Insulting Price Reductions in Real Estate


If you’ve ever bought a house or sold one, you’ve likely come across the conventional buying etiquette that says not to make a super low-ball offer.

Sure, you can underbid for a home, but if you offer something too low, it will come off as offensive to the home seller and their listing agent.

While this theory may be ridiculous in itself, considering home buying and selling shouldn’t be about emotions, let’s look at it the other way around.

I already wrote at length about stale listings and price reductions, and essentially how houses that aren’t priced to sell will languish on the market.

This tends to lead to a price reduction (or two), which is fine, but here’s where I have a bone to pick.

And it’s not emotional, even though it may sound like it.

Don’t Drop Your List Price By a Trivial Amount

When prospective homebuyers make so-called “low-ball offers,” they typically have a reason for offering the number.

It may be that they researched comparable sales in the area, and felt their offer was more in line with what homes were actually selling for.

And sure, the offer may be even lower than those sale prices, to allow room to negotiate, but at least there’s a reason behind the numbers. They make sense.

But for a home seller to execute a seemingly mindless price reduction just for the sake of reducing the price is irritating.

What’s the point of lowering your list price by one or two percent after not seeing it move for months?

Do you really think your home will attract new interest because it’s 1.5% lower than it was yesterday?

Does It Enter a New Pricing Threshold?

The only time I’d say a price reduction of this nature would make sense is if the new price fell into a lower pricing threshold.

So if the home was listed at $560,000, and dropped to $550,000, that may make sense because a new set of eyeballs may come across it.

Why? Because they may have filtered their real estate search to include homes listed at $550,000 and lower.

But if you’re lowering a list price from $590,000 to $585,000, it’s doubtful that anyone will take notice, let alone give a you know what.

Long story short, if you’re going to execute a price reduction, think it through, and make it meaningful to the buyer.

Otherwise you’re just wasting your time and making your listing look bad, all for no reason.

Put simply, be sure to actually accomplish something seeing that there is a stigma with a price drop.

Read more: Setting the right listing price.

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