What’s Up with Denver’s Real Estate Market?
Not so very long ago, it was unmistakably a seller’s market in the Denver metro area. We had lots of people who wanted to buy but not nearly as many who wanted to sell. Not surprisingly, prices headed up. But, as the saying goes, “Change is the only constant in life.” Over the last month, we’ve seen multiple signs that we’re moving toward a buyer’s market. More homes are coming on the market and prices are starting to drift downward. This is partially a seasonal phenomenon and not completely unexpected. Nonetheless, it presents challenges for sellers.
Competitive Pricing is Your Best Tool to Attract Buyers
The days of 20 offers in the first 24 hours may be gone for the moment. Not to worry! There are still lots of buyers out there. If you want them looking at YOUR home first, my advice is to use competitive pricing as a tool.
Competitive Pricing Example
Let’s say you think your home is worth $450,000. You look at Zillow’s estimate and see it’s pegged at $465,000. Meanwhile, comparable sales would argue for a value closer to $445,000. Where should you price it? In such a case, I would advise you to list at $445,000 or slightly lower.
Take a deep breath, don’t panic, and hear me out. I recommend this strategy because the “buyer parade” comes out in full force the first week your home is on the market. Here’s how it typically plays out.
Imagine YOU are a buyer:
- Every day — sometimes multiple times a day — you’re looking at the new homes coming on the market. (If I’m your buyer’s agent, you as the buyer would receive instantaneous notice of homes that match your criteria.)
- Once that perfect home pops up, you get excited. You look at the pictures over and over again. You may even send links to your family and friends.
- Then you contact your Realtor for a showing, and you go out to see it.
- It looks as good in person as it does online, and you fall a little more in love with it.
- Then (hooray!) you find that it’s priced well – or even slightly below what you’d expect.
Here’s what that in-love buyer is thinking when s/he sees your better-than-expected listing price:
“I’d better grab this gem before someone else does.
I need to submit an offer NOW!”
Competitive Pricing Results Speak for Themselves
The “buyer parade” is triggered when your home goes on the market. And as you can see in the illustration above, 60% of buyers will look at a home priced on par with comparable sales. But 75% of buyers will look at a home listed for 10% below market.
Once the buyer parade leaves town, it’s hard to get them back without throwing additional incentives (like a price reduction) into the mix. I just had two examples of this in the last few weeks:
- One seller decided to go with my pricing recommendation. We ended up with four offers in 48 hours! One offer was over asking price…and was EXACTLY the price the seller wanted originally. That puts the seller in a really good position in the event this offer falls through, because we know that we have three other buyers who really want the house.
- The other seller decided to list above my pricing recommendation. The home sat on the market for weeks with little interest from buyers. Eventually, the seller ended up with an offer that was $20,000 LESS than what they were originally hoping to get.
Competitive Pricing in This Phase of the Market Cycle
The biggest factor in pricing your home to sell is knowing not just where the market is, but also where it’s heading and why. Right now we are dipping slightly towards a buyer’s market because of an uptick in homes for sale, driven by sellers who want to be in their next home before the school year starts. Pricing wisely — using a competitive pricing strategy — is your best approach.
If you are looking to sell your home, I’d love to help you. Give me a call at 303-204-6494.