Home Prices End a Decade of Surges as Sales ReboundPrices fell in February for the first time in 131 months, which could bring more buyers to the market just in time for spring, according to NAR
Beyond a Price.
Dated: November 3 2022
Pricing has always been important and now it's more important than ever!
By now you've seen the news or heard a friend, co-worker, or family member say..."The bubble has burst on the housing market" or something to that effect. Well let us tell you something...and NO this isn't just REALTOR or salesperson speak, (we don't consider ourselves salespersons, we consider ourselves consultants) it's not down or a bubble burst it's just back to normal. If fact in most areas of the country it's still very good.
Yes, interest rates are up.
But also Yes, buyer demand is still there and we still have low inventory numbers.
2020-2022 have been some crazy times in real estate. I expected 2020 to be a "stabilization year" for real estate meaning the demand would flatten...then the pandemic hit and it could have gone two ways...luckily for myself, most other REALTORS and sellers in most markets it went to the good size of crazy in that demand skyrocketed along with the appreciation of values of property.
Even when we were in the best of times pricing was very important. Take this example: If pricing your home even when people were getting $20,000-$30,000 over the asking price if you priced it to levels that $20k-$30K over the correct value you had effectively overpriced yourself because most buyers knew that they would still need that much over to be competitive and it may have meant fewer and less seller-friendly offers in the process.
Now the market has shifted and it is more important to price accurately. Check this true story: We listed a home in September knowing that the market shift was here and talked to two of our potential sellers about it honestly and gave supporting info for them to make an informed decision. One listed with us another listed with a competitor. Our listing was priced at what we suggest at $329,900 the competitor listed the other property which was extremely similar (not two properties or sellers for that matter are 100% alike), but they price closer to $335K. Our listing (this isn't us bragging) was on the market for less than 72 hours and has since closed for $327,000. The other had numerous price reductions and is now contingent (not yet closed) and its last listed price was $299,900...YIKES! Again there are many factors that might be but these two properties are very similar in size, age, location, condition, and overall appeal. So why the vast difference in not only probable sales price but also expediency of sale?... You know the answer is PRICE.
We know how important price is just like you do, but there are many other factors that come into play. Price isn't just an asking amount it is a marketing tactic and while others might be basing the price on 60 days ago...they should really be pricing for what it WILL Be in 60 days.
Now, we, like you, don't have a crystal ball, but we do know the factors that shift things in the market, and while a $6,000 listing price difference may seem like a great idea in this case it wasn't. These things can happen in any market and we've seen it numerous times over the years. Even in a down or slower market we had properly priced homes getting multiple offers or over asking price or lesser contingencies (ie inspections, home to sell, etc.)
But wait...is it always about price?
No, not always, but price does fix everything in the long run.
There are many things you can do as well. Here are the top 5 (taking price out)
- Condition - curb appeal, cleanliness, odor removal, paint, carpet, and other general touch-up items. It's different for every home, ask us for help on these.
- Terms - financing options, closing needs for both parties. More on this later.
- Location - obviously you can't change the location in most cases but sometimes there are things that you can do to change the appeal of the location.
- Marketing - exposure to the most buyers who are ready, willing, and able to purchase as possible. Coupled with numerous things we do to prepare the home before and during the sale. Ask us about those things.
- Negotiating - it doesn't just start at the time an offer is made, in the example above you can see that at the listing time it started. Also during the contract/offer stage yes, but also at the inspection/s stage sometimes negotiations start again, and being prepared for this is also important.
Now back to terms. This could mean a few things from seller financing, often referred to as selling on contract or seller financing, which can be an interesting thing to offer if you are able. But another is assisting with what we are now dealing with for buyers which is rising interest rates. You might ask, "how can I possibly help with that?" Here is a scenario: A buyer views your property and it appeals to them and might be their "perfect home" but they can't do it based on price or because their "buying power" has decreased by $15,000 (ex) rather than lowering the price by $15,000 maybe an interest rate buydown could be a beneficial option for everyone. Here's what we mean. If a lender will allow an interest rate buydown that costs 2% (or 2 points- which might be high-but a good example) Then it might cost less for the seller to put that 2% towards the buydown for a buyer rather than reduce the price. Here is an example:
$300,000 list price or potential sales price. The buyer can only do $285K at 6.75% interest rate. The lender will allow for a buydown to 5.875% with 2 points paid (usually by anyone) 2 points (a point is a percent) =$6,000. Now buyers can do it. So rather than a $15,000 reduction in price, it's $6,000 or $9,000 more net to the sellers...very interesting huh!? This is just one example of how thinking outside of the box and BEYOND the price can help make a transaction work for everyone.
Let us know if you have questions or ask for a private visit from your favorite NextHome Beyond agent and we'll get the BEYOND working together for and with you.
Hello, I'm Travis Hiatt I'm the broker and owner of NextHome Beyond in North Liberty, IA. I work primarily in the Iowa City and Cedar Rapids metro areas of Iowa. I love Real Estate and sales and h....
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