I had an interesting debate with one of the top brokers in town the other day. The topic at hand was whether properties at the top end of the market should entertain a price reduction if the dance card is sitting empty for too long. The underlying question it seems is, “How can I capture buyers’ attention when the property isn’t the newest kid on the block?”
“Reduction!” cried my colleague, sporting sheets of For Sale properties, many of who’s listing history looked like a thermometer on a winter day—down and down again until SOLD ended the movement. Indeed, if you look at the price history of the 6 properties over $10million that have sold in the last 6 months, 1/3 of them took at least one price reduction before they sold. “Exactly my point!” said the self-satisfied rogue.
Enter Opinion #2. Do price reductions just drive the market prices down? On the other hand, if there is little traffic why lower the price? You need warm bodies to generate an offer and at the high end does a 5 or 10% price reduction really do anything other than make you wish you hadn’t put the heated driveways or custom heat control panels in? Unless a price reduction puts you into a new price category where you are convinced those buyers haven’t yet seen you—and makes you clearly the favored child vs. the others in that new price bracket—you may want to think twice about messing with the price.
There is no easy answer to the question about when, if ever, is the right time to take a price reduction. The best way to evaluate your pricing is to take an honest look at the market. How does your property stack up against those that have recently sold in your price range? Looking at your home’s price per square foot vs. others in your price category that are comparable in location, condition and land size, can give you important information in determining how the market is viewing your property at the price it is being offered at. The more you understand the market in your price range the better you can determine if a price reduction is the right thing for you.