I have noticed recently that when I pull up a list of homes for sale in a neighborhood, more than 2/3 of them have had their prices reduced at least once. This is more than I normally see. We also still have homes that sell in hours at list price. Why the price reductions in a hot market? Are the agents over pricing these homes.
In some cases yes. Sellers can demand they start out a bit higher to give themselves room to negotiate. What generally happens is that they are so over priced their home does not get shown. After a period of time where no one looks at the home, the sellers relent and the price begins to drop until the level is reached where buyers find the home worth looking at.
I have also seen where a home hits the market at what looks to be a fair price, and the neighborhood market collapses. This happened to me this year. All the comps pointed to a price. The day we listed, two other nearly identical properties dropped their prices by $15,000. I believe we hit a tipping point where we had too much inventory that had been sitting too long in the neighborhood. My listing apparently frustrated the other two sellers and they dropped their prices to try and sell quickly.
Sometimes, even after doing extensive market reviews and determining a fair price for a home, we find ourselves in a market where prices temporarily deflate in a slower time of the year. At those times we have to look at our pricing to make sure we are still competitive.
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