How Quick do you price drop your rental listings?

56 Replies

I list my properties in MLS and also do rental open houses 2x/week. I have a newer rental property that I rented out for the first time last year, in July, got it rented in 2 weeks for $1600. This year, listed it August 1st for $1650 after looking at comps, got only 1 app from someone that didn't work out, so 11 days in on August 11th dropped the price to $1599, got WAY more MLS showings (24 in total scheduled which probably means 12 actual showings), 2 paid for applications we had to deny, 2 applications that have yet to have an app fee paid, one of which I am not crazy about because they just want to rent for a year and then buy a house, the other is a long term renter who's agent says he is notoriously hard to get a hold of so I doubt I will get the app fee soon from him. No more agent showings scheduled. Just dropped the price today,9 days since the last drop, to $1575. Losing a month rent is a bigger hit than losing $25-$100/mo less over a year. Since I'm in Chicago, I am nervous about getting more into the slower rental season. So far we've always gotten a ton of foot traffic during the open houses. I have checked Zillow, Trulia, Craiglist, MLS...inventory of 3 bedroom rentals appears low. Ours is in tiptop shape too, some people say it's like brand new since we just repainted and recarpeted.

Only had to do it once.  But the basic answer is my selling point is school district, and I would drop as much as I had to to get a tenant in August rather than wait till after the school year has started, or especially winter.

So, on that applicant that only wants it for a year, isn't it a case of possible vacancy a year from now versus certain vacancy now?  I'd be pushing them to complete the process and counting myself lucky if they took it for a year.

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Are you only listing your rental on the MLS? We lower prices incrementally every 1-2 weeks, depending on activity levels - phone, email, apps, showing, etc.

Think of marketing your property like fishing. You will catch the most fish (inquiries/applicants) with more lines in the water (different listing sources), proactively changing your bait (adjusting price), and recasting your line (revising ad content). You may also want to consider self-showings... convenience, and more people viewing (7 days a week)! 

Good luck!

@Richard C.  Yeah, I get the no bites=priced to high, but since there *are* bites. Regarding the ones who want to move in now, the lease will end July 1 so we don't get into this again next year, and they came in really aggressively with a whole list of stuff they wanted us to agree to (lower rent, lower security deposit,etc.) and are arguing about what documentation they need to provide since they are self-employed so there is that PITA factor as well.  Also, I don't plan to make the place brand new again in a year like it is now.

I've also listed properties at $5 or so below the next big price point - like $995 instead of $1000.

I will drop the price in the first few days if there are no calls/email at all. Once the calls start regularly, I know I'm at the right price. If I get a strong candidate, and they ask for a reduction, I may go down $25 or so; $50 if it's a harder area to find good tenants.

The PITA factor can't be ignored. If they have a list of issues when they first see the place, it won't get any better once they move in.

Perfect. Then most likely the rent price is too high for the current market. Rather than dropping the advertised price of $1575, type in the first line: "Pay by the 1st of each month and get a $X discount." This way you are not permanently dropping the price to say $1550, but this is an incentive to pay on time and people love "saving money!" Also, if they pay on the second, you get your original $1575 price plus applicable late fees.

@Leland Banner  discount for rent paid early is not a legal option in Illinois. Aly NA like any other rental listings I have done, I am inundated with calls and "send me more info" clicks from Trulia and Hotpads, even when it was at $1650. So I really can't tell anything from that either. MLS feedback includes,"Nice home, my client wants something closer to work but you will get this rented"... a few "bedroom sizes to small" but of course there are others that rented in primetime of summer for $1650, same model house with same bedroom sizes. Who knew August would be *so* much harder! School here started today so I am going to guess that's been a problem from the beginning.

I guess the question is, how long to wait if you don't get a workable application to drop the price again? Obviously a day is to short, and a month to long.

I think a week, maybe 5 days to drop the price. The longer it goes on, maybe 3 days. I get those calls too, about more info. I think it's all they can request from an account on Trulia. When I get calls from those who saw the ad on craigslist or Hotpads and didn't read anything, I refer them back to the ad. 

I've also created two different priced ads on craigslist, and when I get a call, I ask which price did they see it listed at?

As far as people who love to save money, if they pay the rent on time, they avoid late fees - instant savings!

Thanks Aly NA 

Tell me more about listing it for 2 prices...I don't get it.

I tried out Trulia and Hotpads from the renters perspective, it's just a button they hit whenever they look at a rental property. They could go all digital slot machine style and hit buttons on 300 rentals in 1 minute if they wanted. 

They can customize what it says since I see them saying somewhat different things, on at least one of the websites they can put in ranges for their credit score and how much money they make. I had tried setting up a canned email with filter response on Google mail and found out when I was experimenting that it didn't work; the emails look like they get sent as far as what you can see in Google email, but they never actually get there, you need to click the reply buttons and get linked to Hotpads or Trulia and then put in your response.

I create 2 different ads in craigslist; well, they are basically the same, with enough differences in content, price and subject line that craigslist doesn't flag it as a duplicate. The rental amount is slightly different in each. 

I also tested out Hotpads from the renter's perspective, but it's been a while. I'll get to test it again soon enough, we're hopefully closing on a property at the end of September. That isn't an ideal time to look for tenants, but at least the property is in FL and there's no winter weather to contend with. 

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@Kimberly H.  while I haven't had your situation per se this is my approach. I must get 10-15 calls the first week. If not I drop the price. When I drop the price it's to the next price point. Your first one from $1,650 to $1,599 is great. I hate to be the bearer of bad news but the next drop is to $1,499. Even $50 per month won't make someone look at a stale listing much less your puny $25.

In your situation, I would recommend that you examine yourself and your approach to renting. You've had lots of traffic and interest. Based on what you said I don't think in your case the price is the reason. From what you described, you are way too passive and your process is too time consuming and difficult for the applicant. When people take an application at the open house offer to take their ap fee on the spot and let them fax or email in the completed application. Better yet, have it online and suggest that people complete it there or print it out and bring it to the open house filled out. Waiting for them to turn in the fee? NO GO. Offer to meet them to get it when they say they are interested. Sure it takes a bit of time but compared to a month vacancy or $100 per month less in rent it makes the hourly rate a pretty good investment of your time.

Once someone says they want your place, move fast. Don't give them time to shop, to ponder, to consider, to change their mind, or to find a place that is easier to apply to.

When someone is interested help, then fill out the application and drop the application fee if you have one that is a big turn off for renters.

Joe Gore

@Bill S.  , so you're saying I need to close the deal? This is your practice? I guess I don't want to pressure someone to just wind up with them moving out in a year because of something they weren't sure about to start with causing the hesitation (distance to work, closet sizes, whatever) since it's a long term partnership and not a one-time negotiation.

@Joe Gore I didn't follow what you were trying to say.

What I was saying if someone is interested in your property help them fill out the application on the spot. Renters get  turn off when a landlord charges an application fee.

Joe Gore

I would take the people who want it for a year.

And as for the original question... I dropt it every week unless it looks like it will go.

As you have pointed out... If you drop it 100 vs losing a whole month... well.. do the math.

@Kimberly H.  it's not about pressuring them to rent your place, it's about making it easy for them to rent your place. They are interested. They said so. They took and application and even filled it out (I assume based on what you said). All you were waiting on was the money. In my experience, the time it takes to complete the application is the biggest investment on the part of the applicant. The fee is a detail for them. I do require it because scammers will apply but not pay, just to test the waters.

You don't have to be the hard sell but make sure the road to your place is wide, smooth, short and easy.

I would drop the application fee and advertise that fact - no app fee, whoo hoo! But I do charge the $25 for a background check *if* the rest of their app looks good, and I tell them that up front. So they know they won't have to pay for anything unless they're seriously being considered. At that point, if they're serious, they'll pay right away. 

I've had people call and say they want the place without even seeing it, and can I send them the app right away? I don't do that. If they want the place, they can make the time to see it. Applications are at the property and they can fax or email them to me - I live out of state. My contractor shows our properties and he lets the prospective tenants know there are others that are interested, so they have to move fast if they want it. If they don't call me the same day they see it, I know they're not. 

And sometimes it just takes time; no magic bullet. The right tenant will see it at the right time and we just have to wait it out.