It's a tough call. Naturally you want to do everything in your power to avoid giving up any hard won equity in your home, so adjusting the price is always a last resort. The question is - What's the best timing? How long do you wait from the time your home hits the market until you pull the plug - a week, a month, ten days? To answer this question we have to explore how buyers come into contact with your home's price and then ultimately how they measure it against other similar homes.
Something magical happens the first day you list your home for sale. Like the new kid at the high school dance, all eyes will be upon your listing. At that moment buyers and agents make some rapid judgments. Is the home overpriced? Is the home in good condition based on the photos? Is the home in a good location? This first impression will shape how many showings you receive during the first few weeks the home is listed. If you receive very few showings, or no showings, during the first two to three weeks after the listing has hit the market, you have a problem. The market as a whole is rejecting your value proposition. There is only one solution: adjust the price, and the faster the better.
Why not give it more than just a few short weeks? Think of the real estate market as an audience in a movie theater. As soon as your home hits the big screen the group collectively decides if they like the picture or not. More time won't change their mind. If your home has seen little or no activity, it's been decided that your home got a thumbs down. The only thing you can hope for now is that new audience members will trickle in, new buyers entering the market, who will, against all odds, fall in love with your home and nominate it for an Oscar. A better bet is to edit your price and re-submit it to the academy.
There are also other times when a pricing adjustment may need to be considered. For instance, let's take a look at Joe and Jane Seller's listing price below.
|Competitor Home A:||$368,000|
|Competitor Home B:||$349,000|
|Joe and Jane Seller:||$345,000|
|Competitor Home C:||$345,000|
|Competitor Home D:||$333,000|
|Competitor Home E:||$329,000|
Joe and Jane appear to be very competitively priced relative to the market. But let's see what happens 30 days later:
|Competitor Home A:||Expired|
|Joe and Jane Seller:||$345,000|
|Competitor Home B:||$339,000 (Reduced Price)|
|Competitor Home C:||$335,000 (Reduced Price)|
|Competitor Home D:||Sold|
|Competitor Home E:||Pending|
|Competitor Home F:||$326,000 (New Listing)|
|Competitor Home G:||$325,000 (New Listing)|
|Competitor Home H:||$319,000 (New Listing)|
Joe and Jane went from being very competitively priced to being the highest property in their price range. From a buyer's perspective, their home now offers the worst value proposition in the marketplace. The interesting part of this scenario is that most sellers like Joe and Jane would never know the market winds had shifted so far and so fast. Why? Most sellers only request a market analysis at the beginning of their relationship with a real estate professional. Instead, homeowners need to stay abreast of all market activity in real time. How? One simple way is to use the internet. For instance at Trulia you can receive automatic updates on prices changes and new listings as they hit the market, or check out the latest market Stats & Trends. This is critical information that can be invaluable to creating a competitive pricing strategy.