How To Avoid The Biggest Mistake In Real Estate

Anybody who has ever found themselves trying to sell a home invariably struggles with the question "What price should I set on my home?" While normally this is an important decision for a homeowner to make, today it is one of the most critical decisions that must be made in order to sell a home.

Pricing A Home To Sell Picture

The Tallahassee real estate market appears to be similar to most real estate markets around the country. There is a gross excess of inventory of homes and buyer activity continues to drop. This means that the effective home inventories are rising (months of supply of homes).

Supply And Demand Dictate Home Values

We must never forget that real estate is a commodity and as such, reacts in the real estate market just as any other commodity behaves in its own market. When supply outraces demand, values fall. When demand exceeds supply, prices rise. We call the former a buyers' market, and the latter a sellers' market. In real estate, we typically see a balanced market when supply is 5-7 months. Anything less than that is a sellers' market, and of course greater is a buyers' market.

Supply And Demand Of Homes In the Tallahassee Real Estate Market

As we can see from the graph above, we are definitely in a buyers' market, with over 18 months of supply of homes. I'm hoping the last move on the graph is indicating a flattening of the market, but it is way too early to know for sure.

Avoid The Biggest Mistake That Home Sellers Make

The biggest mistake I see from people who want to sell a home comes in both good and bad markets. They price their home too high (because they do not want to "leave anything on the table"). While this appears to make sense, it actually works against them as studies have found that the "freshest" homes on the market sell for a higher dollar.

The following graphic shows that in an upwards moving market, a home that is priced too high will eventually sell when the market "catches up" with the value the seller has put on the home. In the graph below, the blue line represents the value of a home over time. The picture of a house on the chart shows the "asking" price of the home in two different scenarios (A = the market was rising, B = the market is falling). Note point "A" on the graphic, where the home owner prices the home above the market and finally sells the home when the market price catches up to the asking price.

Do Not Chase the market in real estate

Looking at scenario "B" in the graphic above, we can see that the home owner started with an asking price that was "above the market." After a period of time, the home owner lowered the asking price. Again, no sale occured so the home owner has since again lowered the asking price. Now, the home is priced lower than the market was at the beginning of the listing period, but unfortunately, the price is still above the current market.

Chasing The Market Is The Biggest Mistake A Home Owner Can Make

We refer to the actions of the home owner in scenario "B" as "chasing the market." Price reductions that keep occurring above the market do not usually result in a sale. The house never shows favorably  because the competition (homes priced the same way that are SELLING) are bigger and nicer.

When A Seller chases the market on the way up, he will eventually catch it. But on the way down, this is not true. What is truly tragic for the homeowner in scenario "B" is that the home is now priced below what it would have sold for at the start of the marketing period.

How To Price A Home To Sell

This is a tough real estate market and roughly 1 in 3 homes that are offered for sale are going to sell over the next 12 months! If you do not need to sell your home, help everybody out (including yourself) and take your home off of the market. But if you do need to sell, work with a real estate company that understands your local real estate market. This is critical. Pricing your home at the key point, plus marketing it in the key distribution channels will allow you to be part of the 1 in 3 happy home owners that actually sell their home.


*Joe Manausa Real Estate is a brokerage company headquartered in Tallahassee, Florida. Its unique business model provides specialists to both home sellers and home buyers, and the results speak for themselves. JMRE has significantly more 5-star reviews on google than any other local competitor. Joe Manausa Real Estate is a leader in internet marketing and utilizes search engine optimization, email marketing, social media and data analytics to get their clients’ home sold faster and for more money than any other Tallahassee brokerage firm. For more information, visit www.manausa.com or call us at (850) 366-8917.

View Joe Manausa's profile on LinkedIn

Please Do Us A Small Favor

We work very hard to produce daily content for our long-time readers and first-time visitors. We provide this information for free, hoping to earn your respect and trust and the right to one-day help you when selling or buying a home. Can we get your help spreading the word about our blog?

If you like the content, would you please like it or share it using the Facebook button at the beginning of the post? This simple action will be greatly appreciated! THANK YOU!

Please Like Us And Share On Facebook - Help us grow our brand!

Also like us on Facebook at https://www.facebook.com/joemanausarealestate/

Joe Wrote The Book On How To Sell A Home Today

Joe Manausa wrote the book on how to sell a home in the digital age, you can find it here“Location, location, location’ is no longer a competitive advantage. Digital marketing and going direct to consumer have made all geographical boundaries obsolete. The Business of Getting Business is a must-read modern-day survival guide for any local business to get to the next decade. Local businesses are on death ground.

They can either take a stand and re-invent themselves by embracing the digital frontier and have a chance to survive the overwhelming odds of digital direct-to-consumer capabilities that have erased all local and national business distinctions, or they can choose business as usual and accept certain death.

The Business of Getting Business is the critical survival guide for those that choose to dig in and fight.”
   – Anthony Noto, CEO, SoFi and former COO, Twitter

Get the book that explains it all, in a manner that is understanding to all, even technology neophytes. It's available on Amazon, a trusted source for consumers.

Real Estate Agent reveals in Tallahassee, Florida

Think all REALTORS are alike?

Read what people are saying about working with Joe Manausa Real Estate! You can see thousands of real customer reviews reported on Google, Facebook and Zillow at this link: CLICK HERE FOR REAL ESTATE AGENT REVIEWS.

Discussion

#1 By Joe Manausa at 7/11/2017 3:48 AM

Thanks Julie. Once the right price is set, the marketing plan is the next critical element. Thanks for the feedback!

Post a Comment

(850) 366-8917