The market is shifting. Not dramatically (at least not yet), but as we've discussed in our January blog, we're seeing the market start to settle. It was almost inevitable after years and years of homes flying off the market as quickly as they went up.
But we’re not here to chat about the market. At least, not specifically. The variability and shifting we’re seeing in the market is creating some confusion among buyers and sellers alike, which makes one key question in the process of selling a home particularly challenging to answer…
What’s the right price?
At the base of any good pricing model sit your good old fashioned ‘comps’. We’ll look at recent sales of homes similar to yours in size, location, amenities, bed/bath count, etc, to create a basis for comparison. From there, we can turn the pricing dial up or down depending on how your home stacks up against the comps.
But all that said, comparable sales must be taken with a grain of salt. With a market that’s in flux, looking at historic information (and comparable sales are historic, even if they took place in the last month or so) isn’t always a good indication of where the market is headed. And you’ll be selling your home in that future market.
So we use these comps, but we also do our best to predict the future. Yes, really – are you impressed?!
Back to those industry conditions…
So the industry is changing – no biggie! All that means is that we have to pay extra special attention to where the market sits at the moment your house is going on the market, and use that to predict, as well as we can, where the market is headed in the coming weeks or months. We use numbers like inventory levels, number of buyers, interest rates, appreciation rates, etc to think ahead. During the time this house is on the market (hopefully a very short period of time!) how will the market be acting?
This is where experience and insight is key. You wouldn’t hire a stock broker who is fresh out of undergrad, right? Because you rely on their experience to read the shifting market just as much, if not more, than just a basic knowledge of finance and economics. In the same way, finding an agent who knows how to interpret and predict market trends is crucial to a successful (read: lucrative!) sale.
Acting and reacting
Sellers are often hesitant to adjust their sales price once their home has been on the market. This is because, usually when that’s happening, it’s lowering the price, which sellers are understandably concerned about doing.
But with the market changing, it might become quite common for us to see the original asking prices change more frequently than we’re used to. And there are a number of things to take into consideration when making that change, as well. How many offers have been made? How many showings? Are any of those showings repeat showings? Are there any consistent hang ups that buyers have verbalized? Can those hang ups be changed, or are they permanent factors like location or size?
A good agent will look at the full picture, which includes all the traditional indicators like absorption rates, inventory, etc, but will also employ his or her insight and intuition to figure out the point at which the feedback and those statistics interact.
It sure ain’t easy!
It’s challenging to land at the right price. And it will become even more challenging as the market adjusts. Lucky for you, we’ve done this a few times, and we know Richmond like the back of our hands!
The industry is, after all, subjective and emotional – as if these changing tides weren’t enough to complicate things! Getting to the right number is a process, but a manageable one so long as you have the right team on your side!