This question of whether or not to drop your listing price comes up often. Of course, everyone wants to get the best price possible for their home. We also know that if a house is priced too high, it signals to the market that a seller is not ready to sell and your house may be ignored by some potential buyers. So it’s important to know how to set the price…and know when to drop the listing price.
Pricing your home requires a specific formula, but a key factor is your competition – other properties listed nearby. For example, let’s say you are selling a 10-year-old post and beam home with 5 bedrooms and 5-1/2 baths. We would look at other similar homes that are currently on the market. You would assume that a potential buyer would see all other post and beam homes in that price range. You must think like a buyer. Buyers are always trying to get the most for their budget. Which one would you buy?
Secondly, we would also look at similar homes that have sold in the past year. This gives us an idea of the average length of time homes in this price range are on the market, as well as an average cost per square foot.
So now that you’ve set your listing price, how do you know when its time to drop the listing price?
Dropping your price on a house is a decision that clearly affects your net proceeds. When we take a listing we always tell our sellers to leave some room for negotiation, and plan on a couple of price reductions if needed. So always have that bottom line in your mind when you are pricing. Many times the sellers here in the mountains will just wait until the market reaches their asking price. Our resort real estate market in Breckenridge is not the same as a primary residence market, where you have to move by a certain date for a job change or children transferring schools etc.
You should also have an idea of how quickly you want to sell. Are you in a hurry to sell, or are you ok with carrying it a while longer? Can you continue paying the mortgage or taxes and any other ongoing obligations? These things should be into consideration when dropping the price also.
Keep in mind that when negotiating on a house, if you have reduced your listing price, the buyer will not see that as a negotiating concession that benefits them. A potential buyer is making an offer on the current price only (but their agent will likely share the listing history with them).
Signs That It’s Time To Drop Your Listing Price
One of the biggest indicators that a listing price is too high is feedback from other Realtors. If you are getting feedback after every showing that your home is priced too high, then we know that it is true. Of course, you will always get a few people saying this but if we are consistently getting this feedback, it’s important to pay attention to it.
Know that dropping your listing price is not uncommon. It doesn’t mean your home has a stigma or something is wrong and that is why it isn’t selling. While this may be the case in many areas, we are a seasonal resort market. We have a constant flow of buyers different times of the year and from different parts of the country, so it isn’t the same as when there is a fixed group of local buyers looking at a particular neighborhood and waiting for something to go on the market.
Another time you should think about dropping your listing price is if the homes around you or in the same basic price range are selling and yours is not.
The bottom line is: if dropping your price gets you to the next place you want to be, then it is the right thing. If you can hold on longer then at some point the market will rise (hopefully) to meet it.
Roger and Teresa have 22 years of experience selling properties in Summit County and have learned the ins and outs of pricing. They can walk with you through the process of choosing a listing price. Let this expert real estate team sell your home in Summit County and get you the best price possible.