Before you drop the price

Items to Consider Before Dropping the Price

When a house won’t sell, the answer is often to drop the price, but is that the right answer or just a knee-jerk reaction? Maybe you haven't taken care of the 3-C's yet (see posting below). Make sure that those buyer criteria aren't the source of no offers. This may be the case if you are getting a reasonable amount of showing traffic but no second visits or offers.

If price is the issue, then how much and when should it be lowered?

1. Price the house right to begin with — it will get the most activity when it first goes on the market. Agents love "new" listings, something that they haven't already shown to their buyers. Buyer these days also hover on real estate search sites looking for new listings. Get it priced right when this first wave of buyer interest hits.

2. Lower the asking price sooner rather than later while it's still fresh in buyers' minds. It used to be that lowering the price might carry a "what's wrong with this house" meaning. Not anymore. Now it's more likely an indication that the seller "got real"on the price.

3. If there has been no offer in one to two months — six at the most — consider dropping the price, then re-evaluate every two to four weeks. You can also look at the showing activity for guidance. No showings or offers means that the market doesn't perceive the value to be in sync with the price. In a Buyers Market, like we have in Michigan right now the buyers just have too many choices available to nave to put up with overpriced houses. They just move on and quickly.

4. When you drop the price, lower it by enough to make the home the top house in a lower price range rather than the bottom house in a higher range. Remember that real estate search engines use rather broad price ranges (normally $25 or 50K increments), so try to get into the next lower price band on the search engines.

5. The more expensive the house, the greater the decrease needs to be to attract new buyers. a $5,000 decrease is OK on a house costing under $100K, but you may need to move $50-100K on upper end homes to make a difference.