When you list your home for sale, setting the right asking price from the start is important. But sometimes, even if you think the list price is appropriate for your market, your home still might not sell. That’s when you’ll likely need to make a price reduction to attract a buyer.
You’ve enlisted the aid of a skilled real estate agent who has performed a thorough comparative market analysis (CMA) to determine the value of your home. You’ve listed your home at what you both believe is an accurate price, and you’ve hosted many showings, but so far, no one has made an offer.
Why hasn’t your home sold?
“Pricing is usually the reason,” explained Gordy Marks, managing broker at RE/MAX Northwest in Kirkland, Wash. “Most other issues can be overlooked if your price is right.”
Those other issues might include the condition of your home — if it needs upgrades or repairs or lacks curb appeal, buyers may decline to make an offer or lowball their bid — or the wrong marketing strategy.
“If a home doesn’t have the right photos or marketing or isn’t positioned in its local market properly, it may not sell,” said Maria Quattrone, a RE/MAX Realtor in Philadelphia.
If your home is getting little to no traffic and no offers, that’s a red flag that it is likely overpriced.
On the other hand, “if you’re receiving good showing traffic, but all low-price offers, that’s a sign you’re very close to market value and a smaller price adjustment may be necessary,” said Dustin Fox, a Realtor with Pearson Smith Realty in Ashburn, Va..
Another indication that a price cut is warranted is a negative reaction from buyers.
“If buyers coming to look at your home actually make comments about the price, you know you’ve likely set the price too high,” said Ruth Shin, founder and CEO of PropertyNest.
If you decide to reduce the price, experts agree you should do it relatively quickly, ideally within two weeks of initially listing.
“You’re almost always going to get the most activity on any property in the first 21 days on the market, so you don’t want to miss that window,” Quattrone said.
The length of time you should wait also depends on indicators in your local housing market, including average days on market. In the Philadelphia region, homes in late summer spent a record-low median of 11 days on the market, according to Bright MLS.
For instance, “we recommend a price adjustment after 10 days on the market,” Fox said. “You don’t want to reduce the price too late because buyers then look at your days on the market as an opportunity to save money and lower their offers.”
However, consider also that lingering coronavirus concerns and social distancing rules could be keeping some buyers from visiting your home or making offers. For these and other reasons, you may want to postpone your price cut a bit.
“Do a hard reevaluation with your broker on pricing by no later than the 30-day mark,” Shin recommended. “You can delay a price change, but you don’t want to wait too long or your listing will become much less attractive to buyers.”
Some real estate agents suggest adjusting your asking price as many times as needed to sell your home, but at strategic intervals.
“As the number of days on the market increases, so can the need for price adjustments," Quattrone said. "If you don’t see any showings within a week, you may have to move on price.”
Shin advises making no more than three price reductions. “Any more than three will cause buyers to think something is wrong with the property,” she said.
The amount you should reduce your asking price requires careful consideration. If your home was originally priced on the high side, it may not be unreasonable to reduce it by 4% to 7%, Shin says.
“You probably want to reduce by more than 3%, at minimum,” Marks said, “but I would pay attention to what it takes to get to the next lower price.”
Say your original list price was $423,000. If you were to reduce that by 3%, you’d bring the price down to $410,310. Dropping the price to just below $400,000, however — say $399,950, for example — could get more attention from home shoppers because your home will now appear in online searches for properties listed below $400,000.
Keep in mind that if your initial price was close to market value, a more incremental drop could do the trick — anything from 0.5% to 3%.
Overall, it's best to determine ahead of time the absolute lowest price you're willing to accept so that you can make price adjustments if necessary within that range.