Selling a house in Massachusetts can be challenging, especially if it’s taking longer than expected. Sometimes, lowering your asking price might be the best way forward. The question becomes, when does reducing the price make sense?
If your home has been on the market too long or has low interest, it could be overpriced. Understanding the signs that indicate it’s time to reduce your asking price can help you sell faster and avoid further delays.
I will provide the following pricing guidance to ensure you make the best decision possible:
- Three key signs that your home price is too high
- Practical steps to evaluate if a price reduction is needed
- How to work with a Realtor to make the right decision
With thirty-nine years of experience as a Massachusetts Realtor, I can tell you there is nothing more vital than pricing your home correctly from day one. Knowing what your home is worth is a key consideration in house sales. Pricing mistakes can easily cost you money, so it is crucial to adjust accordingly when a mistake is made. You can get back on track by creating an appropriate adjustment to ensure your property is sold.
Let’s explore when and how to consider lowering your home’s price.
Key Signs It’s Time to Lower Your Asking Price
1. Extended Time on the Market
When a property stays on the market too long, it concerns buyers.
Buyers often view properties that linger as problematic or overpriced. Compare your home’s listing duration with local averages. If it exceeds the average, consider adjusting your price.
Typically, homes should attract offers within the first 30 days. Consult with a Realtor to verify if your home’s time on the market is unusual for your area.
Waiting for “your price” does not work. Time is your enemy in real estate. If your home is overpriced, it will remain stagnant on the market.
2. Low Viewing Rates
A decline in showings or online views suggests your home may not be competitively priced.
Price could be the issue if buyer interest drops significantly after the initial listing period. Track online metrics for your listing, including views and inquiries. If view counts are below average, your asking price might turn buyers away.
Adjusting your price can revive interest and visibility in your property.
3. Lack of Offers or Lowball Offers
When offers are scarce or consistently low, it signals your price might be too high.
A lack of serious offers means buyers likely see better value elsewhere. Regular lowball offers also indicate price misalignment with buyer expectations.
If your property has received zero or only lowball offers, consider revisiting your pricing strategy. Your home should attract offers that reflect its actual market value.
4. You Used Terrible Pricing Methods
Several pricing methods are awful and could be why you need a price adjustment. When determining house value, avoid these avenues. They will only lead to disappointment.
- Using a Zillow Home Value: If you priced your property based on a Zillow home value estimate, it’s likely causing your pricing issues. Zillow Estimates are often wrong, sometimes by a significant amount. Zillow isn’t the only online value estimator that isn’t accurate. None of them should be trusted for accuracy.
- Looking at Assessed Value: It cannot be emphasized enough that assessed value has nothing to do with market value. Focusing on your tax value could cause pricing issues.
- Trusting a Refinance Appraisal: Over the years, I have experienced many sellers who think that a refinancing appraisal is the value of their homes. Fat chance! These appraisals benefit banks by ensuring they make money by rewriting a loan. There is little risk to lenders because you have already been paying your mortgage at a higher rate.
Actionable Steps for Evaluating and Adjusting Your Price
1. Analyze Market Conditions
Evaluating local real estate trends in Massachusetts helps you understand the optimal price range for your home.
Study recent sales data for comparable homes in your neighborhood. Look at homes similar in size, age, and features to yours. Identify current pricing trends and how long homes typically stay on the market.
When the wrong comparable sales are used, pricing mistakes are the result.
Recognizing whether you’re in a buyer’s or seller’s market can also guide your pricing decision. If nearby homes are selling for less, adjust accordingly.
2. Seek Professional Advice from a Realtor
Realtors bring expertise and data to help you price your home correctly.
Consult a local Realtor for a comparative market analysis (CMA) to assess your home’s fair market value. Realtors can provide insights into neighborhood trends, buyer preferences, and competitive pricing strategies. They’ll also help you avoid the emotional biases often affecting homeowners’ price expectations.
With their guidance, you can set a realistic price that appeals to buyers.
Hopefully, your agent didn’t give you the inflated price. Unfortunately, from experience, this happens far too often in home sales.
3. Understand Price Elasticity
Knowing buyer sensitivity to price changes helps you make better pricing decisions.
In real estate, price elasticity refers to how price adjustments impact demand. Realtors can help you determine the elasticity in your local market. For example, if small price reductions lead to higher interest, your market might be highly elastic.
In such cases, even a minor adjustment can significantly boost buyer activity. Use this insight to adjust your price effectively. A minor adjustment may work if it is a strong seller’s market. However, a more significant adjustment may be necessary if it is a buyer’s market.
4. Reassess Your Home’s Value Based on Feedback
Feedback from buyers and agents can reveal potential issues affecting your price.
Gather feedback after each showing, focusing on price, condition, and desirability. Listen to repeated comments about pricing compared to similar homes. Negative feedback about pricing often indicates you’ve set your price too high.
If possible, request specific feedback from interested buyers who chose not to make an offer. Use this information to inform your price reduction strategy.
Remember, many agents don’t want to tell an agent their listing is overpriced, so if they volunteer their opinion, it’s saying something.
5. Consider Timing for Price Reductions
Timing your price reduction can maximize its impact and attract new buyers.
Evaluate market cycles and seasonal trends to choose the best time for a price drop. Consider reducing your price at the start of a new month when buyers typically renew their searches. Avoid multiple small reductions, as they can signal desperation.
Instead, opt for a strategic, well-timed reduction that draws attention without devaluing the property.
Deciding on the Right Price Reduction
Choosing the proper reduction amount is crucial once you decide to lower your price.
A 2-5% price reduction can generate fresh interest without appearing desperate. Avoid minor reductions that barely shift the price; these often go unnoticed.
A significant reduction can make your property stand out in listings, particularly in competitive markets. Collaborate with your Realtor to decide on a reduction that aligns your home with similar properties on the market.
Have your agent update their market evaluation since you first listed the house. If you didn’t listen to your agent before, now is the time to do so!
Expert Advice
Karen Baker of Sunset Beach and Beyond makes some excellent points about when to reduce the price of a home.
“Setting the right asking price for your home is crucial for a successful sale. If your home is lingering on the market despite your best efforts, it may be time to consider a price reduction. Key indicators include low traffic and no offers, lowball offers, adverse reactions from potential buyers, and being on the market longer than the local average.
Experts recommend evaluating your price within the first two weeks of listing, as most activity occurs in the first 21 days. You should aim for a price adjustment after about 10 to 30 days if necessary.
Strategic reductions may involve cutting the price by 4 to 7 percent, especially if your initial pricing was high, or making more minor adjustments if you were closer to fair market value.
Limiting price reductions to no more than three is advisable to maintain buyer interest, and adjusting prices to just below significant thresholds (e.g., $399,900 instead of $400,000) can attract more attention. Determining your lowest acceptable price beforehand is essential to guide your adjustments.”
Conclusion
Lowering your house price can be disappointing but can lead to a successful sale. It is vital not to be stubborn when considering a price reduction. Time is your enemy in real estate sales. The longer a home remains on the market without an offer, the higher the odds of selling for less than you should.
Reducing prices appropriately is a consideration that shouldn’t be taken lightly.
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