Selling a house: Price aggressively or let it sit for 90 days?

Question

I'm hearing differing opinions from realtors/investors. Nashville's DOM are about 50 right now. Used to be 14. Lots of inventory that buyers are selecting from, hard to get them to choose your house.

Is it better practice to stick to your guns, price at comps, and let it sell in 3 months? Or price aggressively and get it sold right away to take advantage of the initial hype?

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I heard an analogy yesterday from an agent. He said imagine in front of you is a white sheet of paper. On that paper are hundreds of horizontal lines. Some lines start before the paper and end on it. Some start on it, and end on it. Some start on it and end after. The paper is your listing, and the lines are buyers. When you first list the house, all those lines that started to the left of the paper are the motivated buyers, looking for the right house for a while, and ready to move. But after that first 2 or 3 weeks, they either bought yours or didn't. And from then on, all the buyers coming to see the house are new, tire kickers, feeling it out, etc.

So his point was get that thing sold right away. He's a flat rate broker so he gets paid on the front end whether house sells or not, so that helps his advice to not be as biased.

But other realtors tell me you'll get full price or close to it at comps pricing, you just have to wait.

Martin M. · Answer

@Allan Smith

Ask your realtor to show you the data that they used to comp your place to arrive at their suggested list price. This is so important. They should show you a minimum of three other properties similar to yours that they based the comp off of, and the properties should be geographically as close as possible to yours.

Once you're confident that it's been comp'd accurately, if you can hang on for another 2 months I would absolutely list end of February. We're in the dead season right now and even if it's priced well it may not sell and become 'stale' (not because of price but season)

From there, in Feb, if you're not getting a lot of buyer interest, proceed to cut the price. How aggressively you do that,  e.g. when and how much by, is up to you. If it were me after listing in Feb, after a handful of weeks of being on the market with no offers I may start the price cuts.

You want to avoid stale but also get market price for the place. You'll get there. Good luck!

Lynn McGeein · Answer

Seller motivation for selling is a factor in price just like location, condition, current competition, timing, etc.  If it's priced at comps and truly ready to sell, it will usually sell without sacrificing on price within average DOM, especially if you're heading into spring selling season and first few weeks' feedback has been solid (like, Loved it but prefers a workshop or a downstairs laundry).  But if you absolutely must sell quickly for some reason, or it really doesn't compare well with comps, like needs updates or backs to a main road, then pricing aggressively helps get it sold.

Elyse Wiser · Answer

Nashville agent here. I think pricing correctly from the start is very important, so that the property doesn't sit and become stagnant. Most of the time, you will attract more lowball offers the longer you let it sit. Comps can be a little complicated in our current market. You have to take fluctuating interest rates into consideration. What a similar home sold for 3 or 6 months ago may be an inaccurate picture of what you can sell for today. I am also a fan of listing at a higher price but offering a rate buydown incentive. The monthly payment is what buyers really care about, and it's the same net to the seller. Also staging and presentation matters!!!

Crystal Smith · Answer

I'd put your realtor's advice aside for now and review your business plan and the market data together.  How much will it cost you to hold the property longer if you price it at the average of the comps assuming the current days on market data?

Then look at the Days on Market data for the properties that sold below the average market comparables.  If you set your price at that level and assume the days on the market will apply to your property, how much will it cost you to hold the property and will the profit numbers support your business plan?

Use the data to make decisions. Also since the data changes weekly you should review it weekly.

Theresa Harris · Answer

Talk to him and ask what price he'd recommend listing it at now vs in 2 months from now (based on current comps).  The market picks up in the spring, so if the price difference is a lot, and you can cover payments, I'd hold on for a few months.

Allan Smith · Answer

Thanks for the feedback y'all.  Good thoughts.

Adam Oldham · Answer

I would try to price the home at a price that makes sellers excited to purchase your house, oftentimes agents may list the home at a price below what they actually think it will sell for so they get multiple offers and then do a highest and best which usually results in reaching your expected sale price or sometimes more. The worst thing to have is a house on the market for a long period of time because like others have mentioned it does get stigmatized, buyers think maybe something is wrong with it etc. So I always recommend trying to price aggressively so you have multiple offers which equals multiple options for you to pick from and you can get the buyers to bid amongst themselves for the house which is a good problem to have :)

Ben Russell · Answer

I agree with the realtor, if a house doesn't sell in the first week or so, the chance of it sitting is much more likely.  Of course, this is market dependant and probably more true in a smaller market and less so in a large market.

However, the bigger question is what are your monthly holding costs, the market price of the home and the discounted price you were considering selling for.

Comparing all those numbers will give you a better indication of what the right decision is.

Joshua Christensen · Answer

Hey Allen, the broker you quoted is correct.  The longer a house sits it becomes stigmatized by buyers.  Keep this in mind, there is this idea that Realtors just want to get the house sold to make a commission.

let's be clear.  It is in a broker's best interest to sell at a higher price if they are being selfish (you shouldn't be working with self interested brokers anyways).  Additionally, it is a brokers ethical duty to sell for as much as possible because that's best for the seller, their client.

statistically speaking, the first 2-3 weeks are critical.  If you get a ton of showings and no offers, you're close to the right price point, a slight reduction will usually do the trick.  If in those first 2 weeks you're not getting showings, you're priced too high for the market.

Ultimately the seller sets the marketing price.  The buyer determines the sales price based on THEIR perceived value and what they are willing to spend.  Dont be the seller Who keeps "winning" the offer war, you'll be stuck with the house longer and sell for less than those original offers in most cases.  A stigmatism kills value.

Best wishes to you.

Selling a house: Price aggressively or let it sit for 90 days?

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