Price Reductions On Homes Common In The Pensacola Real Estate Market

I'll start by defining a price reduction. I am not referring to a seller who accepts an offer on a home that is lower than the listed price of the home. This is a common occurence in many real estate transactions. I am referring to sellers who list their home at a certain price, and then reduce that price during the period the home is on the market.

Today, many sellers have homes listed that have been on the market for six months or longer. Most of these sellers have had to reduce their prices to try and sell their homes.

If you are a buyer looking for a home, a real estate agent can give you information on the pricing history of any home listed in the MLS.

There are generally 2 main reasons that cause sellers to reduce the price:

1. The Home was originally overpriced when listed. This is the most common reason for reducing the asking price of a home. After the hot real estate market of the past several years, many sellers are not realistic about what their home is worth in today's market. Many Realtors refer to overpriced homes as "homes that are not on the market". These homes will not get shown, and they will languish on the market. They will develop the reputation of an overpriced listing and will generally be avoided by Realtors looking for better value for their clients.

2. A Major Defect was discovered with the home. Sometimes a home will go under contract, but a home inspection will uncover an unknown defect. This situation will effectively force the owner to reduce the price of the home low enough that a buyer will be willing to purchase it with the defect. This is far less common than the first reason.

I had a buyer tell me that they felt they got a super deal on a home because it was originally priced at $195K, but the owner had reduced the price to $150K. I guess ignorance is bliss, but I had to inform this buyer that this type of scenario generally indicates that an owner had to reduce the price because it was too high to begin with. It is very likely the buyer got the house at fair market value. Unfortunately, I think she was feeling a lot better about her purchase before she talking to me.

I wanted to know what percentage of homes on the Pensacola Florida market had price reductions since being listed. I do not know of any tool in the MLS that would give me such data, so I had to take an educated guess approach. Note that the results of my market survey have no statistical validity. I searched for homes that had been on the market for over 4 months in different areas of Pensacola I then randomly selected homes, looking at the history of the home while on the market. My unscientific results were at the very least consistently convincing.

East Hill - 70% of homes checked had price reductions
Scenic Hills - 70% of homes surveyed had price reductions
Pensacola Beach - 90% of the condos clicked had price reductions
Myrtle Grove - 90% of the homes selected had price reductions

The homes that did not have price reductions probably need to be reduced. What this survey shows is that sellers often tend to be unrealistic about the price they can get for their homes in this market. The hot market is gone. So how does a seller price their home to sell? Simple, listen to your real estate agent.

In this buyer's market, sometimes it is hard to get to the perfect price for a home, even for an experienced agent. My best advice is to find a good real estate agent, and ask that agent to show you prices of similar homes sold, and prices of homes for sale in your area. Take a tour of some homes that are considered your competition. Prep your home to sell. Work with a good agent who will do the research for you, show you the competition, and help you price your house right the first time.

Check out my blog at Pensacola Real Estate News for more articles on real estate in Pensacola.