How you do a price reduction in a Seller’s Market

Okay, so you have made a mistake and overpriced your house. No worries. The market is strong enough that you haven’t shot yourself in the foot, you’ve just wasted a little time.

Back when the market was bad, it was even more critical to get the price right from the get go. The reason was because there were so few buyers entering the market. If they came to see your house and didn’t like it, a small price reduction wasn’t much motivation to come back and see it. About all you could do was made a big price reduction or wait for new buyers to emerge into the market.

Today, there are new buyers out every day. I don’t think in this environment that you need a huge price reduction to get your house sold. While it is true a lot of the same buyers who saw your house probably haven’t bought anything because there is literally nothing else to buy, your best bet is to catch a buyer who just started looking.

I think right now, I would suggest a small price reduction. That could serve two purposes. The first is that it might just cause a buyer who is tired of losing out in multiple offers to come back to you. It also makes it attractive to those brand new buyers. Every buyer loves a price reduction.

If your house makes it past the first day on the market and you didn’t get an offer, something is wrong. Whatever the issue is, a lower price always helps. If you reduce the price a bit and it still doesn’t sell, keep reducing the price a little until it does.

Of course, the best way to prevent needing to drop your price is to start out with the right list price from the beginning. Pricing it correctly usually means a faster sale and a far greater likelihood of getting multiples offers.

The worst part of being a Realtor

I bet you are thinking I am going to talk about being on call 24/7 and other things realtors complain about.

Not quite.

To me, the worst part of being a realtor is seeing your client make a mistake you know they will regret later.  It is easy to do.  I mean, no buyer or seller really know the market like a realtor.  They only know what they read in the paper or hear their friends discuss.  Often buyers and sellers don’t totally trust their agent.  I recently told a client a truth about our market.  This client said none of her friends believed me.  I asked if any of them had recently sold a house in our area.  None of them had.

Here are the biggest ways clients can make a mistake:

Buyers:  There is nothing worse for a buyer than the first house they see being the most totally amazing house that has come on the market all year.  When this happens, buyers often assume every house is just as good.  They often decide to wait for a better one.  When they do this, they quickly realize the house they passed on was so much better than the other houses in their price range.  I dread it when this happens because I know that the buyer is thinking I am just trying to get them to buy the first house they see to make it easy on myself.

Another big buyer mistake is wanting to negotiate in multiple offers.  I often have buyers tell me they want to come in low and let the seller counter.  I tell them that if they had two offers, and one of them was lower than the other, which one would you counter if you were even going to counter at all?  When you are in multiple offers and you make the weakest offer the seller got, they simply do not counter your offer, even if your agent tells their realtor you are open to a counter.  I mean, they already have other offers that are better than your offer, they have no need to counter.  Always come in with your best offer in multiple offers because  you only get one chance at getting the house.

Sellers:  I feel for sellers.  I think they have it the worst.  I mean, they see in the news that prices are going up.  They know their neighbor got 5 offers the first day on the market.  They see what their Zestimate is on Zillow.  They often think their house is worth more than it is.  Like in any market, the most you can get out of a house is what a buyer will pay.   You can never get more than market value for your house.  It is just in a hot seller’s market, you might have 5 people all willing to pay market value for your house instead of hoping and praying that just 1 buyer will in a buyer’s market.

When a seller overprices their house, they lose the frenzy of having more than one buyer wanting their house.  When a house hits the market, all the buyers in that price range rush out to see it.  Buyers are afraid of losing it.  Once the house has been on the market for a bit, buyers are no longer afraid of losing the house, so they make less than full price offers.

Sometimes a seller will think the realtor isn’t doing enough to market the house.  Exposure is never a problem these days.  Houses get thousands of views on just zillow.  Once a house is listed you can google the address and see several pages of places the listing can be found.  There is no way there is a buyer out there for a specific house who does not know it is available unless they don’t have internet or don’t have a realtor.

So, those are some of the worst parts of being a realtor.  The 24/7 thing is something you get used to after a while.