Price Drop Strategy

Price Drop Strategy:

In many cases, sellers will price their home too high. Once a home is listed, a seller will quickly realize that their home is priced too high when this happens:

1) Few and infrequent showings.

2) No serious inquiries.

3) No offers.

If you do not have a lot of showings, it's unlikely you will get an offer. The odds aren't in your favor. If your home is priced right, you will get a lot of showings. Eventually, one of those showings will lead to an offer. 

Remember, buyers care about 3 things:

Price, location, and condition.

Of those 3 things, the easiest one to change, and the one that will move the needle the fastest, is price.

The question I get a lot from sellers is what is my recommendation on a price drop strategy.

This is where the 30 day / 2% rule comes in.

Once you home is listed, for every 30 days your home is on the market, you will need to reduce the price by 2%.

Here is an example of a home on the market for 120 days:

Day 0-30: $300,000

Day 31-60: $294,000

Day 61-90: $288,000

Day 91-120: $282,000

Here is the biggest problem with pricing your home too high in the first place.... Once the Days on Market (DOM) start to increase (because you haven't already sold your home because it was priced too high), now buyers start to wonder what is wrong with your house.... They start to think to themselves that if other buyers are passing on this house, then it must be a lemon and avoid it... Now the seller is scrambling to find a buyer, and chasing a downward price. Any buyer who comes around may feel the seller is desperate to sell, and offer a low ball price. Oftentimes, a seller who prices their home too high, or does not make swift price adjustments, will sell for a lower price than if they would have just priced it fairly in the first place.