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NEWSFLASH: There Is NO Inventory!!!

I was in a conversation with one of the most productive agents in our area recently and he told me that there were “no homes for him to sell”. I thought he had a brain cramp. Look at all the ‘For Sale’ signs, all the homes on MLS, all the short sales and foreclosures plus all the shadow inventory on its way. Had this respected agent lost his mind?

As he saw the puzzled expression on my face (which was his intent), he began to explain that every home that is priced correctly is being gobbled up by buyers right away. The only homes that remain on the market for more than 30 days are the ones where the price doesn’t COMPEL a buyer (even multiple buyers) to make an offer.

I pondered his assertion for a while and his premise began to make more and more sense because I am witnessing:

  1. Increased attendance at Open Houses. Buyers are coming out to look because they know now is the time to buy(great interest rates with higher rates around the bend, huge inventory available, etc.)
  2. Realistic sellers (in terms of asking price) are getting significantly more traffic. This results in an increase in interested buyers; more interested buyers push prices higher. By adjusting prices, many sellers are getting higher offers. By remaining overpriced (and hoping to negotiate down), other sellers are seeing no traffic and no offers.

Why are there record numbers of homes on the market when the properly priced homes are being gobbled up (some at even higher than the listing price)? Because there is a huge difference between a home ‘being on the market’ and a home that is seriously ‘for sale’. Sellers who are serious about selling are aggressive with pricing because that is how you gain the highest price. A little counter-intuitive maybe; but, it’s very true.

Pricing is the centerpiece of your real estate agents marketing plan (although not the only component). The marketing plan should be designed to drive as many qualified buyers to see your home because THAT is the single most important factor in getting the most money – the number of people bidding. My advice is to give yourself the best chance for highest bids by pricing the home at a compelling number.


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8 replies
  1. Danny @ Tampa Real Estate
    Danny @ Tampa Real Estate says:

    I agree totally. Here in Tampa I noticed many homes sitting on the market because they are way overpriced. It mine as well not even be on the market. Strategically pricing is the main factor in getting your home sold. Here you see many bank owned homes under price homes and then have bidding wars with multiple offers.

    Reply
  2. Joe Vita
    Joe Vita says:

    The secret is to price property ahead of the market.
    If local stats indicate that market values are still heading downward & the comparables you used to value it were sales from 6 months to 12 months in the past, adjust your CMA market value down. That way its current price will reflect its future value in the near future. Stay ahead of the market and it will sell.

    Reply
  3. AngelatheREALTOR
    AngelatheREALTOR says:

    I strongly agree with the author. As a REALTOR(r) who works with both buyers and sellers, I understand the motivation of both parties. My duty as a seller’s agent is to sell my client’s home for the most money in the shortest amount of time. With a volatile market that continues to decline every 30-45 days, the longer your home is on the market, typically the lower the sales price. Pricing your home competitively and pricing it to sell quickly is a must if you want to get the best price. And when I am working as a buyer’s agent, I don’t show them a homes that are overpriced. When I agree to work for them and represent them I explain that there are 8,500 properties listed for sale in our MLS, less than 500 sell each month, so I am not going to waste my clients home showing them a home that they most likely won’t be able to convince the seller they are overpriced. My buyer clients agree looking at homes that are overpriced is a waste of their time. On the rare occasion my buyer clients wish to see a For Sale by Owner or an overpriced home, we rarely can make the deal work, because the seller’s justification on price is based on what they paid for their home or what they owe bank for it. And my buyer’s lender doesn’t care what the seller paid for it or what the seller currently owes, they only care if the home will appraise in today’s market in order to issue a loan.

    Reply
  4. Stephanie
    Stephanie says:

    I hadn’t really thought about it, but that’s excellent advice. Sellers need to think of ways to get ahead of the market and increase appeal for buyers. This is almost what you see on ebay, with sellers pricing their items way below the competition. Potential buyers see the low price and start bidding. Then, in an effort to win, they keep upping their bid.

    Reply
  5. Glen Hagen
    Glen Hagen says:

    What a great post…

    I thought that since this IS a byer’s market, the buyer was to walk away with the better of the deal. Most all buyers understand that, but relatively few sellers. And a better deal is below and not above, appraised value. Most asking prices are significantly above current appraised value. Perhaps that’s why less than 3 in 10 homes listed in Suffolk County, get sold!

    My dad had a saying, “Don’t confuse me with facts, my mind is made up! Perhaps that’s why many sellers still don’t price their properties so they may sell!

    Reply

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