Three days into the fall 2022 market, it’s a bit topsy-turvy. The pricing and offer night strategies are all over the place. Some sellers are listing their homes or condos at market value and accepting offers anytime. Other sellers are going old-school and underpricing their homes with an offer date, hoping to spark a bidding war. A third group seems to be intentionally over-pricing their homes and letting them sit on the market, waiting for a buyer to come around and negotiate on the house. Three very different marketing strategies tell us that agents and sellers are all trying to determine if we’re in a buyer’s or seller’s market. For example, listing a house at market value is what you do in a buyer’s market.
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On the other hand, underpricing a home for a bidding war is what you do in a seller’s market. The third option of overpricing likely means a seller is hoping for an intense negotiation in a buyer’s market. These various pricing strategies make it difficult for buyers to gauge the demand. Some houses they can buy at face value, and some they should expect to sell for 40% over the list price. We’ve never had so much variety in pricing strategy in this market, so it’s time for a handy guide. The first step is to work with an excellent real estate agent who can tell you which house is using which strategy. Once you know what you’re dealing with, here’s what you should do:
Homes Listed at Market Value
Exciting! This is the best-case scenario. Your strategy should be to get in there as soon as possible and, if you like the house, offer on it quickly. You want to offer soon because you want to eliminate the possibility of another competing offer. The longer you wait, the higher the chances are that a second or third offer will also materialize. When a house is listed at market value, the best action plan is to offer the list price or slightly below the list price. If you offer an extremely low price, you’ll offend the owner and stall any negotiating before it gets going.
Underpriced Homes With an Offer Date
This is the pricing strategy that veteran house hunters and owners are most familiar with. It is a risky strategy at this moment because interest rates are rising, and consumer confidence is lower than it has been in many years. If you want to offer on a house in a bidding war, it is more important than ever to know your financials. Don’t go over your pre-approval threshold; thoroughly examine the home’s value with your real estate agent. It can be easy to get carried away and offer more than you thought in a bidding war situation. When the values were steadily rising, this was not an issue. However, house values are still declining, so you want to be careful about your offer price.
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You love an overpriced home and want to make an offer. What do you do? This is more nuanced because everything comes down to what the seller expects. Some sellers will overprice their home and hope that buyers will bring low offers so they can negotiate. Other sellers are stubborn and won’t accept less than their list price. Your best option is to determine what the house is worth and make an offer close to that amount with take-it-or-leave-it attitude.
Most importantly, don’t let the confusing list-price strategies deter you from offering on any place that you like. Find an agent who feels comfortable negotiating offers and start booking a lot of showings. This Fall market will be busy, and buyers will do well, regardless of price games.
The Kim Kehoe Team