Selling a home at the right price is crucial to avoid issues like increased likelihood of sales falling through, longer selling times, and potential failure to sell. Research shows that properties with reduced prices are twice as likely to face these challenges, emphasizing the importance of pricing realistically to avoid overvaluing homes in the current property market.
Why are home sellers pricing too high? Estate agents benefit from higher sale prices in the form of their commission, but even they are finding it a challenge to temper home sellers' lofty expectations. 'We're hearing that some sellers have struggled to adjust from the pandemic frenzy market mindset, into the calmer market mindset of the last 18 months or so, and are being over-optimistic on the price they think they can achieve,' says Tim Bannister, a property expert at Rightmove.
Agents tell us that sellers often ask them to try to market their home at a higher price, thinking they can always just reduce the price later with no harm done.' But that is not usually the case. Rightmove revealed homes that haven't had their price slashed are 1.35 times more likely to be sold, and sales are half as likely to fall through. They also typically sell three times as fast. Bannister adds: 'We can see in our data that being too optimistic at the start of marketing has detrimental effects on a property sale. 'We can see that homes are twice as likely to fall through, take much longer to sell, and are less likely to eventually be sold at all, if they need to be reduced in price during marketing.' The best strategy, he says, is to listening to the advice of your agent and come to market with a competitive price against neighbouring sellers.
When is the right time to reduce your home's selling price? If you decide to lower your home's asking price, experts recommend doing it promptly and only once. Research from Rightmove shows that numerous sellers wait several weeks or even months before adjusting the price. This delay not only prolongs the selling process but also diminishes the likelihood of selling the property once the price is eventually lowered.
Nearly 60% of homes that reduce their price within two to four weeks end up selling, compared to fewer than 53% of homes that wait eight weeks or longer before adjusting the price. This translates to a 13% increase in successful sales for those who lower the price within two to four weeks.
If your home lacks interest, a significant price cut is needed to attract more buyers. A small reduction may not drive more viewings. Rightmove recommends larger price reductions increase the likelihood of a sale.
A 5-10% price reduction increases chances of selling compared to smaller cuts. Fine & Country's Jonathan Handford suggests a substantial price drop if physical viewings are lacking. Incremental adjustments may not suffice, and a more significant reduction may be needed to regain interest as time passes.
Ultimately, sellers should try to avoid having to cut the price in the first place. Selling a home successfully is about knowing what the competition is selling for and at the very least pricing in line with similar homes that are selling in the area, or better still, undercutting the competition.
Pricing below competitors may lead to bidding wars and faster sales. Prompt price adjustments are advised if initial pricing is too high. It's recommended to reduce prices early and significantly rather than making multiple small reductions.
How to tell if your home is too expensive When deciding how big a price cut to make, sellers need to know what sort of interest their home has attracted from buyers. Rightmove revealed there is twice the likelihood of a home being reduced if the first buyer enquiry about the property arrives during the second week of marketing, compared to the first day. It also means the property will spend twice as long on the market. 'A very good indicator of whether a property is likely to need a reduction or not, comes from enquiries into agents about the property via Rightmove,' adds Bannister.
Why are buyers put off reduced-price homes? Potential buyers deem price reductions, coupled with the months of marketing, as a clear sign there must be something wrong. Who wants to buy something that clearly nobody else does? 'Buyers can easily spot an overpriced listing and will likely skip over it entirely,' says Handford. 'By the time the price is reduced, the listing appears stale, causing buyers to wonder what's wrong with the property or they assume that the seller is greedy or unrealistic. 'Ideally you want to price on or below market value, as this leads to a sense of urgency among buyers who will frantically bid against each other to secure the property.'
Don't fall for an estate agent promising highest price It's not always the seller's fault they market their home at too high a price, however. In a crowded market, estate agents can be desperate to beat their rivals to the job. This can result in some being prepared to promise a higher sale price than they can really deliver in order to win the instruction. When presented with an agent who says they can get them £50,000 more than anyone else, the seller may be tempted to try their luck. 'Sellers need to be very wary of agents telling them what they want to hear on price just to win the listing,' says Handford.
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