Are we adding gasoline to a real estate market already on fire?
Buyer fatigue is fast becoming a reality and who can blame them? Countless offers written over several days or weeks, often in competition with dozens of people vying for the same property. Multiple failures and a lack of hope. The average sale price of a home skyrocketed in January and increased again in February, but ironically, the average list price of a home went down in that same period.
Sellers, probably guided by their Realtors, are choosing to list far below market value to create feeding frenzies. This is why homes are now selling at an average of 122% of the list price. In this model, the goal is to have as many showings as possible over several days before the Seller chooses to review their options. This may attract dozens of offers, but usually, only the top three or four are competitive, while all the others are not.
Instead of listing well below market value and holding five days of showings, why not list at market value without an “offer presentation” date? First come first serve and the best offer wins. Multiple offers are still possible, but it eliminates the pain for Buyers who would already know the home is above budget.
To be clear, I’m not suggesting for a moment that Sellers obtain less than market value for their property. If a home is worth $500,000 – whether you list for $300,000 or $550,000, it will likely sell for $500,000. I suggest a shift in strategy where Sellers still obtain market value, by listing at market value.
Currently, due to intense and perhaps artificial competition, buyers are playing darts in the dark, hoping something hits the board. Perhaps we should pay far more attention to market value instead of adding gasoline to a real estate market already on fire.