When Should You Reduce the Price of Your Home?

The Houston real estate market has never been hotter. A number of records have been shattered this summer and the outlook for the future is strong. For example, more homes sold in Houston in the month of June than ever before (8,414). Along with this surge in transactional volume came all-time high median and average prices ($240,000 and $305,000, respectively).

Any time there’s significant growth in a real estate market, you’re going to see sellers leading the charge. Realtors will often get aggressive and try to come in above the comps and push the envelope a little bit. Occasionally, this will result in overpriced homes that eventually have to be corrected in order to sell.

If your home has been on the market for a few weeks and hasn’t gotten many bites, then it’s possible that you’re overpriced. Should you reduce the asking price? When? And by how much? Trying to answer all of these questions at once can be a little overwhelming.

Reducing the Asking Price: Here’s What You Need to Know

As you’ve probably heard people say before, you’re going to get the most leads within the first couple of weeks your house is on the market. After this point, your listing may get overshadowed by other new properties and homebuyers will start to wonder if there’s a reason other people have passed it over. That’s why it’s critically important that you set the right price. If you think your numbers are bloated, here are some things you need to know about lowering the asking price.

1. Consider Alternatives

When your house isn’t selling, you have two options: you can either lower the price of the house, or you can enhance the value. If at all possible, you want to avoid dropping the price. Before grabbing your calculator and calling your agent, think about ways you can add value.

For example, maybe you’ve had a handful of showings and you keep hearing people talking about how dated the kitchen is. Instead of lowering the asking price of the home by $10,000, maybe you can put $5,000 of work into the kitchen and get someone to bite on the current price.

2. Just Be Patient

How motivated are you to sell your home? If you need to be out in three weeks and already have a closing date set on another house, then you have to move quickly. In this case, you likely have no other choice but to drop the price.

But what if you don’t really have any timetable and can afford to wait three, four, or five months? If you’re convinced that your asking price isn’t outrageous, then maybe you can wait it out. When time is on your side, you can afford to be on the upper end of the price spectrum.

3. Good Reasons to Drop the Price

Dropping the price isn’t something you should do casually or arbitrarily. You need to think very carefully about what you’re doing and only adjust the price if there’s cause. Here are a few reasons where it makes sense:

• No showings. The Houston market is so hot that you should be getting showings, even if your price is on the high end. If you’re getting no showings – or an abnormally low number – this tells you that you’re way off base and buyers don’t even want to waste their time seeing the property.
• Lots of showings, no offers. Perhaps you have the opposite problem. You’ve had dozens of showings, but not a single offer. This tells you that your house meets the criteria of buyers, but something is off. Price could be the issue.
• Shifting market. The real estate market changes on a daily basis. Depending on the sale price of other houses in the area, it’s possible that the valuation of your property has changed since you put it on the market. Maybe you need to lower the price in order to match up.

As you can see, there are times when it’s okay to drop the price. You just need to think long and hard about why you’re doing it.

4. You Only Have One Shot

You only have one good chance to lower the price of your house. Lowering the price multiple times tells future buyers that there’s something wrong with the house (even if there isn’t).

Having said that, you need to drop the asking price enough. Going from $198,000 to $195,500 isn’t going to sway many people who were previously on the fence. Going from $198,000 to $189,900 might. Not only is this a significant drop, but it’s just below an MLS search threshold. If you drop it enough, you could also start a bidding war, which could bring the price back up.

5. Do More Than Drop the Price

If you can’t afford to drop the price a significant amount, you’ll have to do something else to get the attention of buyers. For example, you could couple a price drop with new listing photos, a renovation, or some kind of perk.

You don’t want to just reset the price. You want agents and their buyers to see the house and think it’s a brand new listing. You’re essentially investing in a rebrand. Change up the style, address the landscaping, have a professional stage the house, hold a new open house, etc.

Sell Your Home With Green Residential

Selling your home isn’t as straightforward as some realtors would like you to think. Correctly pricing a property requires more than a couple of comps and a gut feeling. You need to work with someone who can come up with a marketing plan and pricing strategy.

At Green Residential, we not only work hard to aggressively price and market your home, but we also charge significantly less than the other guys. With our flat-rate fee, you could save as much as $4,000 in commission on a $400,000 house. Want to find out how? Contact us today and we’d be happy to tell you more.