It is still very much a seller’s market in New York. Low inventory is causing an imbalance in the dynamic of supply and demand with no indications of change in the foreseeable future. Bidding wars are still common, and with even fewer homes on the market as we approach the holidays, we seldom see listings sell below asking price. I checked closed single family home records for the past 90 days across two school districts not known for high values and the search yielded 83 closings with an average sale price nearly $20,000 over asking and a median sale price a whopping $50,000 over asking.
As Yogi Berra said, you can observe a lot by watching, and the patterns I am seeing indicate that the homes selling faster and for more money are priced more attractively than the ones that aren’t. Optics and perception matter. This doesn’t mean that all home sellers get the message. Upon occasion, we still see sellers make the ill-advised mistake of pricing their home higher than they should for the sake of “wiggle room” in negotiations with buyers. No two listings are the same and there are always reasons to take a more speculative strategy, but in general, under these market conditions, if you’re priced right then you don’t need wiggle room.
I’ll describe two scenarios.
In scenario 1, the market analysis indicates an estimated value of $850,000. The home goes on the market at $849,900 and sells the first weekend in a multiple bidding situation for $875,000.
In scenario 2, neighbors with a comparable home observe the recent $875,000 sale across the street, and contrary to their agent’s recommendations, list their home for $899,000, rationalizing that they can always come down to $875,000.
And the house sits, unsold.
The sellers are flummoxed.
What’s the problem?
Did the market change?
Is our agent even trying?
So the clients get to work on “fixing” their listing. The professional photos get switched out in favor of images they prefer from their digital camera. The marketing description gets extensive re-editing that sanitizes out all the lifestyle description and replaces it with a long list of updates and improvements. And they demand that their agent hold the house open both Saturday and Sunday to “drum up” more traffic.
There are two problems here.
Problem 1 is that most consumers don’t know how to sell or market real estate and have watered down the home’s appeal with their changes.
Problem 2 is that the home started out priced $50,000 more than their neighbor’s home.
$50,000 is a lot of money. That’s why the first home priced at $849,000 sold faster than the $899,000 one that’s getting stale.
The sellers resist adjusting their price to a more market -sensitive number.
They don’t want to look desperate.
And what if they lower to $875,000 and someone only offers them $850,000?
Would you believe me if I told you that I’ve observed instances where the second home ended up selling almost 9 months later for $800,000?
The market is efficient. If a home is priced right, the market will respond accordingly and the listing will sell quickly and closer to the market ceiling.
The market is also skeptical. If a home isn’t priced right, the market will respond accordingly with a stale listing and a curiously disappointing sales price because potential buyers are concerned that there must be something wrong with the house to sit unsold for so long.
With rare exception, wiggle room is another word for self sabotage. The more attractive the price, the more foot traffic the listing gets. The more showings, the greater likelihood of more offers. More offers mean a stronger chance of the price getting bid up.
If asking for more money got us more money, then we’d all be rich geniuses. With the amount of pent up demand so high in this historically strong seller’s market, it is virtually impossible to underprice a home.
Ditch the wiggle room. This isn’t the market for that. This is the market to follow the pattern that succeeds, which is to price attractively and let immutable market forces do the heavy lifting. Price it right from the start and thank me later.
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Pricing it Right: The Myth of Wiggle Room
It is still very much a seller’s market in New York. Low inventory is causing an imbalance in the dynamic of supply and demand with no indications of change in the foreseeable future. Bidding wars are still common, and with even fewer homes on the market as we approach the holidays, we seldom see listings sell below asking price. I checked closed single family home records for the past 90 days across two school districts not known for high values and the search yielded 83 closings with an average sale price nearly $20,000 over asking and a median sale price a whopping $50,000 over asking.
As Yogi Berra said, you can observe a lot by watching, and the patterns I am seeing indicate that the homes selling faster and for more money are priced more attractively than the ones that aren’t. Optics and perception matter. This doesn’t mean that all home sellers get the message. Upon occasion, we still see sellers make the ill-advised mistake of pricing their home higher than they should for the sake of “wiggle room” in negotiations with buyers. No two listings are the same and there are always reasons to take a more speculative strategy, but in general, under these market conditions, if you’re priced right then you don’t need wiggle room.
I’ll describe two scenarios.
In scenario 1, the market analysis indicates an estimated value of $850,000. The home goes on the market at $849,900 and sells the first weekend in a multiple bidding situation for $875,000.
In scenario 2, neighbors with a comparable home observe the recent $875,000 sale across the street, and contrary to their agent’s recommendations, list their home for $899,000, rationalizing that they can always come down to $875,000.
And the house sits, unsold.
The sellers are flummoxed.
What’s the problem?
Did the market change?
Is our agent even trying?
So the clients get to work on “fixing” their listing. The professional photos get switched out in favor of images they prefer from their digital camera. The marketing description gets extensive re-editing that sanitizes out all the lifestyle description and replaces it with a long list of updates and improvements. And they demand that their agent hold the house open both Saturday and Sunday to “drum up” more traffic.
There are two problems here.
Problem 1 is that most consumers don’t know how to sell or market real estate and have watered down the home’s appeal with their changes.
Problem 2 is that the home started out priced $50,000 more than their neighbor’s home.
$50,000 is a lot of money. That’s why the first home priced at $849,000 sold faster than the $899,000 one that’s getting stale.
The sellers resist adjusting their price to a more market -sensitive number.
They don’t want to look desperate.
And what if they lower to $875,000 and someone only offers them $850,000?
Would you believe me if I told you that I’ve observed instances where the second home ended up selling almost 9 months later for $800,000?
The market is efficient. If a home is priced right, the market will respond accordingly and the listing will sell quickly and closer to the market ceiling.
The market is also skeptical. If a home isn’t priced right, the market will respond accordingly with a stale listing and a curiously disappointing sales price because potential buyers are concerned that there must be something wrong with the house to sit unsold for so long.
With rare exception, wiggle room is another word for self sabotage. The more attractive the price, the more foot traffic the listing gets. The more showings, the greater likelihood of more offers. More offers mean a stronger chance of the price getting bid up.
If asking for more money got us more money, then we’d all be rich geniuses. With the amount of pent up demand so high in this historically strong seller’s market, it is virtually impossible to underprice a home.
Ditch the wiggle room. This isn’t the market for that. This is the market to follow the pattern that succeeds, which is to price attractively and let immutable market forces do the heavy lifting. Price it right from the start and thank me later.