Comstock's magazine 0119 - January 2019 - Page 27

Usually people think that sales tell us more than listings about the current market, which seems to make sense be- cause sales are definitive. The price is final. Escrow closed. Buyers and sell- ers had a meeting of the minds. In con- trast, active listings could be priced at any level without ever selling. Listings don’t mean much unless buyers actu- ally end up pulling the trigger. When people say sales are more meaningful, they’re generally correct. But sales are like historical artifacts — they tell us more about the past than the present, showing us what the mar- ket was like 30-60 days ago when these properties got into contract. A home might close escrow today, but it re- ally reflects what prices used to be like when the offer was accepted a month or two ago. So sellers still need to consider current listings. Let me share a scenario to illustrate what I mean. Imagine when the hous- ing market collapsed in 2007. The me- dian price for a home in the Sacramen- to region dropped 18.5 percent in just four months at the end of 2007. Those were dark days and prices were chang- ing so rapidly that sales were quickly out of date by the time they closed. In other words, focusing on the sales during a market like that made it re- ally easy to overprice, since recent sales were simply much higher than any- thing currently getting into contract. Fast forward to today: Values are not plummeting like 2007, but the same principle holds true. We have to give proper respect to listings, specifically the ones getting into contract. After all, the market could be different today than it was just a few months ago, and we’ll see the price difference in the list- ings more than anything. So, with that principle in mind, here are my three big tips for pricing your house in 2019: 1 Don’t forget the listings: At the end of summer and fall last year, we had a dull season where prices really softened, and many sellers struggled with tunnel vision. It’s as if they could only see the highest sales from the spring rather than quite a few listings that were no longer getting offers, indicating the market had changed. When finding listings, ask yourself these two questions: Are buyers biting at price levels for cur- rent listings? Are they getting into contract at higher or lower levels than recent sales? 2 Be objective about your home: It’s not enough to watch the listings in your neighborhood. You’ll want to really be honest about the houses that are similar. To gauge whether something is similar, you can walk through an open house, study pho- tos online or ask your agent’s per- spective. This helps you know your competition, and when listings change their status to “pending” it’s a clue into the sweet spot where buy- ers are willing to make an offer — whether higher or lower than recent sales. 3 Don’t price based on overpriced homes: You see Karen’s house down the street and think, She’s priced at $550,000 and my house is bet- ter, so I’m going to price higher. But if Karen’s house isn’t going into con- tract because it’s priced too high, don't borrow Karen’s mistake in the name of competition by overpricing your own home. Not sure if Karen’s home is overpriced? Once again, you can ask your agent’s perspective. I know it’s different to talk so much about focusing on listings because we’re so used to thinking sales mean every- thing. But if your plan is to avoid the problem of overpricing that plagued our market last year, you can’t afford to ig- nore the listings. n Ryan Lundquist is a certified real estate appraiser at Lundquist Appraisal Com- pany. Read more at sacramentoapprais- On Twitter @SacAppraiser. Sales are like historical artifacts — they tell us more about the past than the present, showing us what the market was like 30-60 days ago when these properties got into contract. Have a real estate question for Ryan? TWEET US AT @COMSTOCKSMAG January 2019 | 27