When Should a Seller Reduce the Listing Price

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Published Date 11/3/2017

With a comparatively sparse inventory of resale homes and high demand from buyers, homes have been selling quickly, often with multiple offers, over the asking price. This fact may have caused overconfidence in some sellers, who want to “test the market” at a high price, but find no buyers willing to step up with an offer. According to the National Association of Realtors, the average time on the market has dropped to 34 days from 39 the previous year. This may have given sellers a belief that they can ask whatever they want and still draw offers from buyers. This is not always the case, and some sellers whose asking prices are higher than the market can bear are disappointed when their properties don’t sell after two or three weeks.

There can be problems with the “test the market” approach, especially when a seller does not act quickly to reduce the asking price early in the marketing process. A property that sits on the market for a long time because it is overpriced becomes a “stale listing;” prospective buyers look past it in favor of other offerings with more reasonable asking prices.

Listing agents typically recommend that their sellers drop their asking prices if there is no offer within the first ten days it is on the market. Although many sellers are reluctant to “leave money on the table,” it is the buyers, and not the sellers, who determine the final selling price. The agent should analyze the market to determine how much price reduction is likely to attract a buyer in that property’s price range.

Once a seller has reduced the asking price, the agent can contact prospective buyers who have previously viewed the property but failed to be sufficiently interested in making an offer. Although the price of a home is always negotiable, many buyers won’t make an offer on an overpriced listing because they do not want to be rejected. A seller who drops the price early in the marketing process can send a signal to buyers that they are indeed paying attention to them and that they are interested in making a deal.

While sellers may have had the luxury of being somewhat arrogant about their prices in the past, a normalizing market requires them to be more realistic about their asking price—and about the final selling price they’re willing to accept. Arriving at that price sooner rather than later is always in the best interests of both buyers and sellers.

Source: TBWS

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