The housing market, like many other aspects of our economy, is changing. After years of sellers being in the driver’s seat and homes selling faster than they had in decades past, the market is taking a breather.
The inventory of homes for sale, for instance, climbed more than 25% from April to May, according to the National Association of Realtors.
Home seller price reductions increased by 74% during this period as well.
What is causing this?
Interest rates, primarily. In fact, the rise in rates has “… already caused the housing market to slow down,” Jacob Channel, senior economist at Lending Tree told the New York Post.
He goes on to conclude that “Fewer people are getting mortgages, homes are sitting on the market for longer and some sellers are cutting prices.”
Does this mean that if you list your home now it might not sell? Absolutely not.
How will home sellers know if it’s time for a price reduction?
Keep an eye on the number of homebuyers who tour your home. According to a national real estate survey, home tours fell 9% at the end of May. Because of this, one in five sellers dropped their price.
If you don’t receive an offer within two weeks of listing, you may want to consider a price reduction. This is because, according to the aforementioned national real estate firm’s studies, your odds of receiving a full-price offer after two weeks on the market drop by 50% and continue to drop with each week that passes.
When a real estate market is adjusting, it may do so rapidly. If nearby homes similar to yours are priced lower it may be a sign that the market is changing and you should consider reducing your home’s price. At least if you hope to remain competitive.
Keep these strategies in mind
Remember that a home’s value isn’t based on what you, the homeowner, think it should be. It’s not based on what the tax assessor says it’s worth.
It is worth what a buyer is willing to pay for it. We know how much they’ll pay by looking at recent sales of homes comparable to yours. Anything else (such as the price of homes currently for sale) is fantasy.
Be fast and be realistic. If buyers aren’t visiting your home and hardly anyone shows up at your open houses, you may want to seriously consider dropping the price. But, do it quickly.
Homes that sit on the market too long makes homebuyers and their agents suspicious. They will also wonder why it’s priced higher than similar homes.
Once you’ve made up your mind to act quickly to drop the price, you’ll need to be realistic with the new price. Many small reductions over time give the impression of a bargain-basement-type home and make you, the seller, appear desperate.
The idea is to ensure that there won’t be additional price reductions in the future. We’re happy to help you come up with a new, more competitive price.