Art Of Price Reduction

Price reductions are a critical part of the business.

Let’s face it, we use our knowledge to price a property and sometimes it still doesn’t sell. As a real estate agent, I don’t want to beat up a seller on price. We all want to get the seller top dollar. But, we still find ourselves in situations where we must ask for a reduction because the market demands it.

Agent Dilemma: What price should I reduce to?

Answer: Reduce it to where it needs to be to attract enough demand for it to sell.

So…. If you have something priced at $309,900 and it’s not selling, where should it be reduced…? Let’s assume you do the research and the comps say it’s worth $302,000. Most agents would tell the seller to adjust to $302,000. It kind of makes sense. That reduction will not help though…


Because the point in a reduction is not to lower the price….the point in the reduction is to increase the demand. When people are searching for property, they enter a price range in the computer and a list of properties appear. If someone is looking at properties up to $300,000 then they only see those listings priced at $300,000 or below. So if you have a listing at 309,900 then those searching at $300,000 or below won’t see the property. When you reduce that property to $302,000, the people searching at $300,000 and below won’t see it either.

The only people that see the property at $302,000 are the same people that already saw it at $309,900. So, that reduction would not created more demand. It would have exposed it to the same people that already saw it.

You want to breakthrough price thresholds….

$299,900 exposes the property to the buyers at $300,000 and below. $302,000 exposes it to those looking at $325,000 and below.

$309,900 exposes it to those looking at $325,000 and below. So in terms of demand, the only reduction that creates more demand is the one that broke through the $300,000 price threshold.

Thresholds are the price levels that people search. You don’t see a buyer typing in the search that they want to see properties at $303,000 and below. They would either put in $325,000 or $299,900.

The good news:

The more aggressive a seller is priced, the more firm they can hold in the negotiations. The seller will typically sell at the same price using this strategy. Meaning….at $302,000, it ends up selling at $297,000. At $299,900, it ends up selling at $297,000.

The only difference is $299,900 gets it done faster.

Price reductions don’t get the seller less….they get the seller the same. They just get them the same….faster.

– Greg Harrelson