How long until you drop the price?

Question

When selling a home, how long until you will drop the price?  Assume you are getting about 3 showings a week with decent feedback.  If you do drop, what percentage would you reduce by?

David Niles · Answer

Jon Klaus It really depends on your market, some areas 30 days is a lifetime, others 90 may be the norm.  
Usually if a property is way overpriced, you will not get any regular showings, if you are getting them, means your price is probably pretty close so there would be some other factor possibly at play, if it is something house wise that can be rectified, do so, if something environmental ie..neighborhood, house next door etc, then usually a very slight drop shows potential buyers there is flexibility and may spark offers.  
You always want to be careful with reductions though because there can be a fine line between looking flexible or desperate creating two different types of buyers.

Joel Owens · Answer

It's all about what the market is doing in your are for the type of product you are selling.

For instance is your local market rising?? Next question would be is your specific TYPE of property rising??

Example the market could be rising as a whole by 1% a month but upon further research your 4 bed 2 bath that is a 2 story is declining in price by 1% a month. You find that in your area the top floors get really hot with the weather and buyers prefer the ranch styles.

If that was the case you need to price ahead of the selling curve and NOT the listing curve for your property. Minor reductions in price won't sell it. You will always in that situation be behind new listings that come on and chasing the market down. Undercut so that you are a great deal and get multiple offers and close it before the market drops again.

In a rising market you might hold onto your high listing price and let the market catch up but you have to factor lost time in opportunity cost  with possibly landing better deals and have to factor in for a flip monthly holding costs that would erode any gain you have by waiting.

Account Closed · Answer

I normally look at the DOM compared to the absorption rate to make that determination.

Rich Weese · Answer

Jon K – I think David Niles hit it right on the button. I would also add that not only the market area determines the price and time frame, but if you are referring to a 5000 ft.² farmhouse on acreage, you will be looking at a much different time frame in most instances.

I tend to list my homes at a higher than anticipated sales point. In this manner, I can regularly reduce the price of thousand dollars and it shows up on the hot sheet in the multiple listing service. In this regard, I would probably reemphasize what J Scott said.

It did surprise me recently here in St. George Utah, that within just a few days, I received a full price offer and didn't have it listed long enough to even start reducing the price! I would have to agree with Paula Smith above that our market is extremely hot. If you look back through older posts and threads, I have been explaining that for at least 1 1/2 years!

Paula Smith – this is really interesting! In the last three days, I have seen two new posters on bigger pockets from St. George Utah! Not bad for a fairly small town. I think there are at least four of us now here in St. George. We should get together and start our own little real estate investors Association of St. George Utah! Rich

P. S. It is kind of fun in this thread to look to the right and see my book being advertised. Not sure how or why that happens but kind of cool.

Grant P. · Answer

3 showings is nothing.  Here in the current market we are seeing 10-20 showings a week, so I can't relate to your scenario.  If I think it is priced right I would let it stay, if I think we were being aggressive with the price I drop it after 2-3 weeks.

This is a conversation I have with my client beforehand however, if they tell me they wan't to list is at a price higher than what I suggest.  I tell them going in I will take the listing at that price, only if at 3-4 weeks we reduce the price if we are not under contract.

J Scott · Answer

Three questions my wife always likes to ask buyers' agents (besides asking for general feedback):

1.  Do you think the house is priced right?

2.  What didn't your buyer like about it?

3.  Is there a particular reason they won't be making an offer?

#3 is generally worded a little less directly than that (my wife is more tactful than I am :), but you get the idea.

You can generally tell from these questions if the house is priced correctly and why you're not getting offers.  If you find that you're getting a lot of buyers who aren't interested -- but the feedback is that it's priced right and just wanted right for those particular buyers -- I see no reason to drop the price.

I'm a fan of dropping every couple weeks by a couple thousand dollars.  But, my wife will use the data she's getting from agents to make that decision.  We recently had two properties that sat for MUCH longer than our average DOM.  I thought they were priced too high, but my wife kept telling me that the feedback was that they were priced right, but the house just wasn't right for those particular buyers.  My wife didn't think dropping the prices would do anything but get us a lower price when the right buyers came along.

It took about 2 months, but one of them got a full-priced offer and the other got within 1% of full price.

We've had other situations where after the first weekend, my wife decides to drop the price because the feedback she's getting is that we're overpriced and losing potential buyers strictly due to the price point.

Paula Smith · Answer

It always depends on your market, here, we have a hot market.  If the price is good it'll get an offer in a couple of weeks at the most.  If the price is GREAT it will get multiple offers within hours, usually at or above asking price.

If your market is good-I suggest pricing the home well.  You do NOT have to price a home high leaving negotiating room, because if it's price well you should have no problem achieving the asking price (or better).  Remember, the most interest is generated in the beginning.  Send an email to all of the agents that showed already and tell them you plan to reduce the price.  Tell them they'd better get an offer in soon before is reduced and sells.  ;-)

Ray Orellano · Answer

I actually just dropped the price on 2 of my listings after 60 days, both are avg 2-3 showings a week with good feedback. I waited a little longer due to the holidays.

As far as percentage goes I really don't think there is a set amount,  whenever I do a price drop I try to get under a certain treshold. Eg. One listing was 360k so I lowered it to 349k to attract buyers searching up to 350k.

Good luck!
Ray

Larry Flanagan · Answer

I try to keep abreast of changes in other actives, pendings, and solds in the neighborhood and follow suit.

George P. · Answer

i am in the same boat on a rental. been on the market about 10 days, tons of showings. no applications yet.

is your price competitive? I can blame it on the weather, but that should not affect you..

How long until you drop the price?

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