Understanding the Market is Critical!
A good article in the Post today (HERE) regarding home pricing on new listings.
In a rising or appreciating market, its easier to price a property aggressively. If it ends up being slightly overpriced for the market it will not take long for the market to catch up to the overpriced property, resulting in a sale.
Its also easy for brokers to recommend too low a price – their client will think they were a hero for selling in 3 days price, but they’ll never realize that they gave the buyer $10,000 in instant equity.
Things don’t work the same in a declining market. The luxury of mis-pricing is gone as the value of a property will be worth less tomorrow and each subsequent day. In a depreciating market, if you price for today, the market may slip right past you on its way down. If you don’t correct your price quickly, you could be looking at an extended listing period. And, once you pass 45 days on market, you have the additional tarnish that comes with time, where buyers and brokers start to ask “what’s wrong with that property?” The price correction curve starts to steepen quickly after just two weeks if you want to pull out of the ditch.
We now sit on the cusp of a changing market – we can clearly see it coming. As things change, fine tuning your price will be more critical than it has been since the depth of the downturn in 2009-2012. You need a lot of data, a good understanding of buyer psychology and a lot of intuition to thread the needle on price. You need to understand the market, starting at the national level, drilling down to the state, then city, then part of town, then neighborhood, then street, then curb, then door and all the way through the house into the cupboards and under the toilet seat. You need to understand and appreciate that, not just from your perspective, but more importantly, from your buyer’s perspective.
And you need to price accordingly!
- Successful sellers understand market value and that they are part of a market.
- Unsuccessful sellers refuse to price their property at the market value and/or think they are the market.
If your house hasn’t sold in 30-45 days, you must change your price! At 60, you’re almost dead in the water – you need a drastic change, because you missed the mark.
Better yet, price it right from the get-go. Before you even start, have confidence that your broker can advise you properly on price. They should explain to you what has sold, what is available, and what competition might be coming. Of those homes that have sold they should give you a full run-down of the listing history – what was the real sale price, what were the issues, how did the market react, how does it stack up? Only with that information (plus a lot more) can you truly understand where you need to price your home to get it sold.
If you are thinking about selling and want my thoughts on your home price – feel free to give me a call!