Establishing the right price to list a property in the current market is challenging. Data has declined due to lower sales volume and prices have come down in most market segments. Typically we analyze comparable sales activity over the last six months, however this is no longer an accurate reflection of the market. Properties that closed six months ago reflect the market over nine months ago when they went into contract and that was a different world. I recently studied a particular market segment that I had analyzed only three months prior and I was astonished at my recent findings. Prices were down in the segment between 4 and 10% since April! There is not a lot of data but the numbers are showing a significant drop. The most accurate pricing indicators are properties going into contract right now. The ability to get that information is key to understanding where the market is in any particular segment.
Part of the problem is there are not a lot of properties going into contract. It is important to look at where properties are priced right now and anticipating where the market might be two to three months down the line. The most successful sales have been properties that have dropped significantly (5 – 10%) in one fell swoop. These price reductions tend to attract attention depending on how high you started. If you started where properties were six months ago and you drop 5% than you should be in a much better place.
Sellers have to be bold on pricing and willing to come down lower than they may have wanted. If a seller is not prepared to do that right now than their property may sit and stale listings do not do well in any market. My advice to sellers right now is to think carefully about pricing and how much you need to sell in this market. The market may turn but it is very difficult to predict when so it all depends on your timeline.