It's always difficult to sell a home; even though you think your pricing is justified, home buyers might think it's way too steep. Of course, you can opt to lower your price, but you might just be losing some money that you need. This is precisely why it's important when - and how much - you should lower the asking price.
Thanks to Realtor.com, here are a few tips to keep in mind when you're thinking about lowering your home price to get more potential buyers and eventually sell your home:
1. House hunters are your friends
New York City real estate agent Brad Malow says, "If 35 to 40 buyers have passed through your home and not a single one has placed an offer, it's time to seriously consider a price improvement."
No, improvement doesn't mean raising your price - it means reducing it. A great thing to do is to ask buyers, as well as brokers, for feedback after open houses have failed to secure a potential buyer.
Keep in mind the common positive or negative feedback you receive, and work from there. If you commonly hear that the price is too expensive, then it's definitely time to lower it.
2. How long has your home been on the market?
Having your home stay on the market for such an extended period of time can cost you a lot of money too. Many home sellers get stuck on finding the right buyer, but that's not how it's supposed to be done.
Houses priced at the right amount will initially get offers "within the first few weeks," as Malow said. So if similar houses are selling much better than yours (and you haven't gotten an offer yet), then it's best to lower the price or take it off the listings for a while to make improvement before relisting.
As Partners Trust Realty agent Mike King says, "Once you've been on the market for five weeks or so, you're chasing the market."
3. Leveraging power
The market typically decides whether or not you should reducing the price - even if it's against your will. "It's almost impossible to underprice, because the market will bring it back up," says King.
As it turns out, the home market is a lot like eBay too: listing the item for a price well under its actual worth will prompt buyers to go into a bidding war for it - which often results in a better price, one that is of your advantage.
"It's called leveraging power," said King. "If I'm a [motivated] buyer and I know there's only three offers, I'm going to be less aggressive than if you had 10 offers."
4. Know the market
Like any other business, it's important to get to know your market. There's no universal time period that can tell you when you should be lowering your asking price, but according to Malow, it's important to keep these three points in mind:
- How are comparable properties doing in the market? Are they selling quickly or becoming stagnant? If they closed, what was the closing price?
- What is the average time that a home stays on the market with respect to your own neighborhood? If your home hasn't reach that point, it's best not to lower the price just yet. On the other hand, if your home has been way past the average time, then it's time to start reducing prices.
- How many homes in the neighborhood had to do a price reduction? How long did it take before those houses actually made the price reduction? Was it able to help sell the home? What was the sale price?
It's always best to first do your research before making any big decisions. Never fight the market, as working with it can reap you more benefits.
