When should you drop your asking price?
Haven’t been able to sell your home in a while?
This could be due to a number of reasons. Some of them are beyond your control, such as fluctuating market conditions, a unique home layout, or yours may be the only property in the neighborhood without a patio. Or maybe it’s haunted.
But what you can control? Adjusting your home’s asking price.
It’s understandably difficult for sellers to accept that they may need to lower their asking price. But if a property isn’t drawing in potential buyers, then it’s time to reconsider.
You should drop your asking price:
- When your listing has gone stale
If your property has been sitting on the market to the point that the listing goes stale, buyers may not even look at it before clicking past it. Reducing your list price could thus help the situation.
But how do you know that the listing is no longer drawing attention?
If your house has been drawing few viewers compared to comps, this may indicate that buyers might deem your property overpriced. Laura Barnett is a leading real estate agent in Dallas. In an interview with CNBC, she discussed price adjustments. “I typically drop the price after the second week on the market.” That might seem a little aggressive. But the increment she uses is more gradual: “Usually just in $5,000 to $10,000 reductions for the most part.”
And, that’s your cue!
- When the local absorption rate is too low
What does ‘absorption rate’ mean in the real estate market?
Take a specific timeframe and determine the rate at which homes in your market have been sold. This is called local absorption rate, which has a great impact on your ability to sell faster.
If there are more homes on the market (especially comparable to yours in attributes and square footage), then the possibility of selling your home as quickly as possible becomes dim. Again, in that case, you’ll likely be forced to drop your asking price in order to get buyers’ attention.
- When you can’t make home upgrades
Enhanced curb appeal is one of the best strategies to attract offers. But you may face some budget constraints preventing you from making necessary or even simply aesthetic home upgrades.
What if you don’t have the funds to apply a fresh coat of paint, remodel your kitchen, or change the flooring?
Other similarly priced homes may be offering their buyers all of that. And if home upgrades are the primary reason why buyers have been turning away from your property, then maybe it’s wise to readjust your price.
Some buyers may be willing to pay a lowered price for a less well-appointed home, opting to use the cash saved for improvements later on.
- When you are bound by a deadline
It may happen that everything about the property sale is going in your favor—the local market conditions, availability of budget to renovate your home, and high absorption rate of properties in your neighborhood.
But you’ve got one nagging constraint: You simply don’t have the luxury of time. You must sell your home before a certain date. Perhaps you’re moving to a new city or region, you’ve already bought another home, or you’re relocating to join a new company.
Therefore, in order to expedite the sales process, dropping your asking price is a reasonable tactic to quickly generate more interest from buyers. (It also presumably widens your pool of possible buyers, since more people will be able to afford your home.)
Playing the limbo (“how low can you go?”) with pricing doesn’t have to be an especially painful experience. You can reduce your asking price strategically in order to land a deal that works really well for you given your other limitations—and truly, that’s something still worth popping the Champagne (or generic sparkling wine) over.