When a property has been on the market for a while without selling, one of the first questions sellers begin to ask is: Should we reduce the price?
Sometimes the answer is yes. Sometimes the better answer is to stay the course. And sometimes there are things that should be done to improve the property before changing the price at all.
The challenge is figuring out which one applies to your property.
Properties are taking longer to sell than they did in some recent markets, so a few weeks—or even a couple of months—without an offer doesn’t necessarily mean something is wrong. But when a property continues to sit with few showings, little buyer interest or no serious offers, it’s time to take an objective look at what the market may be telling you.
A Price Reduction Doesn’t Guarantee an Immediate Sale
One misconception sellers sometimes have is that reducing the price should immediately produce a buyer.
It may not.
If a property is priced at $800,000 and reduced to $775,000, that doesn’t necessarily mean buyers who weren’t interested yesterday will suddenly become interested today. If buyers still believe the property is priced too high compared with their other choices, very little may change.
As a general rule, however, there is a price at which almost any marketable property will sell.
The challenge is determining where that price is while still getting the seller as much money as possible within a reasonable period of time.
That’s where proper pricing becomes both a science and an art.
The First Price Matters More Than Most Sellers Realize
Consider a property that comes on the market at $800,000.
It doesn’t sell, so the price is reduced to $775,000.
Still no sale.
Then it’s reduced to $745,000, followed by another reduction to $699,000.
Eventually, after being on the market for an extended period of time, it sells for $650,000.
It’s easy to look at that history and assume the market simply wasn’t willing to pay more than $650,000.
But that’s not necessarily true.
Had the property been priced at $699,000 from the beginning, it may very well have sold for more money—and in less time.
Why?
Because a properly priced property that presents well tends to attract more attention. More buyers notice it. More buyers schedule showings. More agents talk about it. And when several buyers are interested at the same time, it creates something extremely valuable in real estate:
Urgency.
Buyers behave differently when they believe other buyers may want the same property.
A property that has been sitting on the market for six months doesn’t usually create that same feeling. Instead of wondering, “How quickly do I need to act?” buyers may begin asking, “Why hasn’t anyone bought it?”
And after several price reductions, they may wonder how much further the seller is willing to go.
That’s why starting too high and gradually chasing the market downward can sometimes result in a seller receiving less, not more.
“We Can Always Come Down, But We Can’t Go Up”
We’ve probably heard this statement 10,000 times:
“We can always come down, but we can’t go up.”
It sounds logical.
But as a pricing strategy, it has very little merit.
The assumption is that there’s no harm in starting high because you can always reduce the price later. The problem is that you can’t recreate those first few weeks when a new listing typically receives the most attention.
You can reduce the price.
You can’t make the listing new again.
Interestingly enough, there have even been occasions when we’ve recommended raising the asking price and generated new interest in a property. It’s certainly not something that works in every situation, but under the right circumstances, a price increase can reposition a property, put it into different searches or cause buyers and agents to take another look.
The point isn’t that sellers should raise their prices.
The point is that pricing decisions should be strategic and supported by market information—not based on clichés or throwing a dart at a number to see what happens.
Be Careful About Choosing the Agent With the Highest Price
There’s another part of pricing real estate that sellers need to understand.
Real estate is an extremely competitive business, and agents compete for listings.
When several agents are interviewing for the same property, the seller understandably wants to hear that their property is worth as much as possible. At the same time, every agent sitting at that kitchen table would like to win the listing.
That can create a difficult dynamic.
Sometimes an agent may agree with the price a seller wants rather than risk losing the listing by recommending a lower price. Other times, an agent may provide a more optimistic opinion of value because they believe it gives them a better opportunity to get the listing.
That doesn’t necessarily mean the agent is intentionally misleading anyone. Sometimes the thinking is simply, “We’ll try it at this price and reduce it later if we need to.”
But the seller bears the risk of that strategy.
There are certainly times when a good agent can get a higher price than another agent recommends. We don’t believe sellers should automatically choose the lowest suggested price any more than they should automatically choose the highest.
Instead, ask an important question:
How did you arrive at that price?
A knowledgeable agent should be able to show you the properties they are comparing yours to, explain the differences, discuss current competition and give you the reasoning behind their recommendation.
Selling a home, land or other real estate is one of the most important financial transactions many people will ever make. The asking price shouldn’t be determined by which agent gives you the number you like best.
A good agent shouldn’t simply tell you what you want to hear. Part of our job is to give you our best professional advice—even when it isn’t necessarily what you hoped to hear.
Pricing Isn’t Just About Comparable Sales
Recently sold properties are extremely important when determining value because they show us what buyers have actually been willing to pay.
But that’s only half of the equation.
We also need to look at what is currently for sale.
Those properties are your competition.
Imagine that a buyer is shopping for a waterfront home between $600,000 and $750,000. They may have ten properties they are considering.
They’re comparing location, condition, water depth, views, shoreline, acreage, square footage, improvements, outbuildings, docks, privacy—and price.
Your property doesn’t necessarily need to be the cheapest.
But buyers need to see enough value to choose it over the alternatives.
This is particularly important in the Northern Neck, where properties can be very different even when they’re located only a few miles apart. Two waterfront homes with similar square footage may have dramatically different values because of the type of water, water depth, views, shoreline, elevation, condition, improvements or location.
That’s why simply looking at an automated valuation or calculating an average price per square foot often doesn’t tell the whole story.
Before Reducing the Price, Look at the Property
Price isn’t always the only problem.
Before making a reduction, take an objective look at the condition and presentation of the property.
Could fresh paint make the home feel brighter and more current? Are there repairs that should be made? Is the landscaping hurting the first impression? Are dated fixtures, flooring or finishes causing buyers to see the home as a project?
This matters because buyers don’t always discount a property by the actual cost of making improvements.
A seller may look at dated flooring and calculate that it would cost $8,000 to replace.
A buyer may mentally discount the property by $20,000 because they see inconvenience, uncertainty and another project they don’t want to tackle.
Sometimes spending a relatively small amount of money improving how a property presents can produce a better result than simply reducing the price.
And sometimes the best strategy is to make the improvements and adjust the price at the same time.
What Are Showings and Buyer Feedback Telling You?
One of the best indicators of whether your price is working is buyer activity.
If your property has been on the market for two or three months and is receiving very few showings, that’s worth examining.
If you’re getting plenty of showings but no offers, that tells us something too.
And if multiple buyers are making similar comments—too dated, too much work, difficult access, not enough water depth, too far from town or simply too expensive compared with other choices—we need to pay attention.
We don’t have to agree with every buyer’s opinion.
But when several buyers independently tell us essentially the same thing, that’s market information.
Not Every Property Should Sell in 30, 60 or 90 Days
This is especially important in our market.
Different types of real estate have very different expected marketing periods.
A well-priced residential home in a popular location may attract a buyer relatively quickly. Lots and land, commercial real estate, luxury homes and unusual or highly unique properties may naturally take considerably longer to find the right buyer.
Price range matters. Location matters. Condition matters. Property type matters. The time of year can matter.
That’s why saying, “It’s been on the market for 90 days, so we need to reduce the price,” is too simplistic.
The better question is:
Based on this particular property, its price and the current market, are we seeing the level of buyer activity we should reasonably expect?
If You’re Going to Reduce, Make the Reduction Matter
Repeatedly shaving a few thousand dollars off the asking price may accomplish very little.
The purpose of a price reduction isn’t simply to be able to say the price was reduced.
The goal is to change buyer behavior.
A meaningful reduction may put the property into a different search range. It may make the property look considerably more attractive compared with competing listings. Or it may bring the price close enough to market value that buyers who previously passed it over decide it’s worth another look.
There is no magic percentage.
A $10,000 reduction might make a tremendous difference on one property and accomplish virtually nothing on another.
The right reduction should be based on the same things that should have helped establish the original price: recent sales, current competition, condition, buyer activity, feedback and the seller’s desired timeframe.
Proper Pricing Is Part of How We Earn Our Fee
Putting a sign in the yard and entering a property into the MLS isn’t the difficult part of selling real estate.
Knowing how to position that property in the market is where experience matters.
Proper pricing requires studying recent sales, understanding current competition, recognizing differences between properties, listening to buyer feedback and watching what is happening in the market after the property is listed.
Sometimes our recommendation will be to reduce the price.
Sometimes we’ll recommend making improvements.
Sometimes we’ll recommend doing both.
And sometimes we’ll tell a seller to stay the course because we believe the property is positioned correctly and simply needs more time to find the right buyer.
The important thing is that these decisions shouldn’t be based on frustration, guesswork or an arbitrary number of days on the market.
They should be based on what the market is telling us.
At Bay River Realty, we believe one of the most important responsibilities we have to our sellers is giving them the information and professional advice they need to make good decisions—even when those conversations aren’t always easy.
Our goal isn’t simply to get the listing.
Our goal is to help our clients sell their property for the best price we can reasonably achieve within their desired timeframe.