When Cutting the Price, Take a Big Bite, Not a Bunch of Nibbles

In the District, sold prices were 7.15 percent lower than original list prices. In Fairfax, Arlington, Alexandria and Falls Church, they were 7.4 percent below list. In Prince William County, they were down 9.94 percent; Prince George's County, down 9.96 percent; and Montgomery County, down 8.4 percent.

Declining home prices overall are working against sellers, of course, giving buyers an incentive to wait. "You want to make sure consumers don't really want to wait," Zhang said. "Offer incentives right away. A big chunk. Make it a once-in-a-lifetime opportunity."

Sinai, the real estate professor, offered an approach geared more toward sellers who are willing and able to wait for the one buyer most likely to pay top dollar (at least today's top dollar) for a specific home.

"The number one most important thing to sell your home is to get a lot of people through the door to see it," he said. "You have to find the person for whom this is the most ideally suited house. They have the highest willingness to pay for it."

I asked him about a statement that I often hear from real estate agents: If an asking price is too low, competing bids will bring the price up to the proper level.

He said the trouble with that strategy is you might cheat yourself out of enough time on the market to attract the buyer who will fall in love with your specific home. "You don't want to set the initial price so low that someone who isn't the one with the highest willingness to pay places an offer," Sinai said. "You should be willing to wait a bit for that."

Homes that sold in July had been on the market quite a while. In the District, they had been on the market a relatively short 74 day. In Fairfax, Arlington, Alexandria and Falls Church, it was 91 days; Prince William County, 112 days; Prince George's County, 127 days; and Montgomery County, 92 days.

If you have a home that genuinely is different from six others being marketed in your neighborhood, you might want to start out with a high-ish price. But make sure it's a 2008 price -- not an inflated 2006 price. Nobody falls that crazy in love these days. And if they did, the appraiser and mortgage lender would be much more likely to shake them out of their reverie than they were during the boom.

"In a lot of markets, the sellers have not caught up to where house prices are," Sinai said.

How do you know when to cut the price? Do it when potential buyers stop coming through the door. That could be only a couple of weeks after listing. A lack of traffic is how the market tells you the price is too high.

If you have to drop the price to get buyers looking again, just make sure you get the biggest splash out of it.

E-mail Elizabeth Razzi atrazzie@washpost.com.