In Part 1 of Estimating Your Market Value, a 3 part series, we discussed price per square foot and a formula to estimate the current inventory. In Part 2, we’ll discuss a seller’s market, buyer’s market to help you in pricing your current home for sale.
Estimating Your Market Value
If the real estate market in your area has less than 6 months of unsold inventory, it’s considered a seller’s market. What this means is that there’s a greater number of buyers compared to the number of homes listed in the area. The demand is higher than the supply. In a seller’s market, buyers must compete with each other, and sellers usually get multiple offers their on homes. Buyer’s usually submit an offer with the highest price that the market will support. In such a case, its sensible to price just above recent sales.
It’s considered a buyer’s market when there’s more than 8 months of inventory. In this case, the number of listings is larger in comparison to the number of buyers. This can happen when there’s too much construction in the area, employment has declined in the area, or when the interest rates are at high levels. A buyer’s market usually results in lower prices, as seller’s must compete for available buyers. In such a case, prices should be set at the lower end of the range, because time works against you and prices may be lower in 6 months. This can be a difficult decision to make.
How will you know if the price is correct?
Second viewings are a good indicator you have it priced correctly. There may be a few nibbles before a buyer comes forward who is ready to act. Get feedback from showings. However, keep in mind that buyers and agents are often reluctant to say something negative. Look at overall results of all showings for confirmation of the price . If you are getting lukewarm responses, this will require a strategy of price reductions.
If you need help in pricing your home for sale, please get in touch with me. I’d be happy to show your what others are selling their homes for.