The Market is Finally Becoming Balanced

This time last year the market had almost twice as many homes as it does now. What does that mean for most sellers? Pricing your home correctly is critical to a successful transaction.

It may seem like common sense during any market but with the lack of inventory, many sellers are trying to capture the frantic buyers by inflating their prices but also, some sellers are still being encouraged to underprice their home to create a 'bidding war'.

Both scenarios are detrimental to capitalizing in the current market. The appraisers are still bound by current sales and those prices haven't quite 'caught up' with what the media is telling you are higher prices. To explain further; once a house goes 'under contract' , the mortgage company will order an appraisal to ensure their mortgage is as secure as possible. The house doesn't need to appraise for the mortgage amount, it needs to appraise for the selling price and therein lies the problem. If the property does not appraise, there are a few possibilities that arise.

The seller can then reduce their price to meet the appraised price, the buyer can agree to ' negotiate' somewhere in the discrepancy or the sale can be cancelled. The issue lies with whether the mortgage will be approved based on the appraisal discrepancy and at the risk of going into too many explanations, the mortgage company will almost always deny the loan. Time, money and emotions spent on a house that should never have been priced so high.

On the other hand, there is also the quandary of underpricing. Some agents will flaunt numbers and how quickly 'their' houses sell and how 'they' hold the key to getting your house sold (no pun intended). If a house is priced too low, you can guarantee it will sell quicker than any others but it isn't because the agent had the magic wand. The only 'magic wand' was the agents ability to convince the seller to price their home too low. A disservice to the seller, to the industry and to the market.

Somewhere in all of this is the factual information necessary to price your home well, erring on being slightly high in order to allow room for negotiation. And the key word here is 'slightly'. If in this market you have not received second showings and offers in the first thirty days, your time period for being 'slightly higher' has come to and end and it is time to adjust, accordingly. Price reductions should take place every thirty days so you aren't chasing the market and appearing to the buyers out there that you are unreasonable. Certainly not a position to be in when it comes to receiving an offer.

Speaking of offers.....try never to make the mistake of not offering a counter offer, no matter how low the initial offer is. Agents working with Buyers are required, by regulations, to supply the buyers with a comparative market analysis. This is the same CMA your agent gave you when you wanted to list, but probably more current by this time. This is to ensure that the buyers have all of the facts before they make an offer.

So armed with the facts, and armed with the human spirit of wanting to feel like they have negotiated successfully, any offer is better than no offer at all. As the Broker of the company, I make sure my agents are in a position to counsel their sellers and never allow them to 'refuse' to negotiate an offer the seller feels is too low or 'insulting'. Many times if the seller moves even a small amount on an initial low offer the Buyers are more than willing to stay in the process of meeting at an acceptable price for all concerned and it results in a seamless closing. Good news for all! Nonetheless, the balance is returning to the market and it is a good time for Buyers and Sellers, alike.