more We have all seen it; yard signs that say “REDUCED”, ads in the paper that say “NEW LOWER PRICE” or “PRICE REDUCTION” blinking on our computer screens. Why does this happen and how can you make the best of it when selling your home?
Why a Price Drop?
Maybe your agent suggested a slightly higher than average price to get your listing. Maybe all the competing homes dropped their price and now you’re the highest in the area. Maybe your home has been on the market for weeks and not a soul has wanted to see it. Whatever the issue, the trick is to identify that there is a problem and deal with it swiftly. Your real estate professional will guide you on what is best for your market. Adjusting marketing strategies and open houses can sometimes fix the issue, but if your house is in fact overpriced, there is simply nothing further you can do besides lower your asking price.
It’s hard to accept that you may be losing some hard earned equity and sometimes you are tempted to leave it there for “a few more weeks” just to see what happens. Unfortunately, this is mostly a futile effort. The current pool of home buyers shopping in your area and price range probably viewed your listing within the first few days on the market. They have already given your home the thumbs down by not snatching it up or asking for a showing. By leaving the price alone, “You’re joining thousands of other homeowner who have also decided to wait,” says Barbara Corcoran, star of ABC’s Shark Tank. Hoping that new buyers will enter the market and fall in love with your home is not an efficient home selling tactic. Do you have time or money to wait around for new people to decide they want to buy a home? Me neither. So what is the best strategy?
Make your price drop count!
Your price adjustment should be enough to get buyers’ attention. Make buyer’s agents raise an eyebrow, if not drop their jaw. “When a house isn’t selling, many people lower the price inch by inch,” says Corcoran. “Nothing smacks of desperation more than incremental price drops,” Corcoran states. She explains that a better strategy is to reduce once by a large chunk, i.e. $10,000 to $25,000 or more. “Buyers shop by price brackets and this (strategy) puts your home into a different one, attracting new buyers.” Appealing to a whole new group of excited buyers is much better than keeping your home in a price range where it is ‘old news’.
Corcoran also explains that it is a better idea to go just below a ‘cap’, say $249,000 instead of $250,000. This method of pricing just below a round number not only allows you to appeal to those shopping by price range but also makes your home seem like a better deal. “Psychologically, it will make a difference to buyers,” Corcoran says. Consumers tend to perceive “odd prices” as being significantly lower than they actually are. Subconsciously we round to the next lowest monetary unit instead of the higher one. So subliminally $249,000 is associated more with $240,000 more than with $250,000.
If you’re ready to discuss your real estate goals with an expert on the local market, trust a Carter & Roque Real Estate Realtor®.