Best time to make a price adjustment - Don't ignore key market signals
Don't ignore key market signals
Question: Allison, our Frisco, CO condo has been on the market for only 4 months. Our realtor is telling us we need to reduce the price to sell it. We priced it where he told us to when we listed it, so how can we be sure we need to reduce the price?
Answer: Good question! I only wish that pricing were an exact science, but the truth is that it is an art AND a science. Your property could very well have been priced “correctly” when you listed it, but the market has changed – and continues to shift.
There was a time when a price reduction tainted a listing. That was several years ago when listings in many areas (Summit County included) sold quickly. At that time, it was assumed that something was wrong with a listing if it needed a price reduction.
In today's market, price reductions are common. Sometimes, sellers aren't content with listing unless they try a price that's higher than what the comparable sales data indicate. Or, a price reduction could be necessary simply because it's difficult to price homes in a changing market, particularly if the local housing stock is varied in size, condition, age and style.
It's easier to establish current market value in subdivisions and complexes where the properties are similar to one another, particularly if there are a number of recent comparable sales. It's hard to price right for the market in any neighborhood if few or no homes have sold recently.
It's best to list your home at a price that buyers will perceive as a good value. Overpriced listings sit on the market. Real estate agents and buyers forget about them.
Today's buyers are cautious about buying. Some are on the fence waiting for a clear sign that the market has hit bottom and that prices won't drop further.
Although some markets appear to have stabilized, there is no guarantee that prices won't slip. Buyers who realize that they can't time the market and who want to take advantage of low interest rates are moving ahead with their home search. They are very selective, are buying for the long term, will wait for the right home and won't pay over market value.
HOUSE HUNTING TIP: As difficult as it may be for sellers to consider a price reduction after only a couple of weeks on the market, this is often the best strategy. Buyers and their agents focus on the new listings. If you bring your property on the market priced too high, but it's otherwise a nice house in good condition and in a good location, a price reduction early in the marketing period is likely to attract the attention of brokers and buyers who still have the listing fresh in their minds.
Make sure that your broker gives your listing a renewed marketing effort to generate enthusiasm about the property. More than 85 percent of today's homebuyers use the Internet to search for a home. Some sign up for services that notify buyers when a new listing is submitted to the multiple listing service (MLS) and when there is a price reduction or pending sale.
Your broker should schedule an open house for brokers if possible after a price reduction to alert real estate agents who may have missed the price reduction when they ran an MLS update. MLS updates list price changes.
Depending on your local market, you may need to lower the price more than once, particularly if you waited months to make a price adjustment. If market values have moved down since you listed, you could find yourself out of sync with the market again. Don't rely on what your neighbors are asking for their homes. If they aren't selling, they are probably overpriced for the market. Rely on sales of comparable properties that closed after you put your home on the market.
THE CLOSING: Ideally, you want to reduce the price before your competition does.
For answers to your real estate questions, call Allison at 970-468-6800. Email - [email protected]. Allison is a Certified Residential Specialist (CRS), the highest designation awarded to a Realtor in the residential sales field. Her philosophy is simple, whether buying or selling, she understands that the most important real estate transaction is yours. Want to know the value of your Summit County property? Visit www.SummitHomeValue.com