I always use the "Rule of 8." If no offer comes in on a home after 8 showings, there is a problem with price, condition or location. The problem is usually price.
Feb 28, 2011 12:23 AM
Compass Real Estate - Chevy Chase, MD
Realtor DC, MD & VA Luxury Home Expert
Suggested. I love the "work out" image. Sometimes you do have to make the seller "sweat" a little and know that it really is WORK to sell a house and to get it priced well so that the market will jump in and pay attention.
Feb 28, 2011 12:38 AM
RE/MAX Above & Beyond - Cleveland, OH
E-pro Realtor, Cleveland Ohio Homes
Frank and Karen, Thanks. the reduction has to be significant/
Michele, I remember we used to use 12 as our number but back then we had more buyers. Eight is probably more accurate for today.
Ellie, Thanks for the suggest! No pain no gain:)
Feb 28, 2011 01:05 AM
eXp Realty - Willoughby, OH
When You’re Ready To Move, I’m Ready To Help
RE/MAX Above & Beyond - Cleveland, OH
E-pro Realtor, Cleveland Ohio Homes
Ben Benita - Gainesville, VA
Speaker, Author, Game Changer, Coach
I always love how Sellers seem to think they know SOOOOOO much more than you agents....don't know how you do it day in and day out.....(of course negotiating short sales is no picnic either)!!!!
Feb 28, 2011 04:31 PM
Cary Property Pros - 4 Sale Realty, Inc. - Crystal Lake, IL
Cary Property Pros. Cary Property Pros Premier Real Estate
Hi Barb, I will never turn away good advice when it comes to listing homes at the right price. Sellers seem to think they know better than the professionals they hire. That amazes me. Anyway, I like the way you put it in this post and I especially like the comparisons you used. I will be using this in the future. Thanks.
Feb 28, 2011 04:41 PM
Waves Realty - Melbourne, FL
Florida Space Coast Homes
Price adjustments are part of the business and sellers need to understand that the market sets the price...not the agents.
Feb 28, 2011 04:59 PM
Weichert - Lopatcong, NJ
Barb,
I used a 3-D television ad when meeting with some sellers. They came up with the suggested on sale price. I turned that into a percentage and then asked them to apply it to their home. They lowered it about 1/2 of that amount but it helped!
Feb 28, 2011 11:30 PM
Home Driven Realty, Inc - Baldwin, NY
Driven to bring New Yorkers home
Good Morning Barb
Thanks for the post. Pricing the property right initially is key to getting buyers walking thru the door. Have a great day.
Feb 28, 2011 11:53 PM
Keller Williams Realty - Arlington, VA
Arlington Virginia Real Estate
Barb, great advice on price reduction. You are right, unless it is a visible difference in a price, there is no incentive for a buyer to return. Great post!
Mar 01, 2011 12:25 AM
RE/MAX Above & Beyond - Cleveland, OH
E-pro Realtor, Cleveland Ohio Homes
Ben, I have not traveled the short sale road much so I don't know how you do it but I imagine you have systems in place to make them go smoothly.
Karen, Pricing has been a challenge but I think the theory behind the reductions is still a valid one.
Jeffrey, yes, supply and demand
Irene, great idea!
Morning Patrick! I think we all try to do that but often reductions are inevitable.
Elizabeth, thanks. I think it's a sound principle. A 1% reduction on anything does not provide much incentive.
Mar 01, 2011 12:50 AM
Maxus Realty Group of Samson Properties - Clarksburg, MD
301-246-0001 Serving Maryland, DC and Northern VA
Dealing with lenders and approved short sales. .lenders normally go the 5% drop on price when there is no activity.
The higher the price. .the percentage drops to 3 to 4%
Mar 01, 2011 12:56 AM
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA
Barb, price adjustments can be quite challenging for sellers. Your logic makes sense. Good point!
Mar 01, 2011 01:05 AM
RE/MAX Above & Beyond - Cleveland, OH
E-pro Realtor, Cleveland Ohio Homes
Hi Fernando, Yes, adjustments will always be dependent upon price range, but for the average priced home 5% can often do the trick.
Michael, thanks for stopping by!
Mar 01, 2011 01:45 AM
San Diego, CA
Broker (760) 563-4022
Los Altos, CA
Excellent point and something every agent should be telling their sellers if the home has been on the market a while. If nothing is happening in 30 days, it's time to drop the price.
Mar 01, 2011 05:44 AM
Cedar Rapids/Iowa City, IA KW Legacy Group - Cedar Rapids, IA
Relocation Specialist in Cedar Rapids, Iowa
I agree completely! You really need to make one larger price reduction to reset the buyers and the agents' minds about the house. After two weeks, you need to get this done. If there have been no showings or lots of showings with no offers, it is the price!
Mar 01, 2011 06:41 AM
RE/MAX Above & Beyond - Cleveland, OH
E-pro Realtor, Cleveland Ohio Homes
Cory, San Diego?? absolutely, who's paying for my ticket?
Bryan, I love the 30 day rule but sellers want to hang on longer than that.
Karen Rarely is it anything else.
Mar 01, 2011 08:15 AM
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E-pro Realtor, Cleveland Ohio Homes
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