Hi folks. Here’s some info that may help you with getting price reductions for your listings. I first posted this back in October 2006.
Price reductions. I love ’em and I hate ’em. I seem to have mixed emotions about them. If “The Lovely Wife” is reading this, she will be shocked that I even wrote the word, emotions. Emotions and having them are not my strong suit. Price reductions. I love them, because this is what is needed, to get my properties sold. I hate them, because in my own mind, I am an expert on pricing and should have priced the home properly to begin with.
But you know, in this more difficult market, with rapidly changing property values, I have found myself asking for and getting more and more price reductions. Over the last couple of weeks, I have reduced the asking price on 8 of my current listings. Even though they were already “priced right” and were showing up as the lowest priced properties in their category, they still were not selling. Maybe, I’m just being impatient. I was spoiled, the last couple of years, with my listings selling in a week or two and now I have several listings that have been on the market for over 2 months. So what do you do? You reduce the price. Anything will sell if the price is right.
I know, some will say, “But Broker Bryant, if it’s priced right, just wait, a Buyer will come along. Why should the Seller have to give away their hard earned equity? ”Well, in my market, Poinciana Fl, I see values coming down. Not only coming down but coming down rapidly. Homes, I could easily have sold for $200,000 a year ago, are now sitting on the market, priced at $179,000 (This was late 2006 pricing. Now, 2012, it’s $64,000!). Not only are they not selling but it is difficult to get showings. Since, I can’t predict the future, it is best for my Sellers to sell now. If prices continue to drop, the longer they wait, the less the house could be worth. The reality is, if they have owned it for more than 2 years they probably are in a good equity position anyway. So, my advice to them is, reduce, sell and move on.
I have a few guidelines that I use to trigger a price reduction.
- No showings in 10 days. Reduce
- No offers in 30 days. Reduce.
- Anxious Sellers. Reduce
- Approaching holidays. Reduce
The best time to talk about price reduction is at the listing table. I let the Sellers know about current market conditions and give them my “triggers” for a price reduction. Every time I talk to them, thereafter, I mention the possibility of needing to reduce. No surprises. They know I am going to ask, if needed. They are prepared for it and ready to take my advice when the time comes. Never make the mistake of underestimating your Sellers. They read the same papers and watch the same news, that we do. They know the market is changing. They want to sell.
There are things you can do to make the Sellers more comfortable with reducing the price of their home. Here’s a short list that you can use.
- Keep them focused on their reasons for selling.
- Remind them how much their home has appreciated/depreciated over the last couple of years.
- Show them this appreciation/depreciation in a percentage. It’s probably more than they think.
- Remind them that it’s a great time to buy. They can make up some of the reduction on the purchasing side.
- Remind them that unless they can pick up their house and move it, the market "is what it is" and we have to deal with it.
- Remind then how cute the grandchildren in Georgia are and how nice it will be when they are closer to them.
Finally, stay optimistic. Let them know you are working for them and will do everything you can to get their home sold.
And then, reduce it. If that doesn’t work, reduce it again and repeat until sold. I hate price reductions. But I hate expired and withdrawn listings even more.
So folks, know your market, make adjustments if necessary, ask for the price reduction. Make it your goal that if your sign goes up, it only comes down on way to the closing.