When Should You Reduce Your Asking Price?
Published by Greenslade Taylor Hunt on 25th January 2021 -
It can be a tricky subject to tackle but often it can lead to a great result for a seller and a buyer looking for their perfect home. Martyn Venner, Partner based in our Taunton Estate Agent office, explains when and why you could consider making a change to the price of your property.
Why are buyers less inclined to haggle?
Over recent years it has become increasingly apparent that today’s buyer is less inclined to make an offer significantly below the guide price. There are several reasons for this. Buyers might assume that a low offer will not be accepted, or perhaps they do not wish to offend the vendor and potentially scupper their chances of buying the property should circumstances change.
It’s not that your buyer won’t enter into negotiations, it’s more that the initial pricing must be right for them to feel an outcome would be achievable. This mind-set has been shaped by today’s society. There is very little room to negotiate on anything you buy, competition has driven prices down and margins are much tighter than what they were 20 years ago.
For example, when you shop at Tesco no one asks for a discount because it’s a given that you won’t get one. The cashier would likely look at you like you have just arrived from Mars and the situation could all get rather awkward. This is also the case with second hand cars. Years ago you would be able to haggle to get some money off, now you would be lucky to get a tank of fuel included.
With property portals and other websites providing information such as sold price history, buyers are much better informed, and more importantly, much more aware of the value of property than they used to be. So, if they think a property is overpriced they may not show any interest at first but they could well set a portal alert to inform them if that property is reduced in the future.
How can reducing the price help?
At GTH, we have found that when we reduce the price of a property, we are then inundated with enquiries and quite often go on to achieve the full asking price. We have, on several occasions, gone to best and final offers and exceeded the guide price.
A particular property springs to mind which we recently sold just north of Wiveliscombe. The property launched with a guide price of £399,000, generating eight viewings in the first week but no offers. The vendor was a very motivated seller, so we agreed to reduce the price on the second week to £375,000. We then had another flurry of viewings that produced two full asking price offers, which resulted in a best bids scenario. We went on to agree a sale in excess of the original asking price of £399,000.
So, when should I reduce the price?
It really comes down to the property itself and what it has to offer. But in this market place, if you haven’t sold the property in the first two to four weeks (or received genuine interest from buyers) then this is the time to start talking to your agent about reducing the price. It may seem a little early and many sellers will want to wait it out, but we recommend this timeframe as the property is still reasonably fresh to the market.
Clients say to me all the time: “Doesn’t it send out the wrong signal?” and the answer to this is absolutely not. It simply shows you are a committed seller and one not to be underestimated, which is a positive signal to a buyer. What does go against you is having a property hang around on the market for months and months at the same guide price; many people will just ignore it and assume there must be something wrong with it.
This is why you need an agent with experience. One who can guide you through the psychology of selling and help you to make the right decisions, at the right time, to get the best result for you.