When Should You Drop the Price of Your House

When a house doesn’t attract offers, it’s generally not the house itself or the price itself: it’s the house at that price in that market. Since you can’t change the house, its location, or market conditions, a house price drop may be your only option.

When to drop the price on a house isn’t a straightforward decision because there are financial, emotional, and marketing factors at play. Even if you decide to go ahead, there’s still the question of how much to drop the price on your house.

Your real estate agent will give you good advice, but in the end, the decision is up to you, and you have to be comfortable with it. Understanding the factors involved will help you make a decision you feel good about.

Signs That You Should Consider a House Price Drop

Unless you’ve sold dozens of homes, you may not recognize when to drop your house price. But there are some clear signs that it’s necessary:

• Few showings: Buyers are bypassing your house based on the listing details and price alone.
• Showings but no offers: Your pricing is in the right ballpark, but not quite low enough.
• Comps are selling for less: Buyers are comparing similar homes, and yours isn’t standing out.
• New comps being listed at lower prices: The market has shifted, and you’re now the expensive option.
• Days on the market higher than average: Fresh listings generate excitement, but stale listing makes buyers wonder what’s wrong with the property.

Another clear indicator is direct feedback about your pricing. If buyers and their agents are consistently telling you that they like your house but think the price is too high, take that into account. The occasional buyer might use this as a negotiating tactic, but if you’re hearing it over and over and you’re not getting any offers, it may be time for a house price drop.

How Long Should You Wait to Drop the Price on Your House?

Deciding when to drop the price on your house depends on several factors, including initial pricing, market conditions, and seasonality.

Initial Pricing

If you priced your home competitively, you can wait a bit longer to see results. However, if you priced high to see what the market would bear and you’re not getting any interest, you may need to do a house price drop within a week.

Market Conditions

Seller’s markets are characterized by lower inventory and high demand. In a seller’s market, you can wait longer before reducing the price. If you’re getting regular showings and feedback about minor price adjustments rather than major overpricing, you can give your initial price four to six weeks before a house price drop.

In a buyer’s market, inventory is high and demand is lower. Buyers have the upper hand, with plenty of options and more negotiating room. In this type of market, you can’t wait quite as long before a house price drop becomes necessary. If your house has been on the market for two or three weeks and you’re not getting very much interest, lowering the asking price is appropriate.

In a declining market where prices are falling quickly, you may need a house price drop within two weeks. Otherwise, you risk multiple price drops until you catch up with the market. In the meantime, your listing gets older and older, leaving buyers wondering why your property isn’t selling.

Seasonality

Buyer activity is strongest in the spring and early summer. If you don’t get much interest, then consider a house price drop within two to three weeks. In the winter, you can wait a bit longer, but no longer than a month unless your listing went live during the holidays.

A reasonable guideline for how long before you drop the price on your house is two weeks if there’s no activity, and three if you’ve had a reasonable number of showings but no offers.

How Much to Drop the Price on a House

Once you’ve decided when to drop the price on your house, you need to figure out how much to drop it. Here are some guidelines:

• Make the minimum meaningful reduction: a house price drop of 1% or 2% rarely makes a difference, so start at 3% to 5%. The reduction should be substantial enough for buyers to notice and for your listing to spark new interest.
• Match or slightly undercut your competition: Even a few thousand dollars could influence buyers to make an offer on your home rather than a similar one.
• Go below a price threshold: If buyers are searching up to a particular maximum, such as $400,000, you won’t appear in their search results if your home is listed at $405,000, but it will if it’s listed at $399,999.
• Listen to feedback: if you’re hearing that your price is $20,000 too high, consider a house price drop in that area.
• Consider total time on the market: if you’ve made several small price reductions already, and your house has been on the market for months, you risk the stigma of a stale listing. Consider a more significant price reduction to get new attention.

When deciding how much to drop the price on your house, work closely with your real estate agent. Here’s how your agent can help:

• Updating you on comps and market conditions.
• Advising you on house price drop timing and amount.
• Adjusting marketing based on your new pricing.
• Setting decision points for a house price drop based on their experience and market conditions.
• Helping you understand why and when to drop the price on your house and supporting you through the decision.

Alternatives to a House Price Drop

Depending on your circumstances, you may decide on a different strategy from dropping the price of your house. Here are some alternatives to consider:

• Improve the condition of your property or stage the house
• Offer incentives without reducing the asking price. Some examples are offering to pay closing costs, including a house warranty, or agreeing to a closing date that aligns with the buyer’s schedule.
• Enhance the listing with better photos or more photos, a more detailed description of what makes your property stand out, and consider adding virtual tours or drone footage.
• Remove the listing and re-list later. This will prevent your listing from growing stale, and you can relist when market conditions or seasonality are more favorable.

None of these alternatives are guaranteed to get you the full price you want for your home, but if you have the flexibility, you can consider them. Approach these alternatives with caution and with advice from your real estate agent.

When to Drop the Price on Your House

A house price drop is not an easy decision. You’ll naturally want to get as much as possible for your home, but keeping your initial price isn’t always realistic.

The best approach is to remain as objective as possible. Rely on market data, buyer feedback, your carrying costs, cumulative time on the market, and your real estate agent’s insights to guide your decision.