from the Whit Harvey Group Blog:
“We need to drop the price if you want to sell your home.” Words that no seller wants to hear. Of course, everyone wants to get top dollar for their home, and your listing agent should be working hard to get you that.
But if it seems like nearby houses are selling, but yours isn’t, you and your agent need to evaluate why.
The first thing to do is find out how long most homes take to sell where you live. Maybe what feels like a long time to you is actually normal. Your real estate agent can check the Multiple Listing Service (MLS) and tell you the average number of days local properties remain on the market in your area.
If you’ve already passed the average “days on market” without any offers or real interest, then ask yourself:
1.) Are you keeping your home cleaned and spruced up to look its best for showings, and do you make the home easily available for showing appointments?
2.) Is the house free of any huge problems like expensive repair needs or location next to the freeway?
3.) Has the house been marketed adequately so that potentially interested buyers can find out about it?
If the answer to all of these is yes, then price may well be the culprit. True, when the market is down, houses can take a long time to sell, period. But if the price is right, interested buyers tend to show up eventually.
To see how your house measures up to the competition, ask your real estate agent to run (or re-run) a comparable market analysis (CMA). This is a report that includes information about the selling price and features of nearby homes that have recently sold or whose sales are pending. Your agent should visit other listings to get a sense of how actual houses on the market compare to yours in price and other features.
When should an agent suggest a “price adjustment?”
If showings have slowed after an initial flurry of interest, perhaps the price is too high, and you should consider lowering it. If the house is on the market too long, the listing grows stale, and it becomes difficult to generate interest for buyers, who may think that something is wrong with a house that has been on the market for and extended period of time.
Even if your price was appropriate at the time you listed, market values may have gone down since. Perhaps you’ve already noticed the trend yourself as nearby “For Sale” signs have started sporting “Price Reduced” riders or as you browse MLS listings and find better and better bargains.
How Low Should You Go?
Your price adjustment needs to be big enough to get buyers’ attention, especially if your house has sat on the market for a long time. Real estate professionals and potential buyers may be dismissing it as unworthy of any buyer’s attention, imagining, for example, that it has hidden problems that turned off other buyers or that you’ve stubbornly refused to accept lower, more reasonable offers.
A significant price reduction means that your home will now show up in searches done by buyers with a lower spending cap. For instance, reducing a home from $1+ million to $998,000 will open up the reach to buyers that want to spend under $999,999.
Of course, you don’t want to go so low that you feel like you’re giving the place away. Use the comparative market analysis again in setting your new price. A listing agent should never make their sellers feel pressured to lower the price, however a seller should listen to their agent when a price adjustment is recommended, when it is backed up with good reasons and facts about other sales in the area.
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