Before rushing to a price reduction for your real estate listing, it’s important to take a step back and evaluate all the factors that could be affecting the sale. Is the home being marketed effectively? Does it show well? Is the seller being flexible with showings? Have seasonal trends been taken into account? Is the price aligned with current market conditions?
If the answer to any of these questions is “no,” then a price reduction may not be the right move just yet. By taking a strategic approach and ensuring every possible factor has been addressed, you’ll guide sellers toward the best decision—one that leads to a successful sale without unnecessary price cuts.
Let’s take a look at the six necessary factors I coach agents to consider before speaking to their clients about a price reduction.
1. Decide if you and the seller have done everything you can to sell the home
It’s crucial to evaluate whether you and the seller have done everything possible to attract the right buyer before reducing the price of a listing. A price drop should be the last resort—not the first solution. Here are the initial items to check on:
- Marketing photos and description: Start by reviewing your marketing strategy. Is the property description compelling and highlighting key features? Are you using professional photography to showcase the home in its best light? First impressions matter, and poor-quality images can deter buyers before they even schedule a showing.
- Online appearance: Double-check that the listing is accurate and optimized in the MLS. Ensure all details are correct, complete and appealing to potential buyers.
- Visual appeal: If the home isn’t generating interest, consider how it shows in person. Does the curb appeal draw people in, or does the exterior need fresh paint or landscaping? Inside, staging can make a huge difference. Sometimes, simple updates like decluttering or rearranging furniture will improve the home’s presentation without a major investment. Address the condition of the home based on the seller’s budget and timeline to make it more competitive.
- Showing availability: If a seller has restricted showing times, they’re automatically reducing demand. The more difficult it is for buyers to see the home, the fewer opportunities you have to secure a strong offer. Before discussing a price reduction, make sure the seller understands how flexibility with showings can increase interest and lead to a faster sale.
2. Determine whether you’re in a seller’s or buyer’s market
One of the most important things you must consider is if you are in a buyer’s or seller’s market. These markets are very local and can last weeks, months or years. Many homeowners don’t get this because they only sell a house once every seven to 10 years, so their understanding of market conditions is often based solely on their last experience. Whether they had to compete in bidding wars or negotiated down the price when they purchased typically determines their view of the market.
Before you ask the seller for a price reduction, you must determine if your current market is a seller’s market or buyer’s market.
What’s the difference?
- Seller’s market: This happens when demand outweighs supply. Simply put, there are more buyers than there are homes for sale. In this type of market, sellers have the advantage because competition among buyers drives prices up. If a home similar to yours sold for $650K, you might be able to list at $655K or even $670K, and the market will “catch up” to your price as demand continues to push values higher. Timing matters, pricing slightly above market in the spring can work because demand is strong.
- Buyer’s market: This occurs when there are more homes for sale than buyers looking to purchase. In this type of market, buyers have the leverage, meaning overpriced homes sit longer or never sell. This causes “must sell” sellers to price more aggressively and forces the market down. If you start too high or don’t reduce the price fast enough you risk chasing the market downward. Unlike in a seller’s market, the price won’t “catch up” and the market works against you. Ultimately, selling the home for less than you may have initially got.
Determine if your market is a seller’s market or a buyer’s market by analyzing the absorption rate. The absorption rate measures the speed at which available homes are selling in a specific market.
Absorption Rate = (Number of Homes Sold in a Given Period) ÷ (Number of Active Listings)
- Seller’s market: Absorption rate above 20% (less than 4 months of inventory). Homes sell quickly, prices rise.
- Balanced market: Absorption rate between 15-20% (4-6 months of inventory). Supply and demand are relatively even.
- Buyer’s market: Absorption rate below 15% (over 6 months of inventory). Homes take longer to sell, prices may drop.
Understanding market dynamics is crucial to pricing a home correctly. In a seller’s market, there’s room to be aggressive, but in a buyer’s market, pricing realistically and competitively is the key to selling quickly.
3. Examine the property’s demand and activity
Pricing a home correctly from the beginning is the key to attracting buyers and securing strong offers. But what happens when a listing sits on the market with little to no activity? That’s when it’s time to analyze the market’s response and determine if a price reduction is necessary. Here are signs that it may be time to approach the price reduction conversation:
Low or no showings
If your listing has low showings or only attracts lowball offers, this is a sign that the home is 7% to 10% overpriced. As we discussed in the seller’s versus buyer’s market section, overpricing in a shifting market will work against you. If buyers aren’t even stepping through the door, the market is sending a loud message: The price is too high.
Showings with low or no offers
If showings are happening but buyers are only submitting lowball offers, the listing is likely 4% to 7% overpriced. This means buyers are interested but don’t see the value at the current price point.
In today’s market, many buyers won’t even bother making an offer on an overpriced home. They’ll simply move on to one that’s competitively priced instead of dealing with an “unreasonable seller”. If low offers are coming in, it’s an indicator that the price is close but still needs an adjustment to align with a “reasonable buyer’s” expectations.
Condition, location and obsolescence
While factors like location, condition or a bad layout affect demand and showings, the reality is that you can’t change certain factors. A home’s location is set in stone, and you can only update the property to the budget and timeline of the seller. However, you can adjust the price to reflect those realities.
Ultimately, the market is the judge, it dictates value, not the seller’s expectations. By understanding these pricing signals and adjusting accordingly, you can guide the sellers toward a strategy that gets the result they want.
4. Set realistic expectations based on property type
Consider the type of property and how it affects the time it takes to sell. Luxury properties, unique custom homes or rural properties have a smaller pool of buyers, which can lead to longer days on market.
In contrast, entry-level and mid-range homes or properties in high-demand areas attract more buyers and should quickly generate strong interest. If your high-end or niche property is sitting on the market for a while, you may need to set different expectations with the seller about the timeline before addressing price adjustments.
Even though you can’t change the property type, it’s wise to set a realistic timeline during the listing appointment so price reductions aren’t a focus too early. In addition, since you already know the timeline might be longer with certain property types, you can up your marketing efforts in advance to attract your target audience.
5. Assess the seller’s situation
Determining the right time to discuss a price reduction with a seller requires a careful evaluation of the seller’s situation. You must understand the nuances of the sale and how the seller is affected by it, which is key to making the right recommendation. This way, agents can guide them toward a pricing decision that aligns with both market realities and their personal goals.
The seller’s urgency
The seller’s urgency is a critical factor. Some sellers have strict deadlines due to job relocations, financial constraints or pending home purchases. If the goal is to sell within 30 to 60 days, but the listing has been sitting with little activity, a price conversation should happen sooner rather than later.
On the other hand, if the seller has little urgency, they may be willing to wait til the end of time to get their price. Mainly, understanding the seller’s urgency helps you guide the timing of the price reduction discussion.
The seller’s motivation
The seller’s motivation plays a major role as well. A “must sell” seller is one who is facing divorce, financial hardship or job relocation. They will likely be more open to a pricing adjustment if the home isn’t moving.
In contrast, a “want to sell” seller is someone testing the market, downsizing without urgency or aiming for a certain price. These sellers may resist a reduction unless faced with undeniable market feedback. For these sellers, clear data on comparable sales, buyer feedback and showing activity will be necessary to support the case for a price adjustment.
6. Consider market seasonality
Are you adjusting your pricing strategy based on the seasonal shifts in your market? If not, you could be leaving money on the table. Every real estate market experiences seasonality, but not all markets follow the same pattern.
Year after year, data shows that buyer demand peaks during spring. By summer, activity starts to slow, and the market takes a noticeable dip as people focus on vacations and family time. As summer ends and families prepare for the new school year, buyer activity picks up again. This seasonal pattern repeats every year, making it a predictable trend in the real estate cycle.
So, if your market is at a current seasonal low and you are considering a price reduction you may just want to wait to see if buyer demand rises in the upcoming season. Understanding these seasonal shifts in your market is critical for pricing strategy. Listing at the right time and adjusting the price appropriately to match seasonal demand can be the difference between an expired listing and a sale.
The full picture
Price reductions can feel like a defeat, but they don’t have to be. Before you lower the price of a listing, make sure you’ve done everything possible to position the property for success. Of course, price is the main factor, and your goal is to position the property at fair market value, where showings translate into strong offers. However, reviewing the above considerations before reducing the price will ensure you’re on the right track to get the listing sold.
About Sean Moudry
A distinguished figure in the real estate industry, Sean Moudry is celebrated for his exceptional achievements and leadership. As one of Realtor Magazine’s 30 Under 30, Sean quickly established himself as a rising star in real estate. His expertise and dedication earned him a place in the prestigious RE/MAX Hall of Fame, a testament to his sustained excellence and impact on the field.
Further demonstrating his leadership capabilities, Sean became a Black Belt Team Leader at Keller Williams, where he played a pivotal role in guiding and developing top-performing teams. His influence extends beyond direct sales and leadership — he was named a top real estate coach by The Close and Inman News, two of the industry’s most respected publications.
Sean’s knowledge and experience are also captured in his best-selling book, The Ultimate Guide to Building a Real Estate Brokerage, which has become an essential resource for professionals looking to elevate their careers in real estate. His combination of hands-on experience, leadership acumen and coaching expertise makes Sean Moudry a highly respected authority in the real estate community.
