Market Trends: Price Reductions

Knowing when and if a seller is nearing a point where he is going to lower the price, can increase your chances of buying that home at a lower price. The best way to know if a seller is likely to drop the price is to look at the listing's property history to see what that seller's behavior has been in the past. It's usually a good indicator of what they'll do next.

The Should I Wait for a Price Reduction graph shows you when homes in an area have had price reductions. The graph also shows you how many homes are selling in that area without a price reduction at all.

In the example graphed below, if you add up the first two gray bars, you'll see that around 1,000 homes sold within the first 45 days of being on the market and without a price reduction. Those homes were probably priced right for the market.

The blue bars show the number of homes that sold with one or more price. You can see that after being on the market for 45 days most of homes sold with at least one price reduction.

What does this mean to you?

• If you are looking at a home in this area and it's been on the market less than 45 days, it's got a one in three chance of selling without a reduction. If it seems priced right, it probably will sell.
• If the home has been on the market longer than 120 days and hasn't yet reduced it's price, it's still might sell at its original asking price. About half the homes sold after 120 days still sold with no price reductions, but the other half did reduce.

Usually higher priced homes are more likely to reduce their price because they've got more room to move. Take a look at what the seller bought the house for to know how much room they have on their asking price. If they're close to what they bought it for, it's fairly unlikely they'll reduce the asking price as they'd be selling for less or near what they paid.

There's a lot of other information in this graph. You can figure out:

• # of homes sold or withdrawn in the last 90 days: by adding the heights of the first three bars.
• # of homes sold or withdrawn after a certain number of days: by adding up all the bars in the group to find how many homes stayed that long on market
• # homes with 1, 2, 3, or 4+ price reductions: by adding the heights of all the blue bars.

If it's available on the listing, look in the property history for the seller's original list. That will tell you how much he's already come down in pricing. If they've already reduced their price 10%, it's pretty unlikely they'll be willing to drop it another couple percent.

Learn more about Redfin's market stats and trends:

• Pricing and Inventory Levels
• Methodology
• Viewing Redfin's Stats and Trend Pages
• Frequently Asked Questions (FAQ)