Sellers: don’t price with the expectation of an increasing market
Recently, the market has mellowed as buyers retract. Home sales have continued to decrease for over 5 months as a result, leaving many real estate listings overpriced.
Buyers don’t see the same value as sellers these days which is causing properties to sit for longer, showing longer days on market in the MLS. Sellers contend that they “don’t have to sell,” thinking their perseverance will eventually get them what they perceive they deserve. This is because sellers think the market is stronger than it actually is and that it is still on an upswing which it isn’t.
If a home is priced well (without any wiggle room) and is popular with buyers, offers will come within 30 days. To make your home popular with buyers, simply price it using good sense as if no negotiations were necessary. In other words, price it at your “happy walk-number.”
Selling a home for the highest price relies on a seller being willing to sell at a price that inspires buyers to buy. We often hear sellers say, “I am not going to give my home away.” The translation of that to any real estate agent means, “I am not willing to sell my house for true market value because I want more.”
The reality is that real estate transactions happen when a buyer and seller agree on a price that both can live with. Neither Zestimates nor listing agents create value but an effective listing agent will prove value before taking an offer to contract. In order to attract buyers, one should start with a relevant listing price. The key to knowing whether you are priced relevantly is that you will not just get showings, you will get offers! To get offers flowing, the property’s price must be appealing to all suitable buyers. If more than one buyer recognizes value, then multiple offers can result, and a skilled real estate negotiator will locate the best buyer, meaning the one willing to pay the highest price—possibly above the list price. This process is called proving value.
However, I have recently observed that sellers are too reluctant to adjust their perception of the changing market dynamic. They believe that a strong second quarter GDP at 4.1% equates to eventual higher real estate prices. Unfortunately, the truth is that the market is fully-baked and with the exception of specialized bubble-protected areas, the prices are not expected to rise. All markets anticipate trends and prices shift as a result of anticipation. We are going on the ninth year of this bull market which has set a record. It has reached its peak and as everyone knows, what goes up must come down.
The future for home prices is not a bright one. What we see now is a turnaround in the 7-year seller’s market. Conversely, on the horizon we see rising interest rates (bad for buyers), reduced real estate inventory (bad for sellers), and record deficits, loan tightening, inflation and an imminent recession—likely within a year (bad for everyone).
Adding to the issue, websites like Zillow and Redfin may be falsely inflating property prices by using overly aggressive price algorithms. Some analysts believe that doing so artificially inflates home values. This happens because the algorithms track property listing views and “shares” from the site and then give weight to those data points. The more views and shares a home has, the more their forecasting pricing tool increases the “estimated value.” This is dangerous and could potentially add to a bubble effect since interest in a property does not always directly correlate to offers or a sale.
If you plan to sell your home, do not wait for the economy to boost your property’s value since that will not be happening! List it now, price it right and save some commissions in the meantime by choosing GetMoreOffers.com. Our Platinum PRO plan offers sellers full service with expert contract representation for a low flat fee.