Friday, September 11, 2020

Pricing is a critical element in the mid level price range

Pricing is a thing in this market. The sub $450,000 market is pretty hot right now and it is hard to miss the mark. But as you move into that middle range between $450k and $700k pricing is very important. Now, to be clear, pricing is important in all price ranges, but the market is hot enough right now at the entry point that a seller can get away with a price too low or too high. The starter market will gobble up a deal with multiple offers over asking if it is priced too low and over priced homes will see slightly under asking offers. But the middle range can be a bit dangerous. Price it too low and it will sell but multiple offers may not happen, and that means the seller is leaving money behind. Over price it and it will sit. Many buyer's are reluctant to offer substantially under asking even when the KNOW the house is too high. 

Getting the price just right is a very big deal right now in that middle range $450-$700k. Buyers should not be afraid to offer less if the home is overpriced. Low-balling is not a thing right now and buyers should be aware that sellers are often emotional enough to not even counter you should your offer be insulting. That said, a seller should counter any low ball offer because generally, a person that takes the time to write the offer has enough interest to potentially come to terms that are mutually acceptable. All parties in a real estate deal should try to stay logical about the price and terms, buyers should save the emotion for choosing part of the equation. Once a choice is made switch to logical thinking. 

That can be difficult, but I have had clients wish they had been logical in the negotiating phase after losing a house they later wished they had bought. Another issue is the time on market. This is often misunderstood by buyers and even agents sometimes. When a property has been on the market a long time there are a variety of reasons why, sometimes the house was overpriced for few months and the seller just lowered the price recently to place it more in line with the market. Some buyers may think they can low-ball the seller here, but they may find a solid wall. Often another buyer steps in and snipes the property from them while they wasted their time offering too low. 

There are 2.6 million people in the Portland-Vancouver metro area and some 7000 agents working it. The MLS is interconnected with the world wide web and few deals go undiscovered. If a price looks too good to be true, it probably isn't true :) Buyer's looking for a "deal" should look at fixers. They should be prepared to put 10% or preferably 20% down. This market has not been too cozy to fixers and that means potential value opportunities. Also homes that need enough work to be ineligible for FHA or VA financing are less competitive because at least half the buyers are using government backed loan products. Thinning the competition is a good way to get ahead. Of course buyers that are not predisposed to make repairs may find the local market prices for such work to be very expensive and thus that "deal" may turn out to be not such a great value after all.

Sellers and buyers can both do well in the current market climate. Buyers should be less concerned about price and buy the house that will make them happiest. Loan rates are super low right now and getting the house you want will pay off in the future as the mortgage rate is locked in at historic lows. Every month you get your "deal" when you make that payment. 

No comments:

Post a Comment