Market Insights: Pricing ‘in the flow’
Editor’s Note: This is the second in a three-part series concerning pricing property.
Last Saturday, I introduced you to ‘the pond’ illustration that accompanies this article.
In that article, I encouraged you to reconsider the thought that owning real estate is difficult because it can take a long time to sell. Clients say to me, “I know that my stocks are a liquid asset because I can sell them right away.” No dispute about it – you can liquidate stocks much faster than real estate. What I disagree with, is the idea that in the current market, it can take ages to sell a property.
Residential real estate in Summit County should be sold within three months of being placed on the market. Three months, NOT three years. Why? Overall, the market is unstable. Let me clarify that statement. Since late 2008, until just a few months ago, prices have been declining. Recently prices have stabilized at the levels we last saw in 2005/06. What is around the corner? Nobody knows. Prices could drop, stay stable or maybe even increase.
What I am certain about are the price levels today. Hence, the incredible importance of pricing your property accurately. Last week I said that, in essence, there is no point, whatsoever, to have a property in the ‘stagnant mass.’ Grocery stores don’t leave loaves of bread on the shelf until they are stale and past their ‘use by’ date. Think of your property the same way. Your ‘use by’ date is three months from today.
A property that is priced ‘in the show’, the middle level of our pond, is a property that, with lots and lots of luck, just might be sold by that ‘use by’ date. These properties are priced at a level that generates showings, but the asking price scares buyers away from making an offer. I have heard it hundreds of times, when buyers say to me, “We like this property, but the seller will never accept $xxx,000.” As a result, they don’t make an offer. And this is where luck comes in. On very rare occasions (I have seen it happen once or twice in the past five years), a buyer loves a property so much they will pay over the current market value for the property.
Today buyers are extremely astute. They have the tools at their disposal to determine what they are willing to pay for a property and they use these tools. Buyers want to negotiate with sellers who they feel have priced their property appropriate to the market.
If you have a property on the market and you have had more than a dozen showings and no offers, you are ‘in the show.’ Talk to your real estate professional right away about what is needed to be priced ‘in the flow.’
Daniel Webster Johnson is a broker associate at Resort Brokers Real Estate. He can be reached at (970) 393-3300 or at daniel@YourMountainBroker.com.
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