Pricing Your Home in a Down Market - Getting Ahead of the Curve

Published by julia | Filed under Buyer / Seller Tips, Miscellaneous, Real Estate, Shout Outs, Uncategorized

The concept of pricing ahead of the market relies on the notion that the market moves in a direction, up or down.

Here, sellers need to price their homes for less than – as best it can be determined at a given moment – what their property is worth. They need to be ahead of the market. Why? Because in this situation, buyers are worried about paying too much. If the market is declining, they don’t want to pay what a property is “worth” today, because they expect it will be worth less tomorrow.

Suppose you want to sell your stock in the ABC Corporation, which closed at $100 today, and the market is dropping. If you put in a sell order at $100 (what it is worth right now) and not a penny less, your stock won’t be purchased if it keeps dropping to, say, $95. But if it closes at $95, and you put in a “sell” at $95, you may go unsold the next day as it continues to drop. You may “chase” the market, but if it is truly in decline, you won’t get a sale until you offer to sell it “ahead” of the market (which could simply be an order to sell at market price).

There are importantly different consequences to failing to get ahead of the market depending on whether the market is going up or down. In an up market, if you don’t price ahead of the market, then you might not get as much as you could have. This may cause a bit of wailing and gnashing of teeth, but it hardly calls for sympathy. (Never regret making a profit.)

On the other hand, if you fail to get ahead of the market when the market is in decline, the consequence is not that you simply receive a lower price; the consequence is that you don’t get a sale at all.

Sellers are understandably fearful in a declining market that, if they did get ahead of the market (i.e. downward) they would then just receive offers even lower than their asking price. But this is where negotiations come in. The first order of business is always to have someone to negotiate with.

As we approach the spring season of 2009, sellers and in many parts of the country sellers need to take a hard look at the realities of the market place and the trends of the general economy. If they perceive the market to be heading downward, they had better get out ahead of it.