Tic Tock Tic Tock
Your home is listed, and you did your list price homework with your agent. It’s on the market, but is it the right price? There was all the pricing tactics and strategy ad nauseum of setting the right listing price. Now it’s showtime, and decisiveness based upon showing activity of your home, goes a long way to ensuring a successful sale of your home. Here is the infamous fair market pricing pyramid for selling a home.
The Right Price Maybe…
A good real estate agent has a process for setting the market price. Unfortunately, most of the time real estate agents ultimately defer to the seller’s wants and specifically the price the seller wants to sell the home for. If the agent doesn’t see the price the same as the seller, the Seller will find an agent who will list the home at the seller’s price. This seller price is often influenced upon a nearby sale, or home pending, or just a feeling that the seller’s home is worth more. In the end the right price is validated by an offer. In order to sell any home, a listed home needs showing, the more showings, the more validation that the pricing is often right. Sellers are often faced with the big challenge in a hot market of the extremes of no showings or plenty of showings but no offer or. These all are major indicators of the interest and willingness to make an offer on your home. However, please be aware that the only showing that matters are the one that makes an offer.
Indicators of the Incorrect List Price
A “hot” seller’s market is often thought of as multiple offers over listing price. This is not necessarily true. It’s often too many buyers and too little inventory driving the activity. In real estate agents talk about the “pricing” pyramid. Another pricing concept is the higher the price the fewer the buyers. Right now, a home priced under $620,000 (This is driven by conventional loan limits) will have an accepted offer/pending sale in less than 15 days. The 30-day in contract is the key metric Seller’s should be aware of. For the next pricing tier, $620,000 to $1,000,00 the Seller should have an accepted offer in 30 Days. For homes over $1,000,000 the home should be in contract in 45 days. If you’ve missed these metrics, not only have the buyers passed on your house. You are now chasing the market.
Days on Market for an Accepted Offer Based Upon List Price
|Pending Sale Within
|$620,000 to $1,000,000
|$1,000,000 and Over
No Showings after 5 Days or Open House
This is a red flag you have missed the price in a hot market. As a seller you need to talk ASAP to your real estate agent and discuss a price reduction or incentives to sell your home (pay for closing costs, repairs, Seller credit). If your home is being sold “as-is” you may want to temporarily take it off market and address issues that you think are hurting buyers from viewing your home.
Too Many Showings With no Offers
If you receive over 3 viewings without an offer by qualified buyers in the current market in South placer, you have missed on the price. If you had an open house with great turnout (5-10 groups of buyers per day the house was open) your listing price is too high. What is a qualified buyer? Your agent should be asking buyers agents or perspective buyers their qualification to buy a home in your price range (are they approved, how will they purchase), why the interest in your home (number of bedrooms/features are a match), and timeframe to buy (ready buyer).
Too Many Offers on Your Home
If you have more than two multiple offers over the listing price in the first week of being on market you have “underpriced” the home. Granted that homes under $300,000 in South Placer will more often than not receive multiple offers are they over asking the asking price? The challenge with multiple offers is who is the best buyer? If often not who offered the most in price. Your real estate professional should be able to help you determine who the best buyer is looking at the terms and conditions for the purchase. Verification of funds, and other qualifications of the buyer matter. Contingencies also have to be carefully considered. Choose carefully and be aware too many offers especially above listing price is not necessarily the “right” price for your home.
Contingent offers are often made on homes that are not priced correctly of have been on the market for thirty days without an accepted offer (pending sale). These offers in general are not necessarily bad offers but the contingency if accepted may keep your home off the market too long (60 or more days) and if the Buyer doesn’t perform you may have fewer buyer available if the home goes back on market. In general, if the contingency is over 30 days, it’s an offer that may not perform (the contingency to sell a home is often this big issue for performing). Again, a good real estate agent should be able to help you make the right decision.
Incorrect Listing Price Impact – Chasing the Market
Chasing the market is when a home’s days on market is greater than the pending sale status, i.e. overpriced. Now the seller is competing with every new listing and being compared to every sale for a house that was on the market too long. This will often result in offers that are 10s of thousands of dollars less than the list price. In the age of the internet, the homebuyer is updated within minutes of a new listing being available. These buyers are willing and able to purchase your home. Don’t disregard this important metric, at this point, the best buyers have passed on your home. Price is the now the only factor that will drive the activity and an offer. You should be seriously considering a pricing reduction strategy to incrementally lower the price until you receive an offer. Accepting this strategy is extremely painful to do, but the “watchers” of your home online will eventually see the price as an opportunity to view and make an offer.
Hope is the 4 Letter Word ….
That should never be used in conjunction for selling your home. Sellers and their agents shouldn’t hope that it sells. The goal is to get your home on market and to get the best ready willing and able buyer to make an offer and complete the purchase. In a hot seller’s market like South Placer, showing activity leads to offers. The buyers are there especially in the bottom third of the home pricing pyramid (Under $620,000 list price), and the right price is the one that receives an offer. Just be sure to realize that a hot market only means that a home will sell in a more reasonable amount of time. It doesn’t mean multiple offers, over list price, and a seller can place conditions to sell the home than creates a long escrow. If you have questions reach out to your real estate professionals and guide you selling in any real estate market.