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.
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.
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.