Price Reductions in Real Estate: Is Now the Time to Slash Your Price?
Deciding when to reduce the price of your home is a big decision that I always recommend discussing with your realtor.
Overarching trends on the time of year and your local market will affect this decision. And as we’re seeing, historical data used for predictions isn’t lining up with this post-COVID-19 market.
To help you make this decision based on current market data, I outline a 3-strike strategy you can use with your realtor.
When Should You Make a Home Price Reduction?
Historically (we’re talkin pre-COVID-19), sellers had the most advantage when they listed homes from March to May. They had the perks of selling homes faster and at higher prices.
From mid-summer to fall, buyers have typically gained more negotiating power, so homes listed from late-summer to winter spent more time on the market, saw price reductions, etc.
But right now, as we move into late summer and fall, the trends we’re seeing don’t line up with the traditional pre-COVID trends. In fact, the market is still favoring sellers.
What does that mean for you if you’re itching to sell your home right now?
The odds of selling are high. The housing market is being pushed into an extended selling season thanks to low levels of inventory and median days for listed homes.
Could this change as interest rates rise? Sure.
But there are other factors that can affect the market as well.
Fall Market Trends in Metro Denver Post-COVID
Labor Day weekend traditionally signaled the end of selling season in Metro Denver, Colorado.
Kids head back to school. Families gear up for holidays (an already hectic time of year). And that meant, in some cases, putting home buying on the back burner.
So we tended to see fewer new listings, more listings expiring or being withdrawn, and fewer pending transactions.
And although there’s usually a slight inventory bump in the market the weekend after Labor day, overall, the market traditionally continues to cool down throughout the end of the year.
But like I said, right now we’re seeing unprecedented circumstances of a continued seller's market.
All those buyers who kept getting outbid or were squeezed out of the raging market before… well they’ve returned and are ready to find their dream home in a less competitive market.
So in this seller's market, should you reduce the price of your home?
Maybe.
Here’s an easy-to-measure 3-strike rule to help you decide when a price reduction makes sense for your home.
3-Strike Rule to Determine When to Reduce Your Home’s Price
Talk with your realtor. They should be able to find and review reports published by their REALTOR BoardⓇ and REcoloradoⓇ (if you’re selling in Colorado).
These reports can help you both determine factors of the 3-strike rule and help you decide the best course of action for your home.
Strike 1: The number of showings an average-priced home has per week for the last week or two.
If the average-priced home has 3 showings per week but yours is getting less, it may be time to consider a price reduction.
Strike 2: The average number of showings before a home goes under contract.
If the average-priced home has 10 showings by the time it goes under contract but yours has had 10 without any offers, it may be time to consider a price reduction.
Strike 3: The median days on the market (or the point at which half of the homes are under contract for the last week).
If the median days on market is 15 but your home has been on the market longer, you may need to consider a price reduction.
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