The Current Market in Wake County NC

As I type this blog entry, we are essentially in a declining market.  Not a bad market, just somewhat correcting itself.  There are spots or certain neighborhoods in certain towns that still are very competitive and do receive multiple offers, but for the most part we are seeing price reductions left and right.  In this blog post I will explain why it is best to price correctly at list date vs. “leaving room to negotiate”.

Every Seller is Human

When listing your home you obviously want the highest dollar amount possible.  There is an emotional component in all real estate transactions and most of it comes from whether “you” got a fair price when you bought or sold.  Most of the time when I go to a listing appointment the seller already knows what they want to list for; I give them a range of what the comps suggest.  The comps (comparables) are by far the best way to see what the market value of your home will be.  Appraisers and buyer agents (who bring the buyers) are going to use the same comps.  Too many consumers now rely on the “BIG” real estate sites to tell them what their home is worth.  You know the names:). The sites spit out an AVM (Automated Valuation Model).  In other words, the big sites say your house is worth a certain amount and sellers hang their hat on that value.  The problem with that is most of the time it is overpriced and the ulterior motive is for you to click that button and have “them” send an agent so list it for you.  Little do you know “they” get paid a referral fee if the agent they refer sells your home.  It is a fair to say most of these sites are a bait and switch.  *And if you do list with an agent of your choice ‘at’ the price the big sites suggest…..it stays on the market longer.  Good for the BIG sites….it stays on their site longer to collect more inquiries and sell more referrals.

Overpricing leaves you stuck….it doesn’t leave room.  When days on the market go up your potential buyers see a possible issue with the home.  Algorithms estimate.  The Market will dictate and the Buyers decide.

The Psychology of Overpricing

Sellers think that overpricing leaves room to negotiate; “I can always come down”.  This is true.  But, the market never forgets.  Every price reduction is recorded and is public knowledge.  The data will start to work against you.  *From day one buyers will see your listing…it will be everywhere.  But, here is what actually happens behind the scenes.

Month 1 – Buyers compare your price to a similar home and wonder why it is priced so much higher.  Then they see similar homes and don’t come back; we lost them right there.

Month 2 – You may get some showings.  The buyer agent will show them comps and then the buyer wonders what is so special about this house.  Is this why it is still available?  Meanwhile, your neighbor just listed their house at a more market friendly price; more competition.

Month 3 – Now you start dropping your price.  Buyers wonder what is going on.  In theory, it is now priced correctly or getting closer, but the days on the market are much higher than your neighbor’s house.  Is the stigma created yet?  Why is it still sitting?  What’s wrong with it?

Month 4 – The neighbors house sold.  It had a lot of viewings and actually had multiple offers.  These two houses were almost identical.  The house that sold was priced just below market value as suggested in the comps.  It actually caught the eye of multiple buyers and brought in more showings because it was priced to sell, not priced to negotiate.  The house that is still on the market will ironically sell for less than the original suggested list price AND 4 months later, which means more holding costs and more stress.

Agents are Also Human

We are only as good as the data allow us to be.  When we are meeting with a client that wants to sell their home, our goal is twofold.  One is to get the highest dollar amount for our client.  The other is to be realistic and develop a strategy to get there.  There are many factors that go into pricing.  If two homes are similar you have to consider condition, appeal, and functionality.  Pricing grabs attention.  Condition, appeal, and functionality help sell it.

Choose an agent that makes sense and has a strategy; not one who says what you want to hear.