Did the Homeowner Just Capitulate? Reading Into a Ginormous Price Reduction

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, a price reduction is indicated.

Depending on Buyer interest (or lack thereof) to date, the typical drop is between 2% and 5%.

So, what can Buyers read into a Seller who just lopped a gargantuan $100k (over 14%!) off their “For Sale” Plymouth home earlier this week?

Answer:  not much, at least without more context.

Listed for $700k $600k! 

My take:

Scenario #1 is that the home was egregiously overpriced, and slashing $100k merely corrects that (or starts to!).

Scenario #2 is that the Seller is trying to foment multiple offers, rationalizing that the resulting premium will recoup a good chunk of the price reduction.

Scenario #3: 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.

See also, “Nurse! I Need a Price Reduction, Stat!!”



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