Pricing is Crucial
Buyers now have the upper hand when negotiating in today’s market, which means sellers must painstakingly arrive at the asking price to be successful.
To find success, sellers need to price their home according to its Fair Market Value based upon its location, condition, upgrades, amenities, age, décor, and overall appeal.
For nearly two years sellers got away with arbitrarily pricing a home where nearly everything sold instantly, with multiple offers, and closed sales prices way above their asking price. It was an auction-like atmosphere. There were throngs of buyers that viewed nearly everything that hit the market. Homes were listed FOR-SALE and, in some cases, buyers were only allowed to see a home during a three-hour window on a Saturday, and then all offers had to be submitted by the following Tuesday at 5 PM. After sifting through 10, 20, 30, or more offers, only one lucky buyer won. All the other buyers had to go back to the drawing board.
Pricing a home was so random, that many homeowners wanted even more than the price suggested by the real estate professional, leaving the professional scratching their head in disbelief that it would ever to sell. Often, after placing the home on the market, they were still able to procure multiple offers and ultimately sale above the asking price. The housing market was out of control and values surged higher. Not only did the record low mortgage rate accelerate demand, but the inventory also plunged throughout the pandemic. The mismatch between supply and demand paved the way to a historic rise in home values.
Those days are gone. The Federal Reserve has slammed on the brakes and done everything in their power to “reset” the housing market, one of the main economic drivers of the economy. As a result, mortgage rates have skyrocketed from 3.25% at the start of the year to 7.12% today, according to Mortgage News Daily, more than doubling, another historic rise. Affordability has taken an overwhelming hit and demand is now down by 43% compared to last year. With muted demand, the active inventory has ballooned and is up by 79% year-over-year. Consequently, the Expected Market Time, the amount of time from hammering in the FOR-SALE sign to opening escrow, has grown from a record low of 19-days in mid-March, an insane pace, to 77 days today. The Expected Market Time had eased from 72 days in July to 61 days to start September due to rates receding during the month of August, but that has all changed since.
Excerpt taken from an article by Steven Thomas.