Recent market conditions show home prices rising and inventory shrinking. When the market changes it becomes more difficult to determine how much a buyer is willing to pay for a property. It also presents a challenge for real estate agents to ascertain the right asking price for a house.
Generally, the asking price is obtained by considering comparable houses in the home’s neighborhood. Price is then adjusted based on the amenities on the property. For example if the home has been updated such as a remodeled kitchen then the price would be adjusted upwards.
Of course, supply and demand affects asking price. If the supply is low as it is in today’s market, obviously, the asking price will have to be adjusted upward to meet it.
When demand becomes so strong, agents may inflate asking prices and buyers will pay it because they fear the price will be higher next week. Foreign investors also help to inflate prices.
Actually, determining the value of property is not an exact science. So, when property appreciation and inflation spike, it creates market conditions that make it even harder for real estate agents to establish proper pricing.
In a normal market, an agent should be able to utilize the comparable sales and come up with something similar to an appraisal with all the pricing adjustments.
But now, many agents are looking at comparables and the competition and tacking a higher price on the home than the comparables dictate. Then they tell the seller that they’ll look at the price again after two weeks of marketing and re-evaluate it.
If there are no second showings or offers after two weeks, the asking price is probably too high.
If you’re thinking about buying or listing your home for sale, contact Teresa Williams of Prospera Realty and Property Management at 813-434-0290 or visit https://www.prosperarealty.com. Teresa is a seasoned professional with unrivaled real estate knowledge in the South Tampa market.