Across the United States, housing markets handle pricing a home in a variety of ways. Many of my Realtor friends in California put a home on the market at or below market price.
The goal is to make the price so attractive that buyers are drawn to that home quickly. As excitement builds, the Realtor will announce that offers on the home will be accepted until a certain date and then highest and best will be selected.
One of the reasons this type of pricing works is because time is not the sellers friend. The longer a home stays on the market the lower the sales price will be. If your home sells in the first 30 days you have a fantastic chance of selling close to the market price.
Buyers know they will likely be competing for this home. In fact, the negotiating has already begun before the offers are reviewed as buyers jockey for the best position.
Ideally, the seller will have several offers to choose from. The price along with the terms are considered by the seller. Once the seller has chosen an offer the negotiating begins. It is not uncommon for prices of homes above $500,000 to increase $50,000, $100,000 or $300,000 depending on the desirability of the property and the competition among the buyers.
This style is uncommon in the Atlanta market but it may be seen occasionally with foreclosures. One local sale that comes to mind is a foreclosure that was priced at about half the market price. So many offers came in that the agent posted a note on the multiple listing service, “Please, no more offers!”
So what does this mean to the local market? A home priced at or slightly below the average market price will sell faster and for more money.
You have a home with a market value determined to be $300,000. In a normal market I’ve seen the seller price their home at $350,000 with a desire of selling at $325,000. In a market that is declining or with minimal growth this home would be hidden from the likely buyer. How can this be?
Buyers in today’s market have shopped the Internet and have been pre-approved for a particular price range. With plenty of inventory the buyer elects to see homes up to $300,000. The agent will search up to $300,000.
The seller’s $300,000 home is listed with homes that have a market value of $325,000 or $350,000. The seller cannot compete with these homes and win.
Sellers might think that it’s not a problem. They can just lower their price if they don’t get a buyer at the higher price. Unfortunately a home receives the most activity when it is first listed. Homes purchased in this period sell faster and for more money.
In Metro Atlanta in first quarter of 2011, 70 percent of homes required a price reduction before receiving an offer. In the second quarter of 2012 that fell to 55 percent. This is a reflection of sellers coming to terms with today’s values.
See the Chartmaster Charts to see where your home might stack up against the average. Remember these figures are for Metro Atlanta so the actual percentages may vary for Peachtree Corners.