There are myriad considerations about putting a property on the market this year. But one stands out. It’s the role strategic pricing plays during the first days after a listing goes public. 

During the last half of last year, we saw sales slump under the weight of high mortgage rates and an anemic inventory. The mortgage rate situation is improving. But the inventory situation is still anemic. An uptick in December sales all but absorbed the new listings and stalled six months of a slow inventory buildup. At month’s end, there were a little over two and a half months of homes on the market. We need 4.5 to six months to regain balanced market conditions. 

Inventory and mortgage rates will probably improve as we move into the early part of the prime home buying and selling season. That means there’s a likely hood for a surge in locals returning to the market. 

With that in mind, here’s the dynamic to keep in mind as buyers gain a little more bargaining muscle in an era that has been an uber seller market.  

Last year sellers increased their asking prices almost every month and the number of price reductions rose to close to half of all sales that moved to the closing table. So, buyers – and their agents – watch new listings like hawks for conditions that will get them closer to the sales sweet spot.  

So where is that pricing sweet spot that triggers a fast-track deal? 

There are variables, but typically it’s somewhere between the average listing price and the average sales price of comparable properties that have already sold. “Somewhere” is the key question. Last year the most common discount was $10,000. 

One consideration focuses on research by Eli Beracha at Florida International University and Michael Seiler at the College of William and Mary. They looked at 1,000 buyers and a pool of over 370,000 listings and found the importance of ’rounded-pricing’ listings vs. ‘just-below pricing’ strategies.  

Beracha was quoted by the Journal of Housing Research saying, “Our study suggests that by using the just below pricing strategy, sellers can price their home slightly higher without driving away potential buyers.” Seiler adds, “As a result, they end up selling their house for more.” 

So how does that work?  

Beracha gives this example: Buyers are more attracted to a property priced at $199,000 than one marketed at $200,000. The research suggests pricing that is more attractive to buyers yields a selling price of about 2.5% to 3% higher when compared to the property priced using a rounded-listing strategy. 

This strategy isn’t brand new, nor is it a guarantee. And there’s a rebuttal that says listings based on the rounded-price strategy have lower discounts and a shorter time on the market. 

Obviously, there’s disagreement because the best listing price technique is an age-old debate among real estate professionals. Still, it’s something to consider when the inventory is tight, and buyers are increasingly price conscious. This is especially true of first-time buyers.  

This year should continue as a sellers’ market, but with buyers who are not willing to be as competitive as previous years.  

The last four years saw double-digit annual price increases. Prices are expected to continue increasing, but the price increase rate is an open question. That makes strategic pricing an important consideration.  

Your professional Realtor® can lay out all the data from sales of homes in your neighborhood and community. That’s the starting point. Once you have the latest numbers, it’s a matter of developing a marketing plan that matches your property.