July 5, 2018 | Selling

Should I Consider Reducing The Price of My Home?

Should I Reduce the Price of my Home? | Home Price Reduction Strategy

If you’re not receiving offers on your home right now, you’re not alone. There are more unsold houses sitting on the market in Calgary than usual. As a result, many sellers have one question on their minds: should I consider reducing my asking price?

While there’s no simple answer, knowing the facts can help you make an informed decision. In this post, I’ll look at some of the factors you should consider—and offer up some tips for creating an effective home price reduction strategy.

 

The Real Estate Market

Right now, there are a lot of homes being listed in Calgary. Some of them aren’t selling, and one of the biggest reasons for that has to do with the federal mortgage stress tests that came in earlier this year.

As someone who works in the real estate market every day, I can tell you that these new requirements are having an impact on homebuyers. In general, buyers are qualifying for smaller loans—and dealing with higher mortgage rates—than they have in the past. Some feel that they’ve been priced out of the market.

For now, homebuyers are acting cautiously. Some are holding off on making purchases, and it may take a bit of time for their attitudes to change.

If selling quickly is your biggest priority, you may want to consider reducing the price of your home using a planned home price reduction strategy. That said, there are a few factors you should consider before making a decision either way.

 

Things to consider

Though the market usually plays a role, there are many reasons why houses don’t sell. So before you lower your asking price, put some serious thought into whether you’re doing everything to sell your home. Here are a few questions you should consider.

 

How much effort has gone into marketing your home?

When a house sits on the market, ineffective marketing is often to blame. I suggest taking a close look at your efforts so far. Start with your listings: do they include high-quality images, and does the written copy clearly highlight your home’s best features?

What else are you (or your Realtor) doing to sell your home? Is it being promoted on social media? Has a direct mail campaign been launched? If buyers don’t know your home is for sale (or they haven’t seen it in the best possible light), you don’t yet know whether they’re willing to make a great offer.

 

How much interest has your home generated?

Have you had several showings? If so, your home is making a positive impression online. Buyers aren’t being turned off by the asking price, which is a good thing. But if you’ve had many showing and no offers (or no reasonable offers), then there might be something about your house that needs to change. Which brings me to my next point…

 

What kind of feedback are you getting?

Have you been collecting feedback from the buyers who tour your home? Asking the right questions can help you figure out how to make a better impression moving forward.

If the reason you haven’t sold your house has to do with your marketing or the general appeal of your home, you may want to try making other changes before dropping your price. An experienced Realtor can help.

On the other hand, if you’re ready to lower your price, there are some basic rules you should follow.

 

How low should you go?

The home price reduction strategy has to be carefully thought out. Drop the price of your home by too much, and you could shortchange yourself. Drop it by too little, and it might wind up sitting on the market for longer than it already has.

What you need is an effective home price reduction strategy.

First off, should you reduce your price by small increments, or all at once? Some sellers decide to decrease their home price by a little bit. If it doesn’t sell, the decrease it by a little bit more. And then a little bit more. You get the picture.

This strategy may work in some situations. But in general, I’m a firm believer in using the information available to you to try to find the right number—the first time.

The number you select should align with the general interest you’ve been seeing in your home. If you’ve had lots of viewings and you’re receiving positive feedback, a 1 to 2 per cent reduction might do the job. Otherwise, you may want to drop your price by 4 per cent or more. A more important question than “how much should I drop the price on my house…” is “at what price does my home appeal to a new buyer bracket?” For example, if your property is currently listed at $619,900, you would be appealing to the $600-650k buyer. By dropping your price to $599,900 you will now be appealing to an entirely new buyer pool and will see a major uptick in activity.

One of the best pieces of advice I can give you is to work with your real estate agent. Personally, I take a lot of information into account when I advise a client about pricing and a home price reduction strategy—and any Realtor who has your best interest at heart will do the same.

 

Wondering whether you should reduce the price of your home? I have the experience with home price reduction strategies and local market expertise to help you come up with an effective pricing strategy. Get in touch, and we can discuss your needs!

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