Mindset required for a recovering market

This week our listings saw 1.4 showings each on average.   The real estate market continues its sluggish pace while the stock market in general saw a fair size drop over the past several days.

I have received a number of comments about my blog last week.   It is interesting that while the media continues to report Charlotte as being one of the most resilient markets, our data is showing a significantly slowing trend.   Its true that we are much better off than other markets, but it is merely the first time buyer market keeping us afloat.   There aren’t too many other places in the US where you can buy a nice 1500 square foot, three bed, two bath home for under $150,000.   And here in Charlotte, they are selling well.

Over the past few weeks I have met with a number of new sellers to get them listed on the market.   As we sit together looking at comparable sales to determine a competitive listing price, I have been noticing a very consistent pattern among the homes that are selling:   No one is getting their pricing right the first time!

Looking through the price history for the homes that are selling, I have found consistently that most sellers experience several rounds of price reductions before their home actually finds a contract.   In many cases in the $300K to $500K range, sellers are having to drop their prices incrementally over time to total reductions of $100K or more.

We are in a very confusing market.   One year ago our market was still booming.   So if you consider comparable sales within the last twelve months, you could easily be comparing your home to the ‘good’ market instead of today’s slowed market.   This is why its important to consider only sales since 10/1/08 (which is roughly when our sales began to reflect the downturn).   Additionally, many sellers are still somewhat in a state of denial about the degree of change we’ve experienced in the last 8 months.

During this market correction, what seems to be working is a proactive approach of pricing the home at what seems competive based on past sales, but then making incremental price adjustments every 30 to 60 days to improve showing traffic and possibility of offers.   I can attest with certainty that this method works without fail.

One things is for sure, the passive approach of sitting still in hopes that the market will improve is a failing technique.   As I said in last week’s blog, the only options for sellers that need to move right now are: be proactive and aggressive with your pricing or rent out  your home to cover your mortgage.   For those sellers that don’t  need  to move and can’t sell for a price they can live with, then wait this thing out for a year or two until things show clear signs of improvement.

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