If you are selling a home and it has been on the market for awhile, you will ask the question “Should I lower the price to get it sold?” It is a tough question for buyers and agents alike and often an unpopular topic to talk about.
As a seller, it is important to realize that there are a variety of ways to try to attract buyers to your property and ultimately encourage them to make an offer. You might advertise online, place newspaper ads, host open houses or offer buyer incentives. Ultimately the most important marketing tool you control is the price of the home. No amount of advertising can impact buyer behavior to the extent that a price change does.
Here are 10 tips to help you decide if your home needs a price change:
- Pay attention to average days on market – Find out from your agent what the average time on market is for your neighborhood. If the average time on market is 60 days, remember that your home will likely take 60 days to receive an offer as well, so early price changes may not be necessary.
- Listen to buyer feedback – Insist that your agent gather feedback from agents and buyers who tour the home. If 75% of the feedback says that the home is overpriced, you are probably overpriced!
- Price the home accurately to start – Do your research about recent sales in your neighborhood and price the home appropriately from the beginning. Experimenting with a higher price to “see if you can get it” is a recipe for long times on market.
- You are not “losing money” – If your home is overpriced relative to the market, you are not “losing money” if you drop the price. You cannot lose money that no one would ever pay in the first place.
- Don’t set your price based on your proceeds – It is human nature to calculate how much profit you will take home if you sell your home for a certain price. Do not price your home based on the profit you want. Price your home based on comparable sales in your neighborhood.
- Make substantial price drops – Make sure that you drop your price by a substantial amount. Small changes in price do not change buyer or agent behavior, which is what you need to change in order to sell your home.
- Pay attention to website price limits – Real estate websites always allow buyers to specify price limits. If your home is priced at $505,000, you are missing a huge audience of people who limit their searches to properties <$500,000. If you are close to one of these price points, be sure you lower the price below it. It will increase showings of the property.
- Give it time to take hold – Don’t change your price too often. It takes time for the price change to be noticed, for the buyer to then view the home, and for the buyer to ultimately decide to make an offer. In today’s market, our current rule-of-thumb is to let a price change take hold over a 4-6 week period.
- Price change = marketing opportunity – A price change is a great marketing opportunity for a house. It will get agents and buyers to notice the property again. Take advantage of the added visibility with other marketing activities.
- No regrets – Don’t second guess your decision to lower the price. The lower price will encourage more showings, will increase the likelihood of an offer and ultimately will help your property sell faster.