Home sellers dream of selling quickly and turning a hefty profit. For some sellers, market conditions, good timing, and luck converge, providing a fast payday and funds to purchase their next abode. Yet sometimes, if a home isn’t priced well, it can languish on the market. Setting the initial asking price correctly is crucial to avoid this scenario. Analyzing market conditions and leveraging expertise to arrive at a competitive price point can make all the difference.
The last thing a seller wants is a drawn-out sale, but at the same time, many balk at the idea of a price reduction. Making a cut, also known as a price improvement, can revitalize interest in your home and attract potential buyers to your property.
To help sellers navigate the important decision about potentially adjusting their house price, the team at Prevu Real Estate assembled a guide explaining when homeowners should lower the sale price of their house.
Leading reasons why a house won't sell at the asking price
Getting a great price for your home means balancing presentation and pricing.
When you sell your home, the dwelling becomes a product for the local real estate market. That means you’ll have to depersonalize the property to make it palatable to any and all buyers. In short, this could mean bringing in a stager to rearrange layouts or refresh rooms with a new paint color.
Buyers might pass over your listing if your home’s appliances need to be updated or the lighting fixtures are outdated. So, if your home is competitively priced to other properties but does not have similar amenities, it may not stand out to buyers who want a turnkey purchase. Additionally, comparing your home with comparable properties can help you understand if your pricing strategy aligns with market expectations.
However, the most common hurdle when selling a home is not pricing it attractively for the current market. This is where your agent can come in handy.
Your real estate agent has access to the multiple listing service (MLS), which can generate a comparative market analysis (CMA) that includes closed sales and active listings in your neighborhood.
"When a home sits on the market for too long, it becomes a stale listing, and buyers start asking why it’s not selling," said Cyndy Stewart, Director of Real Estate Services at Prevu Real Estate. "You want to list at or around market value, so you launch looking good at the start instead of chasing the market down and making price cuts."
When should you make a price improvement on your house with your real estate agent?
Most agents advise you to make a change if your home does not generate interest in the first two weeks. However, if you want to be competitive, you may want to drop the price after one weekend of no activity. The performance of open houses can also indicate if a price improvement is needed.
The longer you wait, the more buyers will wonder what’s wrong with the home. And if they do make an offer on a lingering listing, the odds are higher that they’ll try to make a lowball offer.
Top signs you should lower the price of your house
- Current price is higher than nearby competitors
- Buyers are not seeing the house
- Offers are lower than desired
- House appraisal comes in low
- Days on market begins to creep up
- Lack of buyer interest after 10 to 30 days may necessitate a price adjustment
Current price is higher than nearby competitors
If your home sits on the market for a prolonged time period, it may be because the price is higher than your competing sellers. This is why having an agent helps considerably, as they can provide you with info about how much other homes are on the market for in your area. Real estate search engines can also help understand pricing brackets and set a competitive price.
If you priced your home $25,000 or $50,000 more than nearby listings, buyers might pass over your place if you’re charging more per square foot than other sellers with no obvious additional value.
Buyers are not seeing the house
When you have a limited amount of traffic to the property, something may be turning buyers away from the property. So long as you’ve made it presentable and comparable to other homes being sold, then you can assume your price might be off. A local real estate agent can provide insights into why the property might not be attracting buyers.
Some agents will suggest that you make a price improvement immediately after a weekend with no action. Your agent can also tell you what kind of online traffic the house gets on different listing sites. So, if there are only a few views and less interest in showings, it might mean you are priced above market.
Offers are lower than desired
If you’re getting a few buyers to check out the home, but they make offers significantly under your asking price, this is a telling sign you should be reducing the price. Getting offers is better than none, but if buyers are not outbidding each other or are unwilling to negotiate, your home might not be competitive in the market.
This can be a crucial moment to leverage your agent’s expertise, as they can help you navigate negotiations on the offer instead of knocking down your listing price. However, if offers are consistently low, it might be time to consider a lower price.
House appraisal comes in low
Consider getting a home appraisal if you’re wondering about the value of the dwelling and need a second opinion. This objective opinion can augment your agent’s information and determine a competitive price. Real estate agents can provide appraisals and market insights to help set a competitive price.
This way, you don’t waste time putting the home up at a high price. But if you get an appraisal after the home’s been on the market, it is a good bellwether to determine how to adjust your new listing price.
Days on market begin to creep up
A clear sign something is keeping buyers away is if your home is spending more days on the market than similar homes in your area. Each real estate market is different, but on average, houses are listed on the US market for about 50 days or less.
Your agent can use MLS data to tell you the local average, and if your home spends that much time or more, it might be time to change up your pricing and marketing strategy. Timely price reductions can help avoid a stale listing and attract new buyer interest.
Tips to lower your house price successfully
- Make a price change quickly
- Compare your listing to other sellers
- Be decisive with your price change
- Strategically reducing the selling price can attract more buyers and expedite the selling process
Make a price change quickly
Once you realize your initial listing price needs to be fixed, do not hesitate to make a change. You and your agent should agree on a plan of action if your first weekend does not pull in any interested buyers.
The last thing you want is your home to stagnate on the market while other homeowners get great deals. Ideally, make the change a day or two prior to announcing a new open house event. That way, you can drum up fresh activity with an updated price.
Compare your listing to other sellers
Numerous listing sites allow you to see what homes are for sale and their price. Combined with your agent's pulse of the market, you have a good idea of what other sellers are doing.
If you see other folks moving their price point, you may need to match their moves to remain competitive if your properties are similar.
Be decisive with your price change
If you have to do a price improvement when marketing your home, it is better to make a significant change instead of more minor cuts. You want to get buyers' eyes on the listing, and cutting the price by a few thousand dollars might not be meaningful enough to catch people’s attention.
For instance, if you initially listed your home at $950,000, you should consider a price reduction of $25,000 to $50,000, instead of just $5,000. As you strategically improve your price, you expand your buyer pool as your home enters a new budget range for buyers. The more buyers you have interested in your home, the better the chance to get a great deal around that listing price.
Sean Creamer
Content Marketing Lead
Sean Creamer is a Content Marketing Lead for Prevu, where he explores real estate topics focused on neighborhood discovery, the home buying process, real estate transaction costs, and commission rebates. Prior to Prevu, Sean was a journalist for eMarketer and Wall Street Letter. In addition to writing about real estate, Sean is an outdoor enthusiast and has interest in adventure writing.
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