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Your Home List Price Should You Lower It?

If your house isn't selling, price may be the problem. Find out when to drop the price and by how much.

Does it seem like nearby houses are selling, but yours isn't? Fortunately, there are some objective factors that can help you evaluate what's wrong.

What's Going on in Your Local Market?

First, figure out how long most homes take to sell where you live. Maybe what feels like a long time to you is actually normal. Your real estate agent can check the Multiple Listing Service (MLS) and tell you the average number of days local properties remain on the market in your area.

If you've already passed the average "days on market" without any offers or real interest, then ask yourself:

  • Has your house been thoroughly cleaned and spruced up to look its best for showings?
  • Is the house free of any huge problems like expensive repair needs or location next to the freeway?
  • Has the house been marketed adequately (preferably including an attractive online presentation, with numerous photos) so that potentially interested buyers can find out about it?

If the answer to all of these is yes, then price may well be the culprit. True, when the market is down, houses can take a long time to sell, period. But if the price is right, interested buyers tend to show up eventually. If you're not even getting many people walking through and taking a look, that's a very good indicator that your house is overpriced.

tip Even if your price was appropriate at the time you listed, market values may have gone down since. Perhaps you've already noticed the trend yourself as nearby "For Sale" signs have started sporting "Price Reduced" riders or as you browse MLS listings and find better and better bargains.

The true test of whether your price is right is how it compares to similar properties that have recently sold. Faced with several homes with like features, most buyers will choose the one that appears to be the best value.

To see how your house measures up to the competition, ask your real estate agent to run (or re-run) a comparable market analysis (CMA). Or, if you're selling FSBO, do one yourself. This is a report that includes information about the selling price and features of nearby homes that have recently sold or whose sales are pending. Also visit local open houses yourself (or with your agent) to get a sense of how actual houses on the market compare to yours in price and other features. As you know from when you bought your home, publicity photos can be misleading, and knowing basic data (2 bedrooms, 1 bath, 1-car garage) is far from knowing the whole story about a house.  

How Low Should You Go? 

Your price adjustment needs to be big enough to get buyers' attention at least raise their eyebrows, if not drop their jaws. That's especially true if your house has sat on the market for a long time. Real estate professionals and potential buyers may be dismissing it as unworthy of any buyer's attention, imagining, for example, that it has hidden problems that turned off other buyers or that you've stubbornly refused to accept lower, more reasonable offers.

Of course, you don't want to go so low that you feel like you're giving the place away. Use the comparative market analysis again in setting your new price.

For more ideas to help your house sell quickly during difficult economic times, check out Selling Your House in a Tough Market: 10 Strategies That Work, by Ilona Bray and Alayna Schroeder (Nolo).

http://www.nolo.com/legal-encyclopedia/choosing-home-selling-price-30166.html

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  • Avoiding Capital Gains Tax When Selling Your Home: Read the Fine Print

  • Listing Your House: What List Price Should You Set?

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