Reduce the price

C - Drop the Asking Price: How much?

You'll get the best effect from a price reduction when your new price appeals to a new and larger group of buyers. "Larger group" because buyers can be pictured in a pyramid: the higher the price, the smaller the number of buyers and the lower the price, the more buyers there are.  

For example, if you're considering reducing your home price from $198,500 to $193,500, the effect on increased showings will be minimal. A drop to $189,900, however, will get a lot more activity as you are now below another $10,000 threshold. You'll be appealing to buyers who won't look at anything higher than $190,000.

Suppose you’re sitting at $233,500 and sense it’s time to drop the price. A move to $229,900 moves you below a lower price point (230,000) and is just as effective as a $10,000 reduction when it comes to getting more buyers in the door.

The key point here is that the purpose of a price drop is to not only make a home more financially appealing but also to attract more buyers.  Make your home more appealing to buyers that are in a lower price range. Positioning your price into a lower range accomplishes this. A token drop really does very little.  

Consider the overall pricing of the market your home is in. The difference between a $459,000 house and a $469,000 one is rather small (less than 2 1/2%), as is the difference between a $975,000 and a million dollar home.

Historically, higher price homes appreciate more in dollars and percentage than their lower valued counterparts. But when they are faced with the need for a price decrease, these high price homes also command larger decreases to be effective.

Real estate agents are aware of the necessity for a meaningful price drop, but they are trickier about getting there. If a drop of $10,000 from $239,900 is warranted but meets with resistance from the seller, the agents simply go for a drop into the mid 230's. That’s because it’ll be easier to get the seller to reduce the price by a similar amount in the near future than it is to get the sellers to make the logical $10,000 drop in one fell swoop.