Today we’re going to talk about the conditions of our current market. More specifically, I want to consider the question, “How is the price?”
I’ve talked in the past about the market shifting, but I want to bring that subject up again today.
Since I started talking about shifting, I’ve been getting a lot of phone calls saying, “Hey Robert, when you say shifting, what do you mean? Are the prices going down? Should I wait six months before I buy? Will I get a better deal?”
I want to clarify that a little bit: When I say shifting, I mean that we’re starting to see the market stabilize.
In the early part of this year, the market was very aggressive. Homes were selling for more than what they were worth and there were many multiple-offer situations. This was primarily due to the low interest rates and the fact that we had very low inventory.
In early 2017, you could get away with pricing a home above market value and probably still sell it. As the market continued to appreciate, it would continue to catch up to the overpriced listing, and then the home would eventually sell.
From what I can see now, it’s a little bit different.
Inventory is growing—not significantly—but it is growing over time. The market is slowing down a bit, but only because summer is over, and people are geared more towards school and work. The holidays do tend to see a slower market, as many buyers and sellers exit the market.
So what I’m seeing right now is that, if a home is priced right and it shows well, it will sell very quickly and for a great price. You might even see multiple offers on a property like this because, even though inventory is growing, the inventory on homes that are priced correctly is shrinking.
The reason I bring this up is that a lot of people might call and say, “Robert, you’re saying that the market’s shifting, but I’m still seeing multiple offers every time I bid on a property.”
The answer to that question is that you’re putting offers on homes that are priced right and that show well. So when I talk about the shift, I’m really talking more about those optimistic homeowners or agents who price their homes 5% to 10% above market value. People price this way because they’re so used to what we’ve experienced in the beginning part of the year that they haven’t adapted to our current marketplace.
When a home isn’t priced to sell, it’s going to sit on the market and get stale. In an aggressive seller’s market, homes are selling within one to two weeks, maybe even a couple days. If a home has been sitting on the market for 30, 40, or 50 days because it was overpriced to begin with, many buyers think, “If the market is so aggressive, why has the home not sold yet? What’s wrong with it?”
Those buyers will actually submit offers lower than market value, and sometimes they’re able to get it. In fact, in the last three months, we’ve helped clients buy two properties below what we felt was market value. The seller just started way too high, and we’re not in the same market as earlier this year.
So if you’re a seller, what should you want to do?
Well, you should interview different agents and come to understand three things that will get a home sold for the maximum amount: price, marketing, and exposure. Your agent, if you choose a great one, is going to handle all of the marketing and all of the exposure.
So when I say interview agents, you want to understand their personality, strategy, track record, and most importantly, what they’re going to do to market your property and maximize exposure.
Next, you want to collaborate with your agent to come up with a price that makes sense, otherwise it’s likely the home will stagnate on the market. Be sure to look at things like current inventory, your competition, the current market in your micro-community, or maybe the overall market in Orange County— you want to understand the different factors and trends, and pick the price that will inspire the most activity around your home.
Now if you’re a buyer, what does all this mean to you? The good news is that you don’t have to rush and be as aggressive as you did earlier in the year, because inventory has grown. But it’s important for you to understand that if you come across a great home that’s priced to sell, you still might come across a lot of competition, and you could possibly be outbid.
That’s why I’m telling you this today. The market is still very strong for sellers. That’s what I mean by shift—you can’t get away with now that which you could have in the beginning of the year.
If you found value in this information, please leave a comment or a question. Also, if you ever want to talk about anything specific, please let me know. Until then, happy selling.