It’s funny how quickly markets change. Just yesterday (as I write this in October of 2023), properties were selling so quickly that buyers were all but waving inspections to get their foot in the door. I am also reminded of the changing landscape of the rental market, though I won’t rub it in with the “I told you so” comments for now. Regardless, and interestingly, prices haven’t budged much. This is mostly a product of supply and demand, but it’s also a different topic.
Speaking of prices, let’s get back to the issue at hand. Many property owners and Sellers haven’t adjusted to the market conditions today. Things are taking more time to sell. There is actually a way to calculate how long something should take to sell, and I have written several past articles relating to absorption. In addition, prices have adjusted. In some sectors of the market the prices have continued to rise, but most have stabilized, if not fallen as a result of affordability issues related to increasing interest rates. If you’re asking the subject question and you haven’t been educated on the average amount of time it takes to sell a property (or realistic valuations), then the answer is probably simple. Ideally, we set expectations before listing a property and take a realistic data based approach to valuation and where to begin marketing in terms of a listing price. The mentality of “we can always come down” can be more damaging to the prospect of selling a property than one might think.
This article, however, is aimed more at those considering not “what should I have done”, but “what should I do now”?
First; I would suggest evaluating absorption to make sure that you don’t have an unreasonable expectation. If the market data suggests that it’s going to take 6 months to sell a property, and you’re asking this question 3 months after listing, patience may be the answer.
Second; let’s take a look at pricing. If you made a decision to list at a higher number with the mentality that you can always reduce the price, it may be time to do just that. This being said, you may need to reduce more than you otherwise would have needed to. I would suggest taking a look at the original valuation, as well as market conditions that may have changed. Are we now outside of peak months? *Yes, I have an article on this as well* Have the interest rates now changed market conditions? The bottom line is that market absorption calculations only work with properties that are listed at actual market values. If you are provided with data that suggests that there is 6 months’ worth of inventory and a suggested listing price of $850,000, yet choose to list the property for $975,000, you can bet you are going to be outside of the absorption window. Additionally, those that provide this data, whether it’s an appraiser or a real estate agent, can’t control the market and they don’t always hit the nail on the head. It’s important to have follow-up discussions and plan your next move ahead of time.
Finally; let’s talk about seasonality. We talked about the seasons and how they can impact marketing time, but the seasons also come with… seasons. If you listed a property in July, and you’re making adjustments in December, it might be time to discuss updating the photography to something that doesn’t scream: “I have been on the market for 7 months!” This is usually most important in reverse, Winter photos should always be updated in the when things green up in the Spring or early Summer months.