Sellers Who “Fall on Their Sword” (or, Did They??)
Even in a Seller’s market, not all homes are destined to sell in multiple offers — or at all.
When that’s the case, assuming the Seller is genuinely motivated to sell, and the home is already optimally prepped, staged, marketed, etc., a price reduction is indicated.
Depending on Buyer interest (or lack thereof), the typical drop is between 2% and 5%.
So, what can Buyers read into a listing where the Seller who just lopped a gargantuan $100k (over 14%!) off their asking price earlier this week? (from $700k to $600k).
Answer: not much, at least without more context.
“$100k Off!!”
That’s because there are (at least) four possible explanations:
Scenario #1: the home was egregiously overpriced, and slashing $100k merely corrects that (or starts to).
Scenario #2: the Seller is trying to foment multiple offers, betting that the resulting premium will recoup a good chunk of the price reduction.
Scenario #3: The home was under contract; the Buyer’s inspection turned up a HUGE issue, prompting them to cancel; and now the homeowner is disclosing the defect, and trying to jump-start interest (as the locals would say, “uff-da“).
Scenario #4: the Seller is (suddenly?) acutely motivated, and wants (needs?) to sell ASAP, regardless of price.
Market Re-positioning
So, which is it?
The only way to know for sure is to know the market — specifically, the 3-4 Comp’s (“Comparable Sold Properties”) that establish the fair market value for any given home.
Anecdotally, however, as a long-time Twin Cities Realtor, I associate such precipitous drops with Scenario #1.
Which is why I think most veteran agents eschew them, and instead press their clients for a more-realistic initial list price.
