READ THIS Before Your Next Price Reduction Recommendation!

Great post. I agree, the listing agent should certainly have comps ready to justify a price reduction. Never blind side the seller.

Such a great post Jennifer.  I agree that if your friend's agent did not provide any background information, then he may well be lazy. Or a bad communicator.

Unfortunately, I have a listing right now that both I and the seller felt was priced very competitively 2 months ago.  All the agents said "what a great house - good price!" and buyers feedback never included comments on pricing.  Yet, this property as beautiful as it is, has a couple of, shall we say, peculiarities, that limit the buyer pool interested in this home.  And here's the thing:  the more buyers you have for something, the more it's worth.  The fewer buyers, the less it's worth.  It's the law of supply and demand. 

If the buyers at that price point are essentially rejecting the house, the only real option is to open up the buyer pool by adjusting the price - because we're not likely to "fix" the peculiarities or uniqueness any other way.

It's too bad your friends agent did such a poor job of working through this with the seller.  I did communicate all this, and the fact that other homes in the price range were selling, there were buyers in the market (including solid relocation buyers), and that we needed to reposition to meet buyers' expectations, which are very exacting to be sure.

Good luck to your friend.  I hope it works out well for her.

Your words of wisdom to your friend were right on target. As Realtors, we have many tools at our fingertips to analyze the market.  The resulting reports are essential to helping our clients understand the current market.

FWIW, I find that agents rarely give feedback that the price is too high.  The few times I've said that in feedback -- thinking to help the listing agent get the seller to see reason -- I've gotten back defensive responses trying to justify the price, as if I'd attacked the listing agent's judgement when I didn't mean that at all.  So now, like everyone else, I just say "Unfortunately, the [whatever] doesn't work for these buyers" and we move on.  

"The price is too high" is in the feedback by implication, but not in so many words.

Jennifer, I think the bottom line is that if there are enough showings and no offers, no matter what the specific feedback is, generally speaking price should be taken into consideration to open the buyer pool.  It might not be all about price with some unique homes, but even with that, maybe lowering price will make the next buyer accept that unique feature, which the buyers at the current price point will not.  If the seller can't reduce price or gets to their bottom line of pricing, then their choice is to wait or take the home off the market, especially in this market where most areas have way too much inventory vs. ready, willing and able (and super-picky-because- they-can-be) buyers. 

I just showed a charming and very unique home that intrigued my buyers but I think at the listed price they found fault with the floorplan.  They want charming and unique, they lingered at the house, they loved some features of it like the awesome kitchen.  Would they have accepted the bad features at a lower price - maybe - we'll see if it drops and if they reconsider.  As it was, at the current price they nixed it and will continue looking.  My feedback didn't mention price, I only said it was charming and unique but my buyers didn't care for the floorplan.  I don't mention price unless a home is grossly overpriced and I know there's no way my buyers would consider it.

Hi Jennifer - You need to have a valid reason to lower the price and it can't look like you are just rying to get a fast sale.

Jennifer, I agree with the fact that being asked to make a substantial price reduction without supporting data or an explanation is not adequate and I mentioned that fact in my prior comment.  My last comment was in response to your comment #163.  I think we're pretty much in agreement.

I agree whole heartily on having comps and information to support the price.  Some of what should be talked about has to do with the supply and demand per price point for her character of house within that neighborhood. A simple analysis of the last 6 month's sold information by increments of $10,000 or so as one column, the pending and active market as two more columns, then the time to sell the inventory at each price point would be a useful piece of information in her case. 

Hi Jennifer.  Just had to go read the other blog on price reduction.  Thanks!

Bookmarked it. In fact, very timely one. I have a meeting with a seller who needs...what else? Price reduction!

Stupendous information, and great recommendations.  Some agent's only strategy to refresh a listing is to drop the price, but that's not always what is needed.  I'm assuming that since he was asking for a $50k price reduction that it's in a high price range, and if it's a unique house, I think 6 weeks is way to early to start cutting the price.  It's probably just one of those houses that needs to wait for the right buyer.  This is an older post, so hopefully she worked it out, and it's already sold.

Your question for the agent no. 6 on changing list price is good that "Has the market changed significantly since you recommended the price we listed at?"

However, a reasonable response would be complicated.  Market changes happen, and this impacts reasons for buyers presenting an offer at any price.  Market changes are usually not the most important reason to need a list price reduction. 

I just created a post about "functional obsolesence" and how it effects price.  I have a listing right now that has this because of the 'closed floor plan'.  It was appraised at $199,900 before I got it listed so I felt I had to list it at that but there was no showings at all so I finally got the seller to reduce to $179,900 and we finally have a few showings but people aren't liking it because of the closed up floor plan and it's also odd. This is what I would call "functional obsolensence" wouldn't you?  It's very difficult because I feel like I am insulting the seller about this but I have already presented my view via email.  One agent thought it should be listed at $149,900 and I'm afraid that I agree. I find it difficult to ask for that much of a price reduction because I feel like I am insulting the sellers.  Has anyone else had experience with this and if so, how do you convey this to the sellers?