Just like fishing with the right lure, pricing your home for success is finding the right level so that the Buyers will STRIKE. Currently our multiple listing service tells us that the “STRIKE POINT” is 6% above where the home eventually sells. This does not mean your home will sell 6% below its list price. It indicates that the home will not attract a buyer until it is priced within 6% of where the market is saying the value. Houses react to the market as a commodity not as a product. Their value is more relatable to stocks and bond. If everyone is buying a stock at $90, you can never sell it if you ask $100.
To determine the “strike point” you cannot rely on competing (active) properties. Sellers can PRICE anywhere they like. These are wish prices. You also ca not rely at sold prices. With the local market declining about 1% per month these prices are already old news. What you need to strongly consider are comparable properties that are PENDING. We won’t know where they have sold, but we will know where the “strike point” is.
I have heard Sellers say “I can wait”. That argument makes no sense in a declining market. Time is NOT our friend and as a Realtor, our job is not only to get our Sellers the highest price but also so minimize their risk of loss. Did you know that 35% of homes listed in the New Milford, Brookfield, Danbury corridor (96 out of 275 in the last 6 months) sold within 8 weeks of being listed and that their strike point was 3.5% above value. Those with market times of over 60 days languish and end up selling for 7.2% below the asking price. Lesson, the closer you price to the value (determined by the market) the faster you will get an offer and the closer to the list price it will be.
The value is the value, priced high or low. The thing that the price does is indicate to the Buyer how reasonable the seller will be. The risk in a declining market is that the VALUE is declining monthly and thus so is the “strike point”. Price it RIGHT from the beginning or be willing to make substantive Market Adjustments going forward. If your home has been on the market longer than even 30 days it indicates that the Market (the Buyers) have rejected your Price, not necessarily your home. They will NOT make an offer if your home is priced more than 6% above the market determined value.
Pricing and value are a point in time. Many things can affect value from weather, levels of inventory to changes in financing. You must look at your pricing strategy every 30 days and determine what “market corrections” you must take. Are you CHASING the market or PACING the market? No sale in 30 days… CHUNK the price. (That is a new technical term..chunking) No $5000 reductions here. A minimum of 3% and a suggestion of 5% cut is recommended. Otherwise, you are just following the declining market. Do you want to sell or stay? The ONLY thing that stops a house from selling is PRICE. In the absence of reasonable pricing no amount of staging, marketing or improvements will net you a better bottom line.
In my opinion, there is no such thing as a bad market. There are just overpriced listings. This is NOT the fault of the Seller but a reflection of Realtors not understanding market dynamics and not willing to walk away from an unsellable listing or unrealistic Seller. A good Realtor will educate you on the trends; work together with you on pricing but also have a plan in place for CHUNKING if necessary. Your Realtor should be willing to level with you rather than lie to you just to take the listing.