Extreme Home Pricing

In a recent article from the Wall Street Journal, the percentage of homes with their prices reduced was chronicled for 18 metropolitan areas across the United States. Not surprisingly, some areas had greater than 50% of their homes that showed price reductions. Personally, I have seen homes with price reductions as great as $200,000 off of the original asking price. In today’s market, finding a few homes with drastic price drops isn’t uncommon. However, I came across a post from a Baltimore housing blog that highlighted one particular home in the area that showed a seller who made several price reductions, most of them for between $20-$100 (yes, that’s correct, I didn’t miss any zeros). To me, a $20, $100, or even a $500 price drop really wouldn’t make a home’s price more attractive to me as a buyer – especially when the home is selling for several hundred thousand dollars. This article sparked my interest enough for me to find out which home (in the areas that we cover), had the largest number of price reductions. After some digging around, I found a winner.

A home in Virginia had 31 price reductions over the course of 43 days on the market (so far). The original asking price for the home was $223,900, but that price has since been reduced to $199,900. A $24,000 price reduction in of itself seems pretty reasonable – a 10% drop in price would seem to be a significant amount – one that could entice a borderline buyer to submit an offer. However, this 10% price reduction was not done in 1, 2, or even 5 separate reductions. The seller of this home chose to reduce this home’s price 31 separate times, with most of the price reductions in the amount of $250 (in fairness to the seller, two of the reductions were for $4000 and ~$10,000).

While I’m not quite sure what the pricing strategy is for the home, 1 or 2 price reductions I can understand. Maybe the listing agent accidentally input the price incorrectly into the MLS and didn’t realize it until the next day. Maybe the seller decided to change the price at the last minute. However, 31 price reductions (with most of them for $250), seems a bit excessive. Given the amount of effort to change the price 31 times, my guess is that the seller or listing agent thought that by showing a large number of price reductions, they could attract more interest to the house. Or maybe the seller was just trying to test out how accurate our price reductions feature is (hopefully they have their answer).

Either way, it seems like home price reductions are rising across the country. The next time you are looking at homes for sale, be sure to look for homes with price reductions – most of the time the price drops are more than $250. You might even find the right bargain.

Myron Lo
Director, Product Strategy

Here is a screenshot of the price reductions:

Comments

[Larry Burklow]

Some companies (ie..CB) recommend that you reduce the price $500.00 every week or so to get the property reentered in the 'hot-list' that some MLS's have available that show show price changes.

Many agents check the 'hot-list' religiously, so it keeps the property constantly in front of agents.

This practice was common when I was practicing in Hawaii.

[John Schneider]

It's also really tedious and annoying to keep seeing the same property come up on your hot-sheet with ridiculously miniscule price reductions.
it's like a gnat, you want to swat it.