Aug 26, 2021
On today’s episode, Matt and Garrett discuss current marketplace trends in pricing, and address the misinterpretation that sales are slowing down due to a lack of buyers. Our hosts explain that when the marketplace continues to appreciate, at some point this hits a ceiling and sellers push prices to the point that buyers lose interest, creating a bigger overall shift. For a transaction to take place, both buyers and sellers need to agree that a price is reasonable - if buyers don’t feel this is the case, they will make this clear through their offers or lack thereof. This is why buyers are really the only ones who get to determine market value and define the marketplace as a whole.
Matt and Garrett talk about listening to the buyers in this marketplace, and they discuss the pitfalls of sellers both underpricing and overpricing their homes. Our hosts explain why listing at fair market value is your best strategy, and share some important tools that will help generate interest in your properties without putting off the buyer pool. The key is to think beyond price and look at the marketplace from a buyer’s point of view. Garrett encourages listeners that the market is not slowing down. In fact, buyers are still very much out there, but we need to adjust our perspective (and prices) so that our listings appeal to them, and today’s conversation will guide you on how to do exactly that.
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Episode Highlights:
- When a marketplace continues to appreciate, at some point agents start to wonder when this will top out and buyers will lose interest
- This causes an interesting change in dynamic and creates a bigger overall shift
- Buyers are the only ones who are allowed to push the price - if they don’t feel it’s a reasonable amount, they will make that clear through their offers or lack thereof
- Your goal is to get as close to market value as possible
- There is a lot of misinterpretation in the marketplace right now, and Garrett does not agree that it is slowing down
- For a transaction to take place, two parties need to agree that the price is acceptable
- Buyers are the smartest people in the marketplace and it’s their money that will fund the entire transaction - they need to be working with smart agents (as opposed to the belief that new agents should start working with buyers)
- Buyers are going to define the marketplace
- As discussed with Tara Tooley, if you’re running a good buyer process, you can manage your time extremely well working with buyers
- When you put a listing price on a home, that is a marketing tool
- Listing a fair market value is overall the best strategy
- Pitfalls of both underpricing and overpricing - when you start to play this game, buyers back off and that is when properties start to sit
- It’s up to agents to supply the data and help sellers come up with the best listing price that will generate interest without putting off the buyer pool
- Six months ago, pricing higher wasn’t a bad strategy - but you need to keep up with current trends and take that into account when deciding on pricing
- When you gradually push the prices a little bit higher, eventually you start to hit a ceiling
- When you’re listing a home, you need to think beyond price - you want the home to appeal to buyers and position it correctly
- Tim DeLeon created a great pricing tool call Focus 1st to help with this
- This came out of a piece called Absorption Rate Positioning, which allowed you to look at the marketplace through a buyer’s eyes
- Buyers are hyper-educated about a specific chunk of the market, within a certain price range and style of home - this is why they’re the ones who are allowed to set the price of what a property is worth
- Appreciation trends over the past year
- The marketplace is going to speak to you as soon as you put a home on the market, and the faster the pace, the faster you’ll have to adjust
- People think the market is slowing down because of a lack of buyers, but the buyers are definitely out there - we have just misinterpreted the marketplace and need to look at it from a different perspective
- Pricing is the fastest thing you can adjust
- Don’t push the price - let the buyers get there
- They’re the ones who get to determine market value
Quotes:
“We're seeing some interesting things happen out there in the marketplace in terms of pricing.”
“Buyers are the only ones that are allowed to push the price.”
“You're either going to get multiple [offers], or you're going to get one or you're going to get none. And when you start getting none or it's taking longer for offers to come in, that's when you start to say, Okay, we need to listen to the buyers in this marketplace.”
“That is your goal is to get as close to market value as you possibly can.”
“This is where, again, right now we need to step back and take a look and be like, What's happening in our marketplace? Because I'm tired of hearing people say the marketplace is slowing. I don't agree with that.”
“When it comes to price, what's important to see is that to make a transaction happen, two parties need to agree on something. And price is one of those things.”
“Buyer's agents have got to be smart too, because they're working with the smartest people in the marketplace.”
“If you're running a really good buyer process, as we talked with Tara Tooley - you can manage your time extremely well working with buyers.”
“When you put a list price on, it is a marketing tool. That is basically the initial offering of a property. There's a strategy around that… We recommend that if you list a fair market value, it probably overall gives you the best strategy.”
“A lot of people don't even realize they're pushing the price.”
“I think when we are first starting to go into a very fast moving marketplace, I think our - what we think we're pushing the price is less than what the market can handle, where the threshold is, I think once you've been in it for a while, you start going a little bit higher, a little bit higher, a little bit higher. We start pushing it a little bit more...then we start to hit that ceiling.”
“They're sitting there saying the market is slowing down. It's not.”
“As inventory starts to come back a little bit, as more people are considering selling, or as demand slows - whatever it might be in your market, we want to position against all the things that a buyer looking at your home will also look at. And when you start to take that into account, now you can present a price in accordance that would attract buyers.”
“[Buyers] are hyper-educated in a specific price range, specific style of homes, specific area, neighborhoods, whatever that might be. And they know everything that's going on. They know every home that's come on, they know every home that sold in that price range.”
“This is why [buyers] are the ones that get to set the price when it comes to what a property is going to sell for. This is why they're allowed to sit there and say, I'll pay more for that because I can justify it on a much higher level.”
“It's a great tool to go back to, to allow your seller to step out of being the home owner and really look at it from a different perspective.”
“The market is going to speak to us as soon as we put this home on the market. And the faster the marketplace is going, the faster we have to adjust.”
“One of the best things you can do is adjust, and adjust quickly to see if we can get into that zone - because the buyers are there. The buyers are out there.”
“That's why these properties are starting to sit and it's like, No, we've interpreted the marketplace a little bit wrong, is what I'm watching. And we just need to take a look at it from a different angle.”
“Really, price is the fastest thing that we can adjust. Because there's only so many things we can adjust.”
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