How important is it to set the price correctly when a home is marketed? One way to answer this question is to look at how long a home takes to sell, using the number of reductions as a metric, rather than price differentials which can vary from market to market.
In the 2013 National Association of Realtors Profile of Home Buyers and Sellers, data is provided showing how often home owners reduced price by time on market. You can see the breakdown in the following chart:
Looking at this chart, you can see that 86% of homes which sell in less than 1 week have no price reductions at all, and that for those that sell within two weeks, 84% of homes have no price reductions. Looking at the very right of the chart, you can see the statistics for all sellers, regardless of how long it takes to sell a home. You can see there that 53% of home owners never reduce their price, ever – which means that a bit more than half the time, home owners are pricing their homes correctly. Unfortunately, it means that nearly half the time, home owners overprice their homes.
The most interesting cluster to look at is the 17+ week column, the second from the right. There, you can see that for homes that took 17+ weeks to sell, only 15% of home owners did not reduce their price at all, 25% had one reduction, another 25% had two reductions, and 18% had three reductions, and another 18% had four reductions. The data show very clearly how over-pricing a home leads to a longer time on market and greater numbers of agonizing price reductions. Home owners, do yourselves a favor: price your home correctly from the get-go to reduce your time on market!