Getting Real with Sellers in a Shifting Market - Article in “Seattle Real Producers” Magazine
Imagine it's June 2018 and you are needing to move your family into a particular neighborhood by a specific date and there is only one home that fits your needs; it is priced at $600,000 which is in your budget. You’d buy that house, right? Now imagine there are 10 other parties who also need to buy a house at the very same time and that home fits their criteria too. A multiple offer situation ensues and the $600,000 house sells for $750,000, $150K more than it would have without the competition. After all, the $600,000 price point was based on similar homes sales that closed right before listing. Flash forward 90 days and it’s September 2018 and a flood of new inventory has hit the market. Five of the 10 parties who tried to purchase back in June are still needing to buy a house and good news! There are now 10 similar properties available, each priced at $750,000. But the buyers aren’t buying any of them. Why? The 10 homes are being priced based on the comparable sale of $750,000 which sold under completely different market conditions, when buyer competition was fierce. Those 5 buyers see those ten $750,000 homes valued closer to $650,000 (which was the comparable price 90-120 days ago) but sellers are holding on to that new $750,000 price point even though the competitive outlook has drastically changed.
We’ve all heard the headlines, the market is shifting. Across King County, real estate inventory is up by leaps and bounds, average days on market is up and homeowners across price-points are feeling the pressure on price. As brokers, we’re going to need to sharpen our skills in communicating with sellers how to list strategically in this market. Here are my 3 strategies to help your sellers get to “sold”!
Understand Offer Scenarios with Comps
When coming up with a suggested list price, find out the market conditions surrounding the “sold” homes you’re using in your CMA. How many offers? Was there any competition? Days on market? Make sure you communicate these factors to your clients.
Early Seller Tours
One method I frequently use is taking your sellers to similar homes for sale (if they don’t already follow the market) and establish some good benchmarks for pricing and preparation. Then, when the time comes, you are all on the same page with the how the solds stack up to your client’s home.
Bring on the stats!
Time on market equals client stress, emotionally and financially. The stats show that your clients are unlikely to sell their home in a week anymore, so suggesting they go on a quick vacation and coming home to a sold property isn’t realistic. To help nudge them closer to a lower list price, remind them about the stress of keeping their home immaculate for 2-6 months (let alone a few weeks). A visual aid is a great tool. Check out the DOM charts from Trendgraphix and InfoSparks.