Real estate pricing has become a minefield…
particularly for homebuyers and homesellers in volatile markets such as California, Nevada, Arizona and other former hot spots. As real estate markets shift, the old comparable sales model for offers and pricing may no longer be quite so valid–and could in fact be dangerous.
If sellers overprice their properties–based on prior sales that may have occurred some months ago–they run the risk of having their homes go unsold. On the other hand, if buyers use the same CMA tools to arrive at pricing and an offer, they run the risk of overpaying.
What I am beginning to see is more verbal interaction between agents. We are verbally sharing information about properties and sales before that data ever hits the tax records. This is information we can use to help guide our clients through these dangerous times. One who needs to sell a property cannot afford to deal with faulty dated information or an uninformed agent. To do so could result in a home that doesn’t sell and languishes on the market for months. Using the same outdated information, buyers run similar risks of potentially overpaying for a property–or not knowing if a home is fairly priced in today’s market.
Several thoughts:
1. Real estate agents need to be consultative in their approach with clients, and closely in touch with one another. As real estate professionals, we need to share with each other what is happening in area markets, in local markets. in neighborhood markets. This is information our clients need.
2. Online valuation tools are perhaps even less valid than they were six months ago. Zillow does a good job in reporting history via public records, but more current information is demanded. Old information can be deadly–but that is all they have to report.
3. I am finding buyers more ready to purchase if they trust their Realtor is digging out the information that is truly needed to craft an offer. More agents are calling each other about pending sales, seeking pricing guidance for both buyers and sellers. This is good and serves our clients well.
Real Estate 2.0 may be all about online interactivity between clients, agents, lenders, stagers and other real estate service providers, but some old school tools come in handy as well. Key among those are gossip and whispers. If a seller in a neighborhood is capitulating in pricing, that is important information for both buying and selling clients. Tax records are useless in this circumstance, and so are the online valuation tools that use them.
It is difficult for all when real estate markets go about their periodic shifts. These are the times when knowledge, experience and sure footing are required of the real estate professional. And by the time the valuation software tools catch onto what is happening, the markets may be quietly shifting again.
We are already seeing signs of this in our San Diego real estate market. It is happening elsewhere as well.
What a great post. It’s so true that when everything is in flux that trying to hit a pricing target is a true art form. Everything is a big pile of numbers and stats lobbed at you, and it’s all only so much guess work after that.
Athol: Hitting the real estate pricing target, as you say, takes an experienced real estate professional. It is a volatile market and real-time market data is essential. Unfortunately for those relying on Zillow and the likes for property valuations, the justifiying data is yesterday’s news.