We all want to get the very most profit for the sale of our property but that's simply not the reality for many home sellers across the country. So how do you know when is a good time to lower the price on your home?
It all depends on where you started. Many home sellers that are not in a rush to sell their home will overprice their home in the hopes that they might get the escalated price or lower it when they don't receive the full price. The problem with this tactic is that overpriced homes tend to saturate the market confusing the actual supply and demand causing motivated sellers frustration and confusion.
If you are truly motivated in selling, meaning you have a time limit on relocation, you must be out of the house in a certain time frame or you've already put an offer on another house, overpricing your home is a detriment to the sale. It's best to price it just under its market value and potentially lower if you can financially handle it. However, there is that crucial time of lowering the list price if you're simply not getting any bites.
Home values are determined on what is actually sold and closed, not on what is active in the market. You can always start high and usually you will get a few lookers initially but then if the views and showings trail off within the first week and now it has been three or four weeks without a showing, the word has probably spread that the home is overpriced. If you're not getting any showings you may speak with your real estate agent about lowering the price and how they arrived at the starting price initially.
The first four or five weeks on the market are the most crucial to get the home sold for the highest price.
If the home does not sell within the first month to month and a half, it's a good bet that you're priced too high. If the home has gone 2 to 3 weeks without a showing, the market is clearly telling you to lower the price. By lowering the price you will open up an entirely new price range for buyers. During the first week of a price reduction you'll probably get another influx of buyers and then you can watch how the market goes over the next couple of weeks. Perhaps you'll get an offer but it will be lower than your asking price. This is where comment counter offering and negotiation is crucial. You might find a home buyer willing to entertain the idea of your price with some exceptions and conditions.
If you feel you are right in line with your competition or less than your competition, have your real estate agent ask other agents that have viewed the property for advice on what might not be working. If the home is staged properly, doesn't have any major eyesores or flaws, it really will come down to price.
Waiting too long to lower the price causes buyers to feel that there may be something wrong with the property and that homeowners are simply holding out for the best price that may never come. Also, check with the "days on the market" for your area. If it is taking an average of 30 to 60 days to sell, blowing your price within 2 to 3 weeks might be more conducive to a DOM market where the average sale is within a 60 to 90 days. Waiting 3 to 5 weeks to lower the price in this market may seem more appropriate.
The thing to remember is to use a real estate agent that not only is experienced in the area but understands the current market. Markets can change drastically and micro markets from one neighborhood to another can also be different. Using an agent that is familiar with the homes in a particular subdivision, community or neighborhood can help get the home price correctly the first time and advise you on when to lower the price if necessary.
Feel free to call me at any time for Palm Desert real estate, homes in La Quinta or property values throughout Palm Springs California.
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