When Should I Reduce My Property and By How Much?
In today’s dynamic housing market, it’s quite common to see price reductions. The past 18 months have seen a shift from a seller-dominated market to one that’s more favourable for buyers (October 2023). Pricing, therefore, is a vital component in the equation, when it comes to selling your property.
This shift has led many sellers to re-evaluate their asking prices to better align with the expectations and budget constraints of potential buyers. As a result, we’ve recently seen a higher frequency of price reductions to acquire more attention and receive offers.
But when should you think about a price reduction and how much you should reduce the price of your property?
Recognising the Signs Understanding the market dynamics and recognising the signs that indicate a price reduction might be necessary is the first step. Some signs include:
- Your property has been on the market for longer than comparable listings.
- You’ve received feedback that the price is too high.
- There have been many viewings but no offers or the offers you’ve had have been much lower than the asking price.
- The local property market has shifted since you listed your property.
For more guidance on why your property may not be selling, click here.
Consider Your Initial Pricing Strategy Before reducing your price, evaluate your initial pricing strategy with your estate agent. Was the price based on comparable properties? Were you aiming too high to start with? It’s essential to have a clear understanding of your property’s value in the current market.
Determining the Reduction Amount There’s no one-size-fits-all answer to this question, but some general guidelines can help you decide:
- Minor Adjustment: If you believe your property is priced relatively close to its actual value but just needs a little push, consider a reduction of 1-3%. In fact, a 2% or more reduction can have a significant impact on portals such as Rightmove, as they’ll resend your property out to their extensive database again.
- Significant Change: If your property is priced considerably higher than the market value or has been on the market for a long time without any interest, a reduction of 5-10% may be more appropriate.
The Psychology of Pricing Understanding the psychological aspects of pricing can give you an advantage. For instance, prices ending in ‘.99’ or ‘.95’ are often perceived as being lower than they are. If your property is listed at £300,000, reducing it to £299,950 might seem insignificant, but it could make a psychological difference to potential buyers.
Re-evaluate Your Selling Points Before taking the step of reducing your price, take a moment to re-evaluate your property’s selling points. Maybe it’s not the price that’s the issue. Perhaps the property hasn’t been presented well, the listing photos are not of high quality, or there are minor repairs and improvements that can increase the property’s appeal. If you’re selling an empty property, home staging can make an incredible impact on the number of viewings and offers you’ll receive. Is your estate agent doing all they can for you? Address these factors first; they might make a price reduction unnecessary.
Understand the Market Market conditions play a significant role in pricing decisions.
- Buyer’s Market: In a buyer’s market, where there’s a surplus of properties available and not enough demand, price reductions might be more common.
- Seller’s Market: Conversely, in a seller’s market, where demand exceeds supply, properties can often be sold for the asking price or even higher.
Be Ready to Negotiate Even after reducing your price, be prepared for some negotiation. It’s a natural part of the property transaction process. Determine in advance how low you’re willing to go and what terms and conditions you’re willing to accept.
Consult with a Professional If you’re unsure about the best strategy, consult with a property professional. They can provide you with insights into the current market, suggest appropriate pricing, and advise on whether a reduction is necessary. If your house is already on the market and you feel that more could be done to get it sold, then an Arden re-launch plan can kick-start things for you.
Reflect and Decide After considering all these factors, take a step back and reflect. Ask yourself:
- Why am I selling this property?
- What is more important to me: selling quickly or getting a specific price?
- Can I afford to wait for the right buyer, or do I need to make a quick sale?
Your answers to these questions will guide your decision on whether to reduce your property’s price and by how much.
In Conclusion Reducing the price of your property is a significant decision. It involves a mix of market analysis, self-reflection, and strategy. By considering the factors listed above and consulting with your estate agent, you can make an informed decision that best suits your goals and circumstances. Remember, the price is just one part of the equation. Presentation, marketing, and negotiation play equally important roles in achieving the best outcome for your property.
If you would like us to have a look at your property to give you our opinion, or even just have an informal chat with us, then please feel free to get in touch.
We have offices across Worcestershire and the West Midlands including Barnt Green, Bromsgrove, Redditch, Rubery, Solihull and Worcester, and our friendly team of experts are here to advise and help you every step of the way!