When to Reduce the Asking Price of Your Home

Deciding to reduce your asking price is never an easy one. The NYC real estate market is going through a buyer’s market. That means you can’t afford to overprice, and the coming months are expected to see more price drops as sellers try to stand out from the competition. But if your home has been languishing on the market for 120 days or more, it’s one you should consider. Here’s what to know when considering reducing your asking price.

What’s the market like?

The funny thing about reducing a home’s asking price is that the market can back it up again. Think of it this way. Let’s say you were to put something up for sale on eBay valued at $300, but you only asked for $100. This could garner enough interest that you trigger a bidding war. If someone wants it bad enough, you might even walk away with $350.

If you know that the inventory is limited in your area of the city and there’s a lot of demand, then reducing your listing price could be just what you need to bring the buyers in. Look at other similar properties in the neighborhood. Are they selling or lingering as well? Have they made any price reductions, and if so, did it help them sell? Another perk of having a seller’s agent is that they can provide you with all this information and the expertise to read it correctly.

How motivated are you to sell?

With the current buyer’s market in NYC, some sellers are questioning whether they should hold off on selling for now. The market is hard to predict, but it depends on how motivated you are to sell. If you’re motivated, you’ll have to price your home according to the market, which could mean a price cut. It may not matter how exceptional your home is in a buyer’s market. There may be too many properties to attract enough buyers to your price tag.

If you’re not very motivated, then that’s fine. There’s nothing wrong with waiting for a better market to sell.  Just know that you could be waiting a year or more. You’ll also want to take down your listing because the longer it stays on the market, the more significant the difference between the list and sale price.

How low can you go?

If you are going to reduce your price, then how low can you go? Ideally, you want to make it more competitive and only reduce it once. Multiple price reductions make your apartment look undesirable and can lead to tough negotiations when finding a buyer.

Your agent can provide sound advice on finding that sweet spot. That sweet spot is usually in the bottom five prices of listings for similar properties in your neighborhood. If you can make it look like a deal, you will surely attract the buyers you’re looking for. A price drop of 5% is a good start, but 10% will garner more interest.

Final Thoughts

It’s a massive misconception in real estate that a high listing price leads to a high sales price. Overpricing your property could be a death sentence and drive it to languish on the market for months. A price drop is just another part of the sales strategy, and when you’re setting your initial asking price, you need to consider that you may have to drop it at some point.