Chasing a Falling Market

Seller's Lament: Always One Price Cut (or More) Behind

This chart shows graphically the perils of initially pricing too high, then trying to catch up to a falling market (note: the X-axis is the number of weeks on the market).

In this case, the home (not my listing, thankfully) came on the market last July 10 at $775,000. Here's what happened next:

July 15: price drop #1: $749,900

Sept. 12: price drop #2: $724,900

Oct. 1: price drop #3: $699,000

Oct. 14: price drop #4: $674,900

Oct. 30: price drop #5: $649,900

Feb. 6: price drop #6: $624,000 (not shown)

Clearly, this Seller is trying -- so far futilely -- to catch up to where the market is. I also find it significant that the first price reduction came only five days after hitting the market: such a quick drop often indicates lack of conviction, coupled with unusually harsh early feedback.

By contrast, I don't place that much signficance on the Seller "sticking" at $649,900 from Oct. 30 to Feb. 6: there's no point in "wasting" a price reduction when relatively few Buyers are actively looking.

Hindsight is 20-20, but my advice to homeowners contemplating selling in today's Buyer's market is two-fold: 1) don't overprice; and 2) if you do, bite the bullet and get ahead of the market in one fell swoop, rather than chase it down with incremental drops.

To paraphrase a well-known saying, unrealistic Sellers suffer many price cuts, the valiant only one . . .