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Hi Hank -- I think it depends on your market and the particular property as well as the seller. There are lots of factors to consider. In our market, the newest listings get the most attention and if there are no showings within the first week -- we know there is a problem. If there are lots of showings but no offer the seller can accept but other activity in the area -- the property might be used to "sell other properties" because of price, condition or some other issue.
An agent needs to be on top of what is happening in his/her market and have a discussion upfront with the seller about the proper expectations and what/when a price adjustment is/will be necessary.
League City, TX
Myrtle Beach, SC
Chuck Willman UtahHome...
Jan Green - Scottsdale...
The short answer is when I think that is what I need to do to sell the property and I get the sellers permission. It all depends on the circumstances and there are too many circumstances to cover.
Beth and Richard Witt
Center Moriches, NY
Great question and good answers. As every one has said, it depends on your market. One thing I like to do when a home starts seasoning in the listing is compare what's sold in the last month AND check out the comps used to originally price the home - have they sold? Have they had price reductions? If the competition has moved out and that one hasn't probably time to lower the price. But, there's no set time.
I think that you need to reconsider the price after the first month if there has been a limited amount of showings, or if there is not an offer. Like Cindy said, it might be earlier if everyone that sees the house states that they feel that it is overpriced.
I use the same approach as Michael. The first 2 weeks are critical and I encourage folks NOT to test the market, because the test has already been done.. if they are over-priced for the market, the location, the time of year, the competition, the test will fail.
I will ask for a price drop when the home is not getting an adequate number of showings, or when I keep hearing over and over that the price is too high.
Praful takes care of this.
I ask this question all of the time, Hank. Well, I have learned that you drop the price only when your clients are ready to drop the price. If you have already set up a plan for dropping the price in your initial conversations with your clients, you should not have a problem. But if that did not happen up front, and your suggestions have not worked, I suggest that you have a Broker's Open and let others tell them that the price may need to be renegotiated.
Recently one of my sellers said he was going to get another agent because it was taking too long to sell. (We had two contracts that fell through.) I told them I could sell the house in two weeks with a price reduction of $X. They agreed and we went under contract last night!
That's one of those depends questions, and I try to never have to do this by pricing correctly at the start and understanding the market so I can advise my sellers. IF it has to happen we normally know in a couple of weeks, either because there are few showings, or we have lots of them but no offer. With our low inventory, the clues are there
The best answer is to value the property correctly when listing it and employing a winning strategy to sell it. Did you know there are 567 different strategies to collect social security benefits? So, are we analyzing and optimizing all of our marketing strategies to sell our listing quickly. Some agents have tools in their tool boxes that haven't ever been used except dropping the price tool.
Myrtle Beach, SC
I think Michael Jacobs said it perfectly. We have the 'price reduction' conversation with our sellers at the time we list, especially if we're going in on the high end of the range to fish a little. 2-4 weeks on the market without good showing activity OR good showings and no offers and we're going to drop the price a bit. Then we keep doing that until we hit the sweet spot - lots of showings and offers! It's not rocket science.
Myrtle Beach, SC
I try and do it after 30 days, but each listing is different. Just because it does not sell in 30 days doesn't mean that it is over priced.
It really depends on the market. I like to look at the "days on market" in the neighborhood. If other homes are selling quickly at a lower price and the home you are marketing is not getting any views then that's an obvious time to let your sellers know that the price is just not realistic for the current conditions.
If we're getting no showings, drop the price.
If we're getting no offers, drop the price.
As often as necessary as long as the seller is agreeable.
Beth and Richard Witt
Center Moriches, NY
So far I have not had to do this, but if I had one on the market with no offers in 2 weeks it may be time to have that talk with the client.
Discuss with the seller on the motivation.
Short Answer: When the Seller wants me to reduce the price -- usually with a lot of explanation and coaching from me.
That is a loaded question. There are so many things to consider. It will all depend on the sellers motivation, not always what you want. I always ask sellers do you want to List Your Home For Sale or do you want to Sell Your Home? There is a difference. When a home is getting good showings no offers, it could be condition, wall paper, or something simple that would not cost an arm and leg to change. If it is "Over Priced" then show them the homes in the neighborhood ( or within a 5 miles radius) that have gone under contract while they have been on the market. Show them virtual traffic stats from your website, blog, facebook posts and portals you are on. Show them you are marketing the home. It's time for an adjustment.
It varies depending on the particulars of the listing and it's competition but, in general, my answer is whenever there have been few (if any) showings for 2-4 weeks. One exception is between Thanksgiving and January 1st as it's not uncommon for listings to receive fewer showings during that time.
We do a lot of rehabbing and I drive Rich nuts with the drop the price issue...
I am ready to drop the price the minute one of our houses is not getting any activity...
Rich likes to give them more time but usually I win...
I make exceptions for location or layout causing the house to have a small buyer pool...
Hank Dugie if there are no showings for a week to 10 days, time to drop the price.
Also, if there are too many showings with no offer - again, time to drop the price.
However, one needs real guts to ask for it...
I'm assuming that the property has NOT been ASP staged. ASP stands for Accredited Staging Professional.
An Occupied Listing (using the homeowner's furnishings) and tweaking the property to look as much as possible like a 'model home' and also a Vacant Listing staged USUALLY, by ASP staging statistics proof, sells (or secures a solid contract) within a very short time frame (some 11 days or less) and for top dollar.
The cost of ASP staging is always lower than a first price reduction! Staging works!!
it purely depends on the motivation of the seller and their net equity.
Pricing a property is always tricky. You need to do your homework. How fast a sale does the seller expect? What is the current buying trends in your market? Price really has everything to do with the sale. Price and property condition that is. So if you can show the seller what a reasonable asking price is and go with that you probably do not have to readjust. And that is the 64 thousand dollar question.
"Reduce the PRICE!" That is the only marketing strategy needed. But that may not be fair to the home owner.
Here is what I would like to ask of the professionals here.
1. Identify five communites in your area with 4 br, 2 ba homes priced between $300,000 and $500,000.
2. Analayze the average sold price for homes sold <61 days.
3. Analyze the average sold price for homes sold between 61 and 120 days.
Is the 'reduce the price' advise being offered best for the agent or the home owner?
I believe there are 2 basic rules for price reduction. One: The property is not being shown - or Two: Getting lots of showings and no offers.
Both could point to price being out of line with current inventory trends.
I suggest a price adjustment when the showings have slowed down or stopped. I also suggest one if we have had many showings and no offers. This is a sign something isn't right either.
It does depend on your market. In Denver have not had price reductions for a couple of years.
When you're no longer the #1 competitor in the neighborhood there's need for an adjustment. The change can be subtle and still be successful as long as the others on the market aren't paying close attention to your movements.
What is the average market time in your area? If you are within that average and have good comps - I would evaluate the number of showings. If after 2 weeks there are no showings you may be over priced. Hold a broker's open and ask the brokers that attend their price opinion.
I usually re-evaluate in 4 weeks.
All good answers, especially Joan's comment about testing the market. That's a good response too in a listing presentation when sellers are overzealous on price!