HOW TO PRICE YOUR DC HOME THIS MAY

The DC Real Estate Market Is Changing. That Means Sellers Should, Too.

You’re ready to move on, and you want to sell your Washington DC home quickly… at the highest possible price. But what is that number? Recent data shows that quite a few sellers are having trouble figuring that out.

• Last week, home showings in Washington DC dropped week-over-week, but improved from the same week last year.
• The number of new contracts inched up week-over-week, but down year-over-year, and homes took longer to sell.
• Median list price was down significantly year-over-year–and by nearly $50,000. week-over-week.
• Fewer active listings reduced their price than the week and year prior.

The result of increasing list prices in a declining market is price reductions, which had increased in prior weeks. Sellers now seem to be realizing that overpriced homes have been taking repeated price reductions (called “chasing the market”) and accumulating days on market.

Let’s look at the ramifications of listing too high:

What Happens When You Overprice On-Market

A changing economy and changing real estate market necessitates a reset of consumer expectations. Buyers have already adopted this attitude by adding contingencies to offers that would have been rejected outright just three years ago, by searching for turnkey properties priced at market value, and factoring in buyer broker compensation.

But some sellers are turning a blind eye to market conditions and changes in real estate practices, still insisting on floating aspirational prices on MLS. Here’s why that hurts a listing’s chances:

• The listing is excluded from buyer feeds set with lower price limits because it exceeds their search criteria. That means you’re losing a significant number of potential buyers at the start–they’ll never see your listing
• Buyers searching in that price point will see value comparisons on third party sites like Zillow and Redfin, noting that their estimates are lower than your aspirational price. They may delay viewing the property–either to watch for a price reduction, or until Days On Market are sufficient that they’re comfortable negotiating
• Days On Market accumulate. DOM is a listing’s worst enemy. The longer a home stays Active on MLS, the more skeptical buyers become that it is a worthy property. “What’s wrong with it?” is the common question to agents. You’re stigmatizing your own property!
• A price reduction–or multiple price reductions–becomes a necessity. Data shows that properties that “chase the market” often sell at a lower price than would have been achieved had the property been priced correctly from the start.

Similarly, sellers expecting a multiple offer scenario should remember that the buyer pool is not what it was in 2022. Inventory has ballooned, and economic conditions are less than encouraging.

Pricing artificially low, as many Washington DC home sellers and their agents have done the past decade, could also backfire. While the property might recieve more than one offer, chances are that fair market value will remain an upper limit, and contingencies will still be part of the equation. Worst case scenario, offers will come in below list, landing seller and agent in a sticky situation.

Getting It Right Means Shorter Sales Cycle And Higher Net

Here’s How I Evaluate A New Listing

1. View the property, making notes of drawbacks, attributes, unique features, and factors like condition, alterations and neighboring properties.

2. Run a Comparative Market Analysis on like properties within the microneighborhood that have sold within the prior 90 days, ideally. Adjustments are made for dwelling and lot size, attributes, condition, parking, etc.

3. Apply recent data and market trends to the analysis and make additional adjustments

4. Determine the property’s target buyer and likelihood of selling within 60 days

5. Create a presentation and marketing plan that addresses the property’s strengths and weaknesses, selling season and seller goals, geared toward the determined target buyer.

6. A strategy evolves. A listing price range is determined.

Test, Don’t Guess

Now–do we push the property to the MLS with our determined price, execute our strategy with optimism and hope for the best?  No! I don’t guess when it comes to one of your most valuable assets.

This is the time to check our work. We can do that by listing off-market using Compass’ Three Phase Marketing strategy. It allows us to evaluate valuable feedback, gauge interest based on price, and generate buzz while we make tweaks to anything that needs adjustment. During this time, we can install staging and create marketing assets. All the while, we can allow showings for out-of-town buyers or those pressed to make a buying decision. If there’s strong interest or offer activity, we can choose to negotiate or skip ahead to MLS listing. Flexibility is the beauty of the plan!

What Is The Compass Three Phase Marketing Strategy?

The Compass’ Three Phase Marketing strategy grew out of our use of Compass Private Exclusives and Compass Coming Soon, and adaptation to new industry rules. It’s a plan that allows sellers to take a practice run before listing on MLS and watching Days On Market tick up.

Compass is the #1 real estate brokerage in the nation and a leader in real estate technology.

Disclaimer: This post is offered for informational purposes only and should not be construed as financial or legal advice, design or construction advice. Home buyers and sellers must always perform their won due diligence and seek counsel from licensed professionals such as CPAs and attorneys when making choices relating to a real estate transaction. We do not endorse individual service providers and citations should not be considered endorsements.