Pricing is a Process
Pricing is a process, not an event. It is imperative for sellers and agents to price properties ahead of the market, rather than trying to catch up in a buyer’s arena top heavy with inventories.
The laws of thermodynamics and entropy suggest that days on the market will stigmatize a property and undermine marketing efforts. Only aggressive pricing will assure a seller gets more money in less time.
Currently, in Maricopa County (Phoenix) there are about 53,000 active listings. This does not include builder inventories and new construction. This represents a ten-month absorption rate. The average sales price vs. list price ratio is 95%, and the average days on the market is 143.
Last week I wrote an offer on a repo priced at 255k. The listing agent called to say she required a multiple offer form because there were nineteen other buyers that also submitted purchase contracts! This savvy lender will net more because they priced the property less. My buyer offered $5,000 over list with a $1,000 escalation clause and no cap.
Recently, I spoke with Randy & Linda. Their listing has been on the market for six months. They priced the property too high because they could, “Always come down”. And, that’s what they have been doing. They failed to counter-offer three buyers with reasonable prices. They helped other agents use this overpriced property in order to justify offers on other listings. They fail to realize that if they lose a dollar when they sell, and negotiate better when they purchase, there is a net gain.
If Mark Twain were alive today, I’m sure he would make a witty remark about how wise many real estate agents are when they net a seller more by pricing the property lower. He might also quip that a seller would see a sold sign faster, if they would listen to the market and their agent more closely.
