Is Now a Good Time To Sell?
Jan Stapleton - 2023 NETAR President
Sellers in today’s complex housing market face a big pricing decision because we are in two separate seller markets.
One is the newcomers moving here to embrace a better quality of life. They are becoming more price sensitive than they were this time last year.
The other is organic pent-up demand that includes local first-time buyers, move-up buyers and those who want to scale back. Higher interest rates and lack of inventory have pushed aside many in this group.
There is ample demand from both groups, but after three years of surging home prices and higher interest rates, almost all buyers are getting pickier and declining sales have given them some additional bargaining power. There’s also a lot of unrealistic optimism and misinformation out there.
That puts extra emphasis on getting the asking price right, and this is one area where misinformation is rampant. Although it is not the most accurate, Zillow price estimates get a lot of public attention. Here’s what to watch out for.
Zillow says its price error rate for homes that are on the market is 2.4 percent. That’s $7,200 on a $300,000 home. If the property is off the market, the error rate is 7.5 percent – $22,500 on that $300,000 property.
There’s also a market size factor. The larger the market, the higher the error rate. So rural metro markets like ours have another factor to consider.
Savvy sellers arm themselves with a competitive market analysis from a local professional Realtor® to get as close as possible to what the evolving market is really like. It’s more accurate because it includes more local data.
And those who are serious about selling their home now shouldn’t get too greedy with the asking price. It’s not the same type of seller’s market it was last year or the year before.
A popular tactic is to list high to add negotiating wiggle room. September’s Home Sale Report illustrates how that’s working.
Twenty-nine percent of the homes that sold last month had their original asking price reduced to attract more buyer attention. Topping that off, 51 percent of sales that closed were discounted again. The average concession was $19,743. It wasn’t this year’s biggest average discount, but it wasn’t the lowest. So far this year, the number of discounted sales has been at or just below half of all sales.
One reason discounts are increasing is close to half of the new homes coming on the market are in the same price range as existing homes in the move-up market. That gives builders the advantage of asking buyers, “do you want a new home, built to higher standards, or do you want a used home?”
The current lack of existing homes on the market puts builders in the driver’s seat until the existing-new home inventory balances itself to traditional standards.
That means sellers should check out the current comps to ensure their property is in step with the recent volatility driven by higher interest rates and flagging inventory. It’s important because sales and prices are hyper-local.
Although it’s tempting to watch what homes are selling for in the region’s hottest markets, that’s not realistic pricing in communities where the market is more modest. Check out the county and community market analytics on NETAR’s website for examples of just how much prices vary by location.
Here’s a brief checklist of how good pricing will affect a property’s marketing:
- Attract more potential buyers.
- Reduces time on the market.
- Maximizes profits that can be lost in negotiations.
- Hedges contract approval by lenders and appraisers.
NETAR is the voice for real estate in Northeast Tennessee. It is the largest trade association in the Northeast Tennessee, Southwest Virginia region, representing over 1,800+ members and 100+ business partners involved in all aspects of the residential and commercial real estate industries. Weekly market reports and information for both consumers and members are available on the NETAR website at https://netar.us