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Friday, March 04, 2016

Selling Your Home: What Does Your Price Reduction Really Mean?

I just got interrupted by one of those annoying real estate agent emails that say "Look Here, Big reduction!"  As a local MLS system member I get the system updates daily so the email is more of an annoyance than a news flash!

Why do agents send out these email blasts?   Because they want their sellers to know how hard they are working for them.  So I tolerate the annoyance.

So what does the price reduction tell me as an agent?  More importantly, what does it tell prospective buyers?

First of all, most price changes mean "I was wrong."    Regardless of who influenced the pricing decision initially,  the property was priced too high from the start.   If it has been on the market for a couple of months it tells me the seller has acquiesced in their pricing. 

Still, depending on the change, it could mean the seller's motivation has really changed.   However, a one or two percent reduction in home price does not convey real motivation.

Sometimes it is the seller's agent who employs another tactic - changing the price every day but only about a hundred dollars or so.  This triggers additional attention in the MLS system as a price change.  But most agents recognize this tactic for what it is...a sign of desperation.

How does a property get priced too high?

Properly pricing a property is relatively simple.  Properly pricing usually has only four key influences:
  1. condition, 
  2. location, 
  3. competition 
  4. seller motivation.
Agent knowledge in applying the above is critical as well.
Properly pricing a property is not a mix and match, any combination works option.  Improperly pricing a property happens when any of the above is omitted or given too much weight. 

Finally, sellers should understand most buyers use the principle of substitution.  They will not pay more for a property than the cost of an equally desirable alternative property.

When I run into sellers who appear to be overly optimistic I suggest listing and, in a month evaluate the property based on my 30-10-1 rule.  

The 30-10-1 rule is quite simple...If within 30 days we do not have at least 10 showings and one reasonable offer (even if not accepted), then we look at a price adjustment. [The use of "we" is intended because whether buyer or seller when working with me we are a "we."]

Ready to sell your Viera, Florida home?  Call or text me at 321-693-3850 if I can help in any way.

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