The housing market has been on fire. With the exception of the "COVID speed bump" which slowed sales during the initial quarantine in late March of 2020, momentum picked up the pace again in May of 2020 and is just now showing signs of slowing. At the beginning of 2021, the housing inventory was incredibly low and homebuyer demand was extremely high. This opportunity let sellers price homes outrageously high and multiple buyers were competing, hoping to not lose out again. It was common to have showings lined up over a weekend resulting in sellers having to wade through multiple offers, usually looking for the highest sales price. However, inventory has increased, in turn offering buyers more options and ability to be selective without too much competition. A clear indicator is reflected with homes accumulating more days on market and numerous price reductions.
Determining current market value is the first step in developing a pricing strategy. While there are many different online price guides and estimators that provide a good ballpark number, they are not usually very accurate. Consult with a realtor who has a strong knowledge of the market, neighborhoods and buyer trends. Most agents will utilize an average of all of the recent home sales currently listed and pending homes, while also taking into account many different factors.
When pricing a home, it's important to understand the motivation, the "why," and the goals needing to be achieved. Sometimes it's most important that the home sells quickly, or sometimes sellers are willing to wait for the right buyer at the right price. Most sellers are hoping for the highest sale price possible, but pricing a home unrealistically high can deter buyers and create a longer time on market than if the home was priced at market value.
Sales is a numbers game; getting a home in front of as many buyers as possible will get it sold. A home priced slightly under or at market value will draw the most attention, selling quicker. Unless a home is highly exceptional, pricing above market value will result in a longer wait and will most likely need a price drop before selling. Over the past six months buyers have been trained to think homes are selling fast and at over list price, so right now they might overlook overpriced homes and those that have been on the market a long time. Keep in mind that buyers are shopping online first using set criteria, so consider pricing a home at $499,900 instead of the low $500s, for example, to get in front of more buyers.
The market is still strong and the total number of sales have remained consistent, but the uptick in inventory is forcing sellers to become more realistic with their pricing. It's still a great time to sell and anyone who has owned a home for a few years has generated considerable equity—however, homes aren't flying off of the shelves right now and pricing strategy is becoming very important again.