It's no secret that the housing market continues to struggle throughout much of the country. Although the first-time home buyer tax credit has certainly given the market a healthy boost, there is still a glut of unsold inventory out there - and as of right now, the tax credit is set to expire on December 1.
What does that mean for you, the sorry soul who's trying to sell your home? It means you'll have to make sure the price is right in this highly competitive, price-driven market. Unlike the good old days, homebuyers are no longer choosing homes based on emotion. In this tough economy, they're looking for the best deal. (For more, check out our slideshow: 6 Tips On Selling Your Home In A Down Market.)
If your house has been sitting on the market for three or more tortuous months, your asking price may be to blame. Here are four tell-tale signs that it's time to slash that listing price.
- No one is stopping by for a look.
Your house has been on the market for a month or two, and showings have been scarce to none. Wait a second, do you hear that? Ah yes, it's the sound of warning bells ringing. If buyers are not even taking the time to look at your house, it's pretty sure sign that the price is too high. Of course, you may argue that this doesn't necessarily mean that there's no interest in your home. While you've had no actual showings, that brochure box by your "For Sale" sign is empty and your online listing has received hundreds of hits. If that's the case, this only proves that there is interest in your home, but something is keeping buyers from scheduling a showing. What's holding them back? You got it -your absurdly high asking price.
- You've had plenty of showings but no offers.
So, your home has attracted a handful of showings since it's been on the market, but you still haven't gotten an offer. Of course, the Pepto-Bismol pink shower in the master bathroom or the turquoise blue carpet in the living room could be to blame. Poor design and color choices can certainly scare away potential buyers. But if your home is tastefully decorated and updated, it's more likely that your price needs to come down. Some experts say if you've had 10 showings without an offer, your home is probably overpriced. (Learn about alternatives to selling in Can't Sell Your Home? Rent It.)
- Buyers shower your home in criticism.
You've had plenty of showings, but your realtor has noticed that prospective buyers make the same negative comments about your home time and again. For example, they may continually complain that your house is plagued with a pungent odor reminiscent of wet dog and rotten tomatoes. Or perhaps they all point out that the 1970s-themed kitchen, complete with pea green appliances, is a little outdated. Be sure to ask your realtor to notify you of any negative feedback from buyers. While some of the comments may be difficult to hear, a little constructive criticism may help you sell your home in the long run. Remember, there's no room for hurt feelings in home-selling. It may turn out that other homes in your neighborhood have remodeled, modern kitchens and a more inviting smell. If this is the case, you'll either need to freshen up your home, give your kitchen a makeover or (you guessed it) cut your asking price. After all, if the price is right, prospective home buyers may decide they can live with a pea-green dishwasher - or buy a new one.
- You have the highest priced home on the block
Let's say comparable homes in your area are priced much lower than yours. Houston, we have a problem. If your house is the most expensive three-bedroom, two-bath, 10-year old home in your zip code, it's probably going to be the last one to sell. Ask your realtor for regular updates on home prices in your area. He or she can show you the closing price on homes similar in size and age to yours and notify you when comparable homes drop their prices. This will help you decide if it's time for you to drop you price, as well.
So, after picking up on some of these warning signs, you finally give in and drop your price. But you still haven't received an offer. What's the deal? You probably haven't cut your price enough.
Realtors say if you're going to lower your price, don't do it in small increments. After all, there's really no difference between $225,000 and $224,900. Buyers won't fall for that. If you're going to slash your price, you'll have to lower it by at least $5,000 for buyers to take notice.
Learn more in Closing A Real Estate Deal In A Down Market.