Price cuts (and raises) and the impression they give buyers

Price changes are a great way to get new attention to your property, but they can also backfire. I'm watching a few different areas where I'd consider buying, and all of them are currently either stagnant or slowly declining markets. Which puts me in a decent position, even if many owners are still high on 2022 prices and haven't yet fully realize they missed the boat.

So I watch price cuts closely every day to see if any of the houses I'd consider have been reduced (and how much) plus keep an eye on the overall local market. I also watch what goes pending and recently sold prices.

These are my impressions of various types of price cuts. Of course this is my personal subjective opinion but I think my mindset matches that of a lot of buyers.

First, it's not always the amount of the cut, it's WHEN you cut. Timing is everything. Let's say you're selling an $800k house:

• If it's been on the market for two weeks and you cut $10k, that tells me you are willing to entertain offers but they need to be close to asking.
• If it's been on the market for two weeks and you cut $25k, that tells me you very much want to sell and you are open to reasonable offers. Cutting 2-3% after only two weeks is rationally aggressive and sends a positive message that you are serious about selling. I would not lowball this house. If I still thought it was too high I would roll the dice and wait. But if it was in the ballpark for comps I'd probably offer close to the new asking.
• If your house has been on the market for two weeks and you drop the price by $1000 to try to jump to the top of the listings, I'm going to be annoyed and think you or your agent is a rookie.
• If your $800k house has been on the market two months and you cut $25k, I would believe the market either rejected your price or you rejected reasonable offers. I might lowball you around 10-13% under asking if I really like it. But if you had truly only been $25k too high before, I would have already probably offered $25k under asking. The fact that I, and other buyers, didn't, tells me you're still way overpriced and still not realizing it.
• If your $800k house has been on the market two months and you cut $60-75k, I'm going to sit up and take notice. This tells me you have realized your pricing error and now want to sell. Assuming the comps justify it, I would probably offer close to your new asking price.
• If your $800k house has been on the market two months and you cut over $100k, I'm probably going to wait a week and see what happens. I would question if your agent was trying to start a bidding war. If the house isn't pending in a week and I like it, I will almost certainly offer on it.
• If your $800k house has been on the market for two months and you've done 8 price cuts of $5k each, I am not going to offer on your house. This is not a seller type I would want to negotiate with.
• If your house has been on the market for two weeks in as hot market and you raise the price, I'm going to assume there's so much interest that you're formally raising the price to give bidders a number to beat. If I want in I would be offering higher than asking.
• If your house has been on the market for two months and you raise the price, I'm going to assume you're an idiot.

What are your impressions of various price cuts?

submitted by /u/Jenikovista
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source https://www.reddit.com/r/RealEstate/comments/1l32uxg/price_cuts_and_raises_and_the_impression_they/