When I should Adjust the price of a listing?
Tags: Real Estate, MLS, Pricing Strategy, Home Selling, Market Trends
There are several circumstances that indicate that a listing on MLS may require a price update.
Let us take a deep dive to discuss certain signs that the price for a listing is incorrect and the market cannot bear that price.
Less or Reduced Buyer Showings - When you list a home on MLS, and there is significantly less traction on showings, the buyer broker showings are not taking place or are considerably fewer, say one in a week. The buyer prospects and their brokers need to find value in the property and its price in the overall market. The most significant sign that the pricing is incorrect as per the current market is when the showings aren't happening for the property.
Showings are booked, Don't Translate to Offers - The second scenario which could happen with you is that buyer broker showings indeed are happening. However, you are not receiving any inquiries or interest in the property. As a result, there are no offers to be considered and no agreement to be made with a suitable buyer.
This could happen when the current state of the property is deficient, and the consumers are coming to see the property. But, when they review, they find value in other properties in the same property style, type, and age segment in the same neighbourhood. The property is being used only for comparisons, and in fact, you are helping other properties on the market to sell smoothly. Consumers are looking at our property and finding value in placing an offer on other properties.
Market experiences Dynamic Shift – The third scenario can happen where there is a marked shift in the pricing due to government policy changes, a natural calamity, or bank's interest-related policies. In such situations, and if you must sell the property, the price update becomes even more critical. As with the changing market, you must create value in your listing and a worthwhile proposition for buyer prospects.
When is the best time to reduce the price of a Listing?
Any listing gains maximum attraction in the initial two weeks, and if one of the two signs you are observing, then it's better to do the price update sooner than later. Ideally, after the first two weeks, you should review with your broker in detail the traction received, the feedback received from the buyer brokers and accordingly take the next steps, as needed.
The more we delay the price update, the more listing becomes stale, and the buyers develop a feeling that if the property is not selling, there must be some issue with the same and let us skip and see some other property. They cannot fathom that the price could be wrong, which is why it is sitting on the market.
The more listing becomes stale, it will generate less attraction, and we will get a lesser value for our property than what it truly deserves. If we are in one of the above scenarios and need a price update, it should ideally be in the 2-3 weeks range. This duration would change from market to market. For example, there could be a region where the median days on the market is 25 days before a listing gets sold; if that's the case, the price will warrant a change between 4-5 weeks.
The days on the market for historical properties sold within the last 90 days gives an excellent data point to decide when to execute the change. If you are falling in Scenario 1, where showings are completely stalled then it needs to be reviewed and done promptly.
Before finishing, I also want to point out that when you do a price update on your MLS listing, do remember to take the opportunity to polish and ensure the listing and marketing elements are in place. Review the description of the MLS, as it is the key to attracting the right buyer for the property. Ensure the photos/video tours/marketing material/drone shots are doing justice to the property in conveying value to our target buyer prospects.
How many times should we do a price update?
We understood how to identify the listing that needs a price update and when to execute the update. Should we do the price correction in small instalments, or should we do it in one shot? We should reduce the price once based on analyzing the sold data and community in the as-of-date market and leave it at that. As it would be good incentive for the buyer prospects to get excited about your listing.
Doing piecemeal minor price corrections will not help us in the long run, as it doesn't generate significant interest in the buyers, and the property loses precious time on the market and becomes staler. This is called 'Chasing the Market,' Even in such situations, the Seller ultimately gets less than what the property actually deserves.
In a nutshell, the principal learning is that price decision at the time of original listing should be objective, based on the data and not emotional one. The property presented and marketed well and priced right as per the market will sell smoothly and seldom require a price update.
Wish you all the very best! Reach out to our dedicated team at Elixir for any queries you have in Real Estate and we will do our best to help.
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