All indications are in place that this summer will continue to be a sellers’ market in the Washington region.
Unlike much of the rest of the country, the number of listings on the market in this area continues to drop because of increased sales and fewer new listings. According to data from Bright MLS, there were 7,535 homes for sale in April, down 12.9 percent compared with April 2018. The average percent of the original list price received when a property sold was 99.3 percent, the highest level in April in a decade. And homes in many neighborhoods sold for more than their original asking price.
Just because it’s a sellers’ market, however, doesn’t mean you can price your house sky-high and get an offer. Some homes continue to linger on the market even when inventory is low. Why? Typically, either the house is not in good condition, it isn’t in an appealing location or — most commonly — buyers perceive the house as overpriced.
Pricing appropriately from the start
Studies show that when a house is priced too high compared to other similar homes on the market, buyers won’t consider it or they won’t make an offer. In a fast-paced market like the current market in the Washington region, a house that doesn’t get an offer within the first week or two or within a month becomes stale. Even when sellers lower the price, buyers sometimes feel that there’s something wrong with a house that stays on the market too long and will offer an even lower purchase price. The result: a painfully long period of having your home on the market and a final price below what you might have gained had the property been listed at an appropriate price from the beginning.
Today, buyers and their agents can find out when a price has been reduced and when a house has been put on and off the market.
Another factor to pricing is that buyers typically search within a range. If you price your home above the price at which you’re really willing to sell and what’s probably an appropriate price, you could be missing out on potential buyers. For example, if you price your home at $625,000 but would be willing to sell for $600,000, buyers searching for homes priced from $550,000 to $600,000 won’t see your listing at all.
Why a comparative market analysis matters
Your listing agent will prepare a comparative market analysis (CMA) to help you decide the appropriate price for your home. Typically, your agent will look at recent sales of similar homes, other homes on the market now and homes that didn’t sell and were taken off the market. To choose homes to compare, your agent will find properties that have a similar size and style, were built around the same time and are in similar condition to yours. Things like the number of bedrooms and bathrooms matter, but so do the lot location and whether you have outdoor space.
Your agent can help you understand your home’s value by showing you recent sales of similar homes. More than likely, your home will sell for at least the average price of several recent sales. In addition, your agent can show you the listing prices for a few similar homes that have been sitting on the market too long or were taken off the market. Those homes may have been overpriced, so you can avoid making the same mistake.
Looking at other homes recently listed for sale can also be valuable. Not just online. Your listing agent can get you inside your competition for a real look. Not only does it help you see what others hope to get for their homes, but, if you look at them in person, you can compare the features, finishes and condition of those homes to yours. If you can train your eyes to look like a buyer, you’re likely to have a good feel for what’s an appropriate price.
Jon Coile, chairman of Rockville-based multiple-listing service Bright MLS (formerly MRIS), writes occasional commentary on the Washington-area housing market.
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