Shifting Market Empowers Home buyers
[Originally written by Chad Taylor for the Shawnee Mission Post August 30, 2019]
That’s right potential home buyers. It appears that your time is just around the corner, and by “your time” I mean that we are shifting out of the seller’s market and into a market where you will have more leverage.
The power shift has been a long time coming considering that we have been in a strong seller’s market since the first quarter of 2013. For the longest time, buyers have been competing for the same houses, paying over list price, and in many cases, accepting a home as-is versus being in a position to ask for repairs.
Well those days are gone, with the exception of some competitive price ranges.
So now that the market is shifting, how will home sellers be affected?
Pricing: Median home prices in several areas of town are already down when compared to the same month last year. Therefore, home sellers must be focused on the most recent sold properties (last 90 days) when arriving at a fair list price. Depending on the location, if may make even more sense to focus on the active competition and any current homes under contract that have not closed yet. Actives and pendings are the most accurate representation of value in a shifting market. The long and the short of it is that today’s market requires that you price more competitively.
Condition: It is a price war AND a beauty contest now that the market is shifting. This means that potential home sellers must condition their homes for sale, and not simply throw a sign in the yard. Staging is a must and upgrades to the condition may be required simply to compete with other homes and may not add value. As the housing inventory grows and buyers have more options, they will expect more updates for the price. Or they will expect that the price is much more competitive if a home is not updated or brings with it deferred maintenance projects.
Price adjustments: In a shifting market, fair market value is a moving target that can be hard to follow. Even the best Realtors know that pricing is a challenge in a shifting market and if the market does not accept the price in pretty short order, a price adjustment is required. Price adjustments should be made strategically based on showing numbers and not based on the number of days on market. Statistically for every 10 showings received, a seller should receive an offer if the home is priced in-line with condition and priced fairly. Once you have passed the 10 showing threshold, it is time to consider a price adjustment. In our experience, if a home requires a price adjustment, it typically requires a 3-5% price drop to re-position the home at a price that will introduce it to a new buyer audience who did not see the home at it prior price.
To me, the most important message for a seller in a shifting market is this- patience. You may have heard from your friends and neighbors that homes have been flying off the shelves and at crazy prices, but you must know that in most areas of town, that was the market of yesterday. And the market of today requires patience and understanding. It also requires very clear data about the current market conditions and competition. “Clear is kind” says Brene Brown, and that is exactly how we are with our clients. We provide them with the most up to date market information so they know exactly how they stack up to the market.