Reducing the price may not always be
the best answer for houses that aren't selling

Reducing Your Asking Price??

Tight real estate market may or may not mean you'll have to reduce your asking price

You've probably noticed the increasing number of real estate signs on the market with headers that read: NEW PRICE, or PRICE REDUCED! This happens for several reasons, but the prime one is that the property was over-priced to begin with.

True, we have entered into a tightening real estate market meaning there are more houses for sale than there are buyers.

Either the properties with new prices weren't aware of the current real estate market conditions, or they just plain ignored them.

It is absolutely necessary to do comparables of other properties that have sold in your market area within the last 6 months. Going back 2 years gives you little useful information.

Remember: you are in direct competition with other properties in your area, plus new developments going in outside your area. Serious house buyers are considering all their options and are looking for a house that will give them the most for their monthly payment.

If your house is reasonably priced, and fair, but is lacking some of the new features home shoppers are seeing in the new developments, then instead of trying to reduce your asking price, maybe adding some of those new features might be the answer.

For example, let's say your property hasn't sold for 6 months. You're getting desperate and your real estate agent is suggesting you cut your price by $10,000 or so just to get some traffic. That $10,000 price reduction is only going to cut a buyer's monthly payment by about $100. Not exactly a big motivator. In fact, reducing the price by $10,000 is not going to increase your traffic much at all. You'd probably have to take about a $50,000 discount to increase traffic by any significant amount.

Now let's take just $2500 of that price reduction and invest it in the property with something that's going to create some wow factor. Decks are the best return on the dollar in my market. We generally go for 14x16 if there is space. So we add a new deck that costs about $2500 dollars. We don't reduce the price at all. Once the deck is completed with a little landscaping, put the house back on the market. Presto, you've got a new feature.

Other ideas that add some WOW include picket fences for homes with small front yards, landscaping and/or sod, security system and new appliances, add crown molding or wainscoting to key rooms such as the living and dining room. You can also include a home warranty with the home if the systems or plumbing are old. Accessorize the bathrooms with guest towels, pretty soaps, and candles (not lit) to create more mood. Add new carpet if the old carpet is looking ugly, or paint if you were trying to sell the house without repainting. Refinishing hardwood floors also can help. These are just a few ideas you might want to consider before reducing the price.

Realtors love to cut prices out of panic. However, you have to keep a level head and go in and figure out what has to be done to add some “sizzle to the steak.”

Tight markets require different selling tactics

When real estate sales slow down and the market becomes a buyer's market, then selling tactics need to change.

During boom times, houses will obviously sell faster. When the economy slows down, and house sales falter, you have to have a different mind set as the rules of the game have changed.

Normally, you want to price your house close to where it should be selling. However, in the tight market, buyers will be expecting houses to be "drastically reduced" in price before they are motivated enough to make an offer.

Price reductions

Here's a suggestion to counter this trend: over-price your house to begin with— then "drastically reduce" the price after a month of it not selling. This first reduction may be tempting enough to entice a buyer to bite, but not likely. It will take several months of "drastic reductions."

Offer bonus options to the buyer

Offer a bonus to the buyer in the form of closing costs or an interest rate buy down and you will get the attention of those who matter.

Make sure the property is in move-in condition

Home buyers WANT EVERYTHING! That means they can be choosey. Why pay top dollar for a house that needs paint, a new roof, new carpet, etc? Make sure your property looks the best in all regards, the price is strategically priced, and you can give them a bonus to get them in and you out of your property.