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Pricing and the state of the market.

By
Real Estate Agent with Remax Jazz Inc.

In a market where sale prices are increasing the initial list price of a property is not as critical as when the sale prices are decreasing.

In a rising market if a property is overpriced for example 2% and the market increases 8% a year then in 3 months the property should be at market value.

But in a declining market if a property is overpriced by 2% and the market is decreasing by 8% a year then in 3 months the property will be 4% over market price. And the longer it takes to get the property to the right price the more the seller will lose.

The last time we had a falling market was from 1989 to 1992.  We saw house prices drop by 30% in that time frame.  It was not unusual to see properties chase the market down. A property would be listed a little too high, not sell, lower the price a little, not sell, lower the price a little etc etc.  And yet lots of properties sold in that time frame because they were priced right. 

There is also lots of talk about market times getting longer.  I am going to do a little research and see if properties are selling with the original list price or if they are selling in 30-60 days as a result of a price change.  If they are selling after a price change then I feel it should be expressed as something different than market times being longer, perhaps the market being more "price sensitive".  I will post again when I get some more research completed.

Paul S. Henderson, REALTORĀ®, CRS
Fathom Realty Washington LLC - Tacoma, WA
South Puget Sound Washington Agent/Broker!

Hey Bob, I wasn't sure where you were going at first but you were dead on with your message. I look at time on market all the time. In 2005 my listings were on the market on average 7 days. In 2007, 38 days and this year, 2008, 79 days. I used to market that I could sell your home in less than a month, not anymore...

Nov 18, 2008 01:29 AM
Bob Anderson
Remax Jazz Inc. - Oshawa, ON

Thanks Paul

With fewer Buyers and more inventory is makes sense that it will take longer for sales to occur even if it is just a result of the Buyers spending more time to get thru all of the competition.

It will still be the houses that are seen as best value (well priced for what they offer) that will sell first.

Nov 18, 2008 02:30 AM