Most folks go into a price reduction blind as a bat.
They haven’t a clue as to whether the price reduction will have any effect.
Or worse they don’t know if something else other than price is the real issue.
Let’s take a look at exactly how you can prepare for a “price reduction”.
On average markets are predicable. They leave us with “signals” as to what they might do next.
We can look at this signals and tell what you should do next and that isn’t always “price reduction”.
Three signals that your property’s listing needs a little more work
Signal 1: Median days on market: is the signal against which everything else is measured. If your sitting for longer than the median home did then there’s a chance something in your listing needs adjusted to get your home sold.
Signal 2: Online Listing Hits: The 2017 NAR home buyer profile reports 42% of people are starting their search on the internet. The internet is by far the biggest piece of the pie, with the second being agents at 17%. Long story short, if you’re not getting seen online your chances of selling well are greatly diminished. Online traffic typically converts at 1% so you need to be seeing hundreds of hits to get previews of your home.
Signal 3: Number of Buyer Previews: people visiting your property should already pretty well know it’s a good fit. Typically 1 in 20 previews results in some sort of an offer. We always recommend soliciting feedback from these previews. Specifically what objections people have to buying your home.
Additional Signals: It’s a good idea to query the MLS for feedback. Agents use something call reverse prospecting to find agents with buyers who may fit your home. Follow up with those agents and see what their buyer’s think of the home.
Social Networking: It never hurts to throw the listing up on Facebook and see people’s reaction. A great place to do this is in the Facebook marketplace.
Can you do more to sell your home?
We are assuming you have a generally marketable property. That your home is clean and in good repair. That you have decent photos and accurate listing details. Your home is also in the MLS as well as on major websites such as Zillow, Trulia, Realtor, etc. This be the case then you can look to the signals to tell you where to go next.
No online hits?
- Change your primary photo.
- Take some or all new photos.
- Complete missing details (if any).
Buyer Previews but no offers?
- Do the photos in the listing accurately and completely represent your property?
- Consider adding a floor plan drawing to the listing.
- Add a walk through video to the listing.
- Solicit previews for their feedback. Why did they object to buying?
Should I hold open houses?
My opinion on open houses is they are a thing of the past. Many years back before the internet, folks had to rely on brokers and their listing books (if any) to find properties. Open houses were the way to go simply because there was no other way to view properties on your own without the pressure of an Real Estate Agent. Now people can do that much more efficiently on the internet. They can view hundreds of homes in a matter of hours filtering down their search. They call an agent to preview homes once they find a few on the internet that fits their needs.
Open houses are a place agents go to solicit business and have become more of a leisurely activity than a buying necessity. Most folks coming through the doors are “tire kickers” looking for decorating ideas and a few are buyers. However, NONE of them know if the house fits them. That means you may need upwards of 2000 people (given numbers above) to visit your open houses. Even if you say need 200 people, why would you go to that trouble when the internet is filtering them for you and saving your floors in the process.
We do recommend open homes for something different. That is to survey the public when you need new ideas to get your home sold.
When to adjust the price of your listing
Nobody likes to throw away money. When you’re listing your home you’re not really playing with money though. Those numbers mean nothing until your home has sold. So we want to make an informed decision as to what the market might bring you today, in light of what you’ve listed your home for. There are a few more signals you’ll want to take a look when arriving at that new listing price:
Signal 1: List to Sold Price Ratio: this is an what homes have been listed for and the price they sold for. It’s fantastically helpful in telling us how much we need to reduce the price by as it literally tells us how far everybody else had to reduce the price to sell property.
Signal 2: Absorption Rate: this tells us how long it would take for us to run out of homes if no more listed. A low abortion rate is an indication of a rising market in which you might like to hold out for a buyer. Typically an absorption of 6 months is an even keeled market, prices can start to rise as the number falls from there.
Before you implement a price adjustment you want to test your theories. Search the market and see if what competition you have. That is what homes are similar OR better than yours for your given price. Adjust your price until you’re lower than that competition.
Confused as to what to do next?
This can all be a little confusing. That is why I am here. Drop me a line and we’ll chat about getting your home sold…