When is it time for a price reduction?

When is it time for a price reduction?

Ask Phyllis: a blog series of frequently asked real estate questions.

Dear Phyllis,

As an avid follower of your column, I have yet to see this question discussed. I have three siblings and am the trustee of my father’s estate. We listed his Palm Springs residence, and after a week on the market, the Realtor suggested a price reduction. Am I wrong to be put off by this? We have had a few open houses with just a handful of lookers. The Realtor sent me the lockbox report proving there have not been many showings. I always thought it was simply a matter of finding the right buyer. So, my question is: When is it time for a price reduction?

Sally

Dear Sally,

Although the market has changed, well-priced homes continue to sell and sometimes in multiple offers, resulting in an over-asking price sale. I am unfamiliar with the Palm Springs market, but likely the best time to sell is in milder weather.

Initially, listing at the right price is critical to selling quickly, ideally at a great price. If the price is set too high, the home may stagnate on the market and push you into a price reduction, possibly multiple ones. What is the feedback from real estate agents that have shown the home? Is there anything you can quickly and easily change to make it more saleable?

If potential buyers are viewing the listing online but have not come to look personally, it indicates a problem. Typically, the first week of open houses will get the most traffic. After that first week, other than luxury homes, listings begin to get stale if there are no offers. I look at the number of “saves” my listings have on Zillow. When there are a lot of “saves” but few showings, it indicates that buyers are waiting to see what happens. If you reduce the price, the people who have “saved” on Zillow will be emailed the price reduction.

Check out the competition. If homes in your price range are selling while yours is not, then it’s time to reevaluate your price. The longer a home is on the market, the less likely it will sell for the asking price. Most of our neighborhood homes that sell for full price or higher are getting offers in the first week. Don’t think of it as a reduction but rather a price improvement.

To recap: showings and open house visitors drop off quickly. Thus, don’t wait to reduce the price. Reduce it quickly while there is still interest.