Selling a home: When to accept a lower price
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You’ve finally received an offer on your home, but it isn’t what you hoped for. You may wonder when to accept a lower price, and when to hold out for more.
- How is your local market? Are people beating down doors, or do For Sale signs sit in yards forever?
- Is there something that makes selling your home a challenge? Like a funky floor plan or structural problems?
- How motivated are you? Is your home vacant, racking up mortgage interest every month?
Your market may favor buyers, you really need to get out, or your home has a few defects. In that case, accepting a lower price may be in your best interest.Verify your new rate (Aug 14th, 2020)
When to accept a lower price: your market
One factor in your decision must be your local housing market. If it’s a buyer’s market, you may have to give a little in order to get your home sold. The decision of when to accept a lower price depends in part on your ability to get a higher one. If that won’t happen, it’s time to suck it up and move on, or pull your home off the market and wait.
How can you tell if a market favors buyers or sellers? Home appraisers calculate the months of housing inventory, then determine if you have a balanced market or if conditions favor buyers or sellers.
- A balanced market has five to seven months of inventory
- Four months or fewer indicates a seller’s market, and you can probably hold out for more
- Eight months or more points to a buyer’s market, and you may have to be more flexible with your pricing
To calculate months of inventory, follow these steps:
Find the number of active listings on the market within the last 30 days. They will be on the Multiple Listing Service (MLS). If you have an agent, he or she should be able to provide this information
Find the number of homes that were pending or sold during that time
- Divide the active listings by the sales and pending sales to find months of supply
If during the previous month there were 250 active listings and 50 sales, you’d have five months of inventory, because 250 divided by 50 is five months. That would indicate a balanced market.
Your home’s condition
Another factor in determining when to accept a lower price is your home’s condition. How does it stack up against the competition? If your neighbor has a beautiful, functional home in great condition for sale, don’t expect to get the same amount for your home if it has blemishes.
Items that can drag down your home’s marketability include
- Dirt and clutter
- Odors like food, smoking and pets
- Ugly fixtures or old appliances
- Cheesy wallpaper, popcorn ceilings, and other dated features no one wants
- No curb appeal
- Bad floor plan
- Noise — proximity to a school, traffic or busy area
- Features not everyone wants to maintain, like hot tubs, swimming pools, or extensive landscaping
You can see that some of the above-mentioned items can be fixed easily. You just need to clean and declutter or undertake small repair or improvement projects. Other problems, like a noisy area or clunky floor plan, can’t be as easily fixed. You may have to accept a lower price in that case.
The good news is that you probably also got a price break when you bought your home because of that same issue. So you may profit as much from your sale as a neighbor with a nicer house — because they would have paid more.
If it kills you to drop your price, and current conditions are working against you, you may want to remove your home from the market and try again when signs are better.
However, not everyone can afford to do this. You may need to sell your home to buy another, or you have to move for a job and don’t want to rent it or leave it vacant. In that case, you have little choice if determining when to accept a lower price for your property.
If conditions don’t favor you, and it’s not possible to wait them out, you’ll probably have to take less for your home. In that case, grit your teeth, sell your home, and move on.
Perhaps when you purchase your next home, you’ll be a buyer with all the power.Verify your new rate (Aug 14th, 2020)
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