Market Reposition (Price Reduction)
Introduction
Despite our best efforts and depending on the market conditions, there may be occasions where a price reduction is indeed appropriate. But rather than view it as a price reduction per se, I personally prefer to view it as a market reposition. Here I discuss the difference between the two and when we should consider resorting to such an approach.
Before resorting to a price reduction
A price reduction is most appropriate when it is apparent that our home is simply not selling, due to the market disagreeing with the asking price, its time value on the market having considerably diminished, and/or having fallen into the trap of the stigma cycle!
We shouldn’t be too quick to resort to a price reduction, nor should it be seen as a simple fix!
Before resorting to a price reduction, we should ensure that other elements of our property listing are on point, including the photos, description, and video. It’s entirely possible to see better results by improving other elements of our listing, without needing to reduce the price and lose out on the value of our home!
If improvements to our listing do not result in improvements to the number/strength of buyer interest or offers we receive for our home, it may then be necessary to effect a price reduction!
Market reposition, rather than price reduction
Rather than view it as a price reduction per se, I personally prefer to view it as a market reposition.
What’s the difference?
A price reduction implies a reduction of value from our home’s true value, in other words, sacrificing part of the true value. It also implies a sense of not only trying to appeal to new buyers, but also trying to appeal once again to the same buyers who didn’t feel that our home was worth the asking price to give it another chance.
A market reposition acknowledges that the lack of buyer interest or offers for our home demonstrated that the asking price did not reflect the true value, and that we’ve been trying to appeal to the wrong segment of the market. In this sense, there’s no ‘sacrificing part of the true value’, as the asking price did not reflect the true value in the first place. The course of action therefore, is to reposition our home (or rather, reposition the price point of our home) in the market to appeal to a more appropriate segment. Simply put, a market reposition is a price point reposition.
Rather than trying to appeal once again to the same buyers to give our home another chance, a market reposition is all about appealing to fresh eyes from the correct segment of the market!
Fresh eyes from the correct segment of the market can include buyers from our likely buyer pool whom our home previously missed, and/or buyers whom our home was previously not visible to in their search results because it fell outside of their search/price criteria.
Whilst a price reduction can potentially reignite interest in some of the same buyers to give our home another chance, the majority of those same buyers aren’t likely to come back, having already moved on and turned their attention elsewhere to (and prioritise) newer and fresher properties on the market (i.e. new competition).
Our marketing efforts are therefore better served to appeal to the correct segment of the market than try to salvage the attention and interest of those buyers who have already rejected our home!
Getting in touch with me
If you would like to discuss any of the above points with me further, or if you need help or have any questions in general, click here to get in touch with me.
In some cases, a price reduction (or market reposition) may not be enough depending on how our home was marketed initially. A price reduction alone may not be enough to overcome the diminishing time value of our home, or low (or no) buyer confidence from social proof affirmation, especially due to the stigma cycle.
Under such circumstances, it may be necessary to effect a price reduction, whilst also switching to a new agent!
If you want to know more about price reduction and switching agents, come join me in the next section.