Pricing strategy in today's market requires data, local insight, and a clear conversation with sellers about realistic expectations and current demand.
Pricing strategy is one of the most important conversations that we should have right now. The market is shifting, and with the end of summer approaching, many properties are being reduced in price. Whether this is due to seasonal patterns or broader changes in the market, it’s likely a combination of both. Here’s everything you need to know:
The importance of realistic pricing. It is essential that you know how to speak with sellers about realistic pricing. Many sellers compare their expectations to what they saw between 2021 and 2023, when some homes sold for hundreds of thousands of dollars over asking. Others took their homes off the market during that period, believing they would reenter at a later time with similar expectations. While those goals are understandable, it is important that you help sellers understand that the conditions during those years were not typical.
That period was driven by an artificial market. A combination of unusually low interest rates and high demand created a temporary spike in pricing. Buyers stretched far beyond their normal budgets, leading to bidding wars and long lines just to view a property. Today, that urgency has declined, and we are seeing a very different landscape. Homes are staying on the market longer, and sellers need to adjust their expectations accordingly.
In most parts of the country, a balanced market means about five to six months of inventory. Anything over six months is generally considered a buyer’s market. In some locations, such as areas with faster turnover, even three and a half to four months of inventory can indicate a buyer’s market. This varies by region and price point, so understanding the local market is critical.
Everything is local. Some areas with higher inventory are experiencing longer days on market and more frequent price reductions. At the same time, lower-priced properties in certain areas may still be receiving multiple offers. The key is understanding that all markets are local. Conditions can differ block by block, especially when comparing price ranges.
When evaluating offers, appraisers look at recent comparable sales within the last three to six months. Even if a seller receives a high offer, that offer may not match the appraised value. A proper comparative market analysis helps clarify this. It’s useful to show sellers a chart of past sales and point out that the peak from 2021 to 2023 was not sustainable. That top portion of the curve should be removed from the current expectations.
Interest rates are not expected to return to historically low levels anytime soon. While prices may gradually rise over time, many areas currently have more inventory than usual. This makes it important for pricing to reflect current market conditions. Sellers should approach pricing from a buyer’s perspective, since buyers compare all available homes in a neighborhood. If a similar property is listed at a lower price, that home is more likely to attract interest.
Ovepricing red flag. A lack of showings is often the first sign that a listing is overpriced. Sellers should be advised to watch for these indicators and be ready to adjust. In some cases, if selling does not make financial sense, renting the property might be an option. If the rental income can cover expenses and the owner is comfortable holding the property for a few years, that could be a temporary solution. If not, a price reevaluation is necessary.
The current market requires clear communication and accurate data. Having regular conversations with sellers, providing local market updates, and setting realistic expectations are essential to your client’s success. If you have questions or need guidance, just reach out. You can call me at 657-4033 or send an email to linda@lindawelshrealty.com. I look forward to hearing from you!
