Who’dve thought we would be discussing price reductions today, with such a crazy market just yesterday. First.. Am I indicating that prices are falling and it’s a buyer’s market? Not necessarily. We are however seeing market stabilization, but some sellers aren’t ready to come to those terms just yet. We are continuing to see listings surge on with new listing prices 5-10% over the last quarter. Many of these listings are sellers that don’t want to leave money on the table, understandably so. The market is moving directions quickly, and none of us want to leave money on the table. In addition, some sellers are listing with “make me move” prices, and there is nothing wrong with that.
With the above said, don’t put yourself at a disadvantage, particularly if selling is a priority, and not just something to take advantage of if the price is right. If your motivations are the former, take a hard look at an analysis provided by a broker to see if it makes sense. As the market stabilizes, many brokers and brokerages are finding themselves with too much overhead and two little selling inventory, which may result in taking listings with unrealistic listing prices, or even providing unrealistic advice, though I hate to admit that it would happen in our community, as most of my colleagues and competitors are, in my opinion, some of the best in the Nation.
Notwithstanding, if you do find yourself in the position to reduce price, do it based on data. In many events we are seeing “panic” reductions, and in some events for properties that are appropriately priced. We all have concerns about the selling season, but don’t reduce too soon.
My second tip, only reduce once. Multiple price reductions lead the market to believe that they should wait for the next reduction. I understand that we don’t know how many times you may need to reduce, hence the need to look at the data closely. Unfortunately we aren’t currently in a position where reducing too much will bring the sales price back over the market value. Regardless, you need to act carefully, but not (too) quickly. Price reductions should be concise, well thought out, and substantial enough that you only do it once – but not so much that you leave money on the table. A good real estate agent will help you plan the starting price appropriately, and provide the data as to how they arrived at the suggested price in a comprehensive way that is also easy to understand in order to make an informed decision.