Is It Time to Consider a Price Reduction?

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At TK Homes, we pride ourselves on pricing homes correctly from the beginning; however, sometimes you just don’t know how the market will respond until it’s active, and buyers are seeing the home. This is especially true as Denver’s market continues to remain softer due to higher interest rates and uncertainties in the economy. When a home doesn’t receive an offer after being on the market for a few days, many times home sellers start to ask, “Do we need to do a price reduction?” Although in some cases a price reduction is needed, it’s not a direct science on the perfect time to make the price adjustment and depends on a handful of factors, including the following:

1. Time on Market

One of the biggest determining factors regarding if it’s time to make a price adjustment is how long the home has been for sale. Often, we find sellers are used to and still hoping for a market like 2022 and earlier when homes would receive multiple offers, sometimes hours after hitting the market. This could result in many sellers wondering if they should be doing a price reduction after not receiving an offer during the first weekend of being on the market. However, not receiving an offer after the first weekend alone is not a good reason to start lowering the price. In today’s Denver market conditions, it’s not uncommon for a home to be on the market for multiple weekends before receiving an acceptable offer.
 

2. Number of Showings

Similar to multiple offers within hours of going on the market, a huge wave of showings right after hitting the market are also distant memories today. With higher interest rates, many buyers are staying out of the market or are even priced completely out of the market. This means fewer buyers and fewer showings. In many cases, we’re seeing only a small handful of showings throughout the week. Because of this, having only a few showings during the week is, again, not a reason to immediately jump to lowering your asking price. 
 

3. Showing Feedback

With the showing service that TK Homes uses on every listing, the service provider automatically requests feedback from every private showing scheduled on the home. While unfortunately many agents simply ignore these requests, many don’t. Watching the showing feedback closely is a great way to determine if it’s time to take a price reduction seriously. If most of the feedback is coming back that the price is high, it could be a great indication that it’s time to talk about a new pricing strategy. When it comes to showing feedback, it is also important to read between the lines because not all agents are going to come out and be completely honest with their feedback. The good news for you is by working with experienced agents from TK Homes, you have access to a special agent of sorts that can translate the feedback to learn exactly what buyers are seeing or feeling about your home.
 

4. New Nearby Homes for Sale

When a home is initially priced, we use homes that have recently sold, are currently under contract, or currently for sale near your home and compare specific features of your home and these nearby homes to determine the best price for your home. While your home is on the market, other homes nearby could also come on the market, which could affect your home’s value. By observing nearby homes for sale and seeing which ones are going under contract, which ones are just sitting, and by monitoring the list price of new homes hitting the market, we can gain a solid idea of what buyers are looking for in the area. If lower priced homes or more updated homes are going under contract and there are similar options for buyers at a lower price, a price reduction could be needed to compete.
 

5. Seller’s Motivation

The final factor for determining a price reduction is 100% unique to each home seller. In some cases, sellers do not need to sell in a timely manner and have the time to wait for the right buyer willing to pay their desired price. However, in other cases, sellers may be in more of a rush and would rather sell quickly. Depending on your specific situation, your motivation to sell could warrant a quicker decision on making a price reduction.
 

At the end of the day, there is no magical formula to determine if it’s time to make a price reduction on your home. In many cases, your home simply has just not been on the market long enough to attract the right buyer. However, by translating the information you are getting from showings, analyzing the feedback from showings, watching nearby homes for sale closely, understanding your personal motivation, and having a good real estate agent to guide you, together we can determine if it is indeed time for a price reduction. At TK Homes, we understand how to translate these market indicators, and we provide proven feedback on how to make sure you’ve got the best pricing strategy when it comes to selling your home.

If you’re thinking about selling and want to see what our pricing strategy looks like for your home, contact us or request a complimentary home valuation today!

~ Written by CEO/REALTOR® Trevor Kohlhepp

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