Your house is on the market, and it’s not selling. Whether it’s been 10 days or 100 days, often times, the reason your house isn’t selling is because of the list price you are advertising. In any market, any home can sell, it always comes down to price.
Of course, professional marketing, strategy and execution by a professional realtor will help to achieve top dollar, but a home is only worth what a buyer is willing to pay.
The good thing is, in any market, any house can sell at the right price. How do you determine that price? Sometimes it’s harder than others. In a market that we have been in for the better part of the past year, there aren’t as many comparable sales to help evaluate your home with. So we often see sellers “testing” a price to see how the market reacts. Usually, that price is higher than what the market is willing to bear and a seller will often consider reducing the advertised price of their listing.
In fact, at times last year, for every seller that sold their home with their initial list price, there was another seller that had to reduce their list price to attract a buyer. Currently, we are seeing far less price reductions in 2023 than we saw in 2022 as homes are selling quicker and list prices are more realistic but there are still those out there that are faced with the unenviable decision to reduce their list price, and by how much.
That’s what our conversation is about today: how much should I reduce my list price by in order to attract a buyer.
The answer is: it depends.
How long has your house been on the market? How many showings have you had in the past 7-14 days? Have you received any offers for your home since you listed it? And what is your house currently listed at?
Let’s start with the obvious: the longer your house has been sitting on the market, the more you need to reduce your price by. In a market like this, where well priced homes are selling in 14-20 days, if you get to that 14 day mark without an offer, it’s time to consider a price reduction. At that point in time, my next question would be what is your house currently listed for? If the answer is less than $500,000 a smaller number is likely going to generate enough buzz around your home to get some buyers through and hopefully an offer. $10,000 to $20,000 within the first 14 days seems reasonable to me.
If your house is listed for $1,000,000 then $10,000 isn’t going to change anybody’s mind about your house. I would be looking at $25,000 minimum at the 14 day mark, and probably more.
Now, if your house has been on the market for 30 days and you have yet to reduce the price, that number is going to have to be higher in order to draw attention from either new buyers that haven’t seen your home yet, or to indicate that you are a serious seller willing to negotiate with someone that has already seen your home at the higher price.
By the way, this is the goal with any price reduction. To bring in new buyers or to change the perception of your house from buyers that have already seen the home.
So for a house that has been on the market for 30 days, I would expect at least a 5% reduction to generate that type of reaction from the buyer pool, especially if you haven’t had any offers yet. If you’ve been on the market for 30 days without an offer, in a market where buyers are expecting to negotiate with sellers under their list price, you’re off by at least 5%. No ifs ands or buts about it and regardless of price point.
Those are two benchmark dates that I think are valid assessment points for your list price. Past that, I find most sellers have either reduced their price or are willing to ride out the listing to find the “right” buyer who is willing to pay their price. This rarely happens by the way but that’s a topic for another day.
I would add a few caveats to this conversation, the biggest and most important of those being that you need to listed to the market. The market will always give you feedback on your listing in one way or another. If there are no showing requests for your listing during the first 3-7 days on market, that’s feedback! If you have 20 showings in the first week and no offers, that’s feedback. Of course, you should get some real feedback from the agents that showed your home during that time period, but it all bears consideration with how your listing is being received.
The second caveat: higher priced listings take longer to sell. If your home is in the top tier of homes in your local market, plan to be on the market almost twice as long as the average listing.
Last word of advice, be proactive and have a plan before you hit the market. If you have a plan to reduce your home within a set timeframe and you know what that price is before you go to market, your expectations will be tempered and realistic.
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