Q: My house just won’t sell. It’s been on the market for six months. I’ve reduced the price several times, and my Realtor keeps trying to get me to bring the price down much more, but I think it will make me look desperate to buyers. Should I get a new Realtor?
A: In my experience, lots of tiny price reductions make you look clueless to buyers; a major price reduction makes you look motivated and makes your home look like a potentially good value, which is attractive to buyers.
With respect to your question about firing your Realtor, I don’t have enough information to know whether your Realtor is the problem. How did you select her? Did you talk with past clients who were happy with her? Does she have a recent track record of successfully selling her listings? Has she shown you the recent comparable sales and data on your competition that document her rationale for the suggested price reduction? Do you feel that she has gotten the word out to the market about your home to other Realtors and to buyers? How long are other homes in your area taking to sell? If the entire market in your area is moving slow now, make sure you are not placing blame on your Realtor for the state of the market, which is not her fault.
Know this — it takes a lot of courage for a Realtor to be the bearer of the unfortunate (but honest) news that your home is worth less than you had hoped for. If a Realtor is repeatedly advising you that your home won’t sell without a major price reduction, knowing that there are a bunch of her colleagues out there who would be happy to lie to you about the value of the home if it meant they could have the listing, she likely has your best interests at heart. It does no one in this situation good for your home to be overpriced and just sit on the market — it stresses you out and prevents you from moving on; your Realtor spends money to market the place with little prospect of actually collecting a commission; and the longer it sits, the more likely you are to get lowball offers.
Often, a Realtor who keeps trying to tell a homeowner that her home is overpriced is hit with the double whammy of (a) being shot as the messenger of bad news, and (b) having to spend time and money marketing a home that won’t sell because it is priced too high. Time and time again, I’ve seen sellers refuse to follow their Realtor’s pricing advice, fire the Realtor when the home doesn’t sell, hire a new Realtor, lower the price, and then get the home sold. They think it was the new Realtor that sold the home, when in fact what sold the house was the very price reduction that the original Realtor was fired for suggesting! If you follow your Realtor’s advice and your house still doesn’t sell after a reasonable amount of time, that may be a good time to look for another Realtor. But if you aren’t even doing what she is telling you needs to be done to get your home sold, you can’t really blame her for the fact that your home is not moving.
Get clear on your goal. Is your goal to sell your home, or to nurse some misdirected sense of pride by insisting on a price that is clearly not based in reality? If your home is listed on MLS and on the popular property-search Web sites and has been on the market a much greater than average period of time with no offers, then it is, by definition, overpriced. Lots of sellers now are mentally stuck on the price they think they could have gotten if they had sold two years ago, but if you really want your home to move, you must get over that. You may not make as much money as you want to; in fact, you make not clear any profit at all. You didn’t say why you need to sell, but if you need to sell, pricing is the single most important element you have the power to control. If you only want to sell if you can sell at your pick of price, then this may not be the right market for you to sell in.
The qualified buyers who are actively out and looking for homes right now are stressed about the state of the market and hesitant to pull the trigger. Many are concerned about buying now, fearing that their home will continue to decline in value, which tempts them to wait for the bottom of the market. The buyers who are serious about buying in this market understand the folly of waiting for the bottom, but figure that if they are going to buy now, knowing that the market may get worse before it gets better, they had better be getting a great deal for their dollars to insulate against further declines and to spur them into action.
Lower the price — for real this time!
Forgive me in advance if this seems gruff; I can’t help it — my dad was a Marine. If you want to sell your home, reduce the price — and reduce it significantly. No more penny-ante price reductions — they are just as stressful to you as a bigger reduction, and they have little or no impact. Those $1,000, $2,000 or $5,000 price reductions do nothing but make the buyers who might be on the fence about your house roll their eyes and think that you are out of touch with the realities of this market. Buyers today have the luxury of picking which sellers they want to deal with; too many other sellers are strongly motivated for a buyer to invest her time and energy trying to educate you about the market and the real market value of your home.
There are no hard and fast rules of thumb for how much to reduce the price, as, obviously, the list price of a $1 million home would have to be reduced differently than the price of a $100,000 home in order to make a splash. Consider this, though: Your primary purpose of reducing the price should be to expose the property to an audience of buyers who haven’t seen it before. Buyers usually search property listings in $25,000, $50,000 or $100,000 increments; in addition to making your price reduction significant, it should also be your aim to bring the price below one of the common listing-search price-range limits. If your home is currently listed at $469,000, you can reduce it to $460,000, but your results will be better if you reduce it below $450,000 to $449,000 — you’ll get your home in front of a whole new set of buyers.
Lest you agonize about dropping the price too low, don’t fret — a price that is set lower than the market value of the home will generate multiple offers, with the result that the home will fetch an asking price that may be lower than your original price, but greater than the "too low" asking price. Nine times out of 10, there’s really no such thing as "too low" of an asking price — the lower the price, the more of a value the property will appear to be; the more buyers will come view it; and the more likely you are to get it sold.
Tara-Nicholle Nelson is author of "The Savvy Woman’s Homebuying Handbook," and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Ask her a real estate question online.
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