In an earlier post I referred to a very large markdown from a very high starting price for Leonia Helmsley’s Greenwich CT estate.  The very large markdown resulted in a much lower sale price, but one that certainly was still “very large”, at least by my humble standards.

Originally listed for $125 million in early 2008, the property finally sold  at $35 million.  At that sale price the 40-acre, 23,000-square-foot Dunnellen Hall estate is a $90 million let-down, a 72% reduction over 2 years from the original listing price.  Harsh.

But that’s probably not your problem, at least not in the same scale.  Still, what should you do when your listing doesn’t sell?  How much of a markdown will get you offers and the most money for the sale of your home?

I’ll start by stating your mileage can and probably will vary, but there are a few recommendations to make.

First, critically view your home against the competition for sale in your market.  Perhaps you were too optimistic at the beginning.  Perhaps the available inventory of  homes in your price range has recently increased.  Whatever the starting point, look again at the competition.  Your realtor should know them well.  Buyers certainly will know after they’ve toured the most interesting suspects in their price range in your area.

Second, don’t be shy.  Remind yourself what your goal is: to get the most money for your home in the shortest amount of time with the least aggravation.  While your home is indeed special to you, ultimately it’s a commodity that is priced on supply and demand.  The objective is to get many more buyers who can afford your home to look at it with great interest.  More potential buyers will get you more serious interest, more offers and more money at the closing table.

If you have a 4 bedroom, 2 and a half bath Colonial on a quiet street, compare against others as much like yours as possible and reduce your asking price to reach a new psychological price point, e.g. $899,000 from $965,000.  Alternatively, aim for the middle of the pack, or slightly lower, of the grouping.  Again, your realtor should help guide you with current data.

When should you make a price reduction?  As soon as you realize you’re not getting a significant number of showings or, following two or three weeks of active viewings by potential buyers with no resulting offers.