3 REASONS WHY SELLERS ARE INCREASING THE PRICE OF THEIR HOMES (C) 2023 Wayne D. Lewis, SR. GRI
INTRODUCTION
We are going to briefly cover activity in the North Texas MLS area. The trend that we will be covering focuses on the seller’s decision to increase the price of their home, and why. We will point out the possible benefits and potential consequences of doing so, especially once the house has been listed. We are so familiar with sellers needing to reduce the price of their homes for one reason or another, but to increase the price, well that begs further discussion.
North Texas Real Estate Information Systems (https://ntrdd.mlsmatrix.com/Matrix/)* provides the source for this discussion. Here is a snapshot of how that looks as of 7/22/23:
Status???????????????????????# of homes?????????????????% ??????????????????AVGDOM
Active ??????????????????????251?????????????????????????????80%???????????????????????????40
Coming Soon???????????? 9???????????????????????????????? 3%??????????????????????????N/A
Active Contingent???? 2?????????????????????????????????1%???????????????????????????47
Active Option
Contract???????????????????? 13???????????????????????????????? 4%?????????????????????????? 35
Canceled??????????????????? 4???????????????????????????????? 1%???????????????????????? ? 57
Pending????????????????????? 27???????????????????????????????? 9%???????????????????????????29
Hold????????????????????????? 6?????????????????????????????????2%???????????????????????????31
BOM???????????????????????? ? 24???????????????????????????????? 8%???????????????????????????78
UP??????????????????????????????216????????????????????????????? 69%???????????????????????????82
All Statuses???????????????312?????????????????????????????100%???????????????????????? 39
This snapshot of 312 homes represents 8% of any price adjustments made of the homes currently on the market in the North Texas area. No doubt, sellers along with their agents, have to weigh the benefits and consequences of increasing the price of their homes. Here are two possible benefits:
·??????Their house receives an increase in offers
·??????The house sells at the newly listed price
There are obvious consequences as well. For example:
·??????The house becomes less relevant among the homebuying public
·??????The house receives offers below the original asking price
Knowing that adjusting the price upwards could have benefits or consequences, what still compels a seller to increase the price of their home on the market? Let’s explore 3 possible reasons that may collectively or individually be behind a price increase.
1.????OFFERS! OFFERS! OFFERS!- ?Homes receiving offers at or above the list price could cause a seller to re-evaluate that the price of the home is priced too low on the market. With that, a seller may be overwhelmed with lots of offers that are above the listed price.?With that, the seller may want to consider requiring that all buyers resubmit their highest and best offer.
2.????Repairs/Renovations-Sometimes sellers may place their home on the market while renovating the property. In order to see what the market will bear, sellers, especially investors, may set a price where they will offer to sell the home as is, as we discussed earlier. If someone wants to complete the renovations that may be in progress. If no one expresses an interest in taking over the renovations, the sellers will complete the renovations and increase the price to reflect the completed work.
3.????Human Error-On several occasions, an inadvertent input may result in a misprint or an underestimation of value. In that case, the agent may need to make the correction, which may suggest a price increase but is actually a correction to an input. Possible examples in this current set of listings could be:
a.????From $ 136.00 to $136,000- Percent increase- 99%
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b.????From $670,00 to $760,000- Percent increase- 13%
c.????From $ 23,900 to $239,000- Percent Increase-99%
d.????From $150,000 to $450,000- Percent Increase 43%
Bonus- Tactical move- Sometimes sellers with the advice and guidance of their real estate agents may intentionally price a property below market value, or even below appraised value. With this knowledge, they can reasonably anticipate getting offers equal to, if not greater than market or appraised value. Subsequently, these homeowners can hope to be a part of the 14% of homeowners who, when they raised the price of their homes, can get an acceptable offer not only above market price or appraised value, but the adjusted increase price as well. Timing is everything.
Conclusion:
The above reasons for increasing the price of a home are not an exhaustive list of possible reasons why a seller may increase the market value of their home. We just opened the door here to this discussion in light of the trend that price increases have become. Today, we see that between the total number of price adjustments of decreasing and increasing price adjustments of 3723 adjustments, 8% consisted of price increases. We know that there could be consequences or benefits depending on factors within or beyond the seller’s control. But the decision must be made with the intent of selling a marketable property. Of all the possible decisions to be made to increase the market value of a home, the decisions cannot be ruled out as an intentional tactic to promote the sale of the property.
It is recommended that we look further at the applicable reasons for the benefits of, and the consequences of reducing the price of a property. In doing so, we analyze how those decisions to decrease the price of a home contrast with increasing the price of a home on the market. What we are hoping to find are tools and incentives that help buyers and sellers to have an extraordinary meeting of the minds in the sale and purchase of their desired property.
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Disclaimer:?The information provided here is deemed to be from reliable sources but is not guaranteed. This is not an intent to solicit the brokers, agents, or clients of other Brokers. The information provided here does not constitute an agent/client relationship. No information provided here constitutes legal advice. Please consult with an attorney if needed.
Wayne Lewis is a Realtor with over 20 years of experience in Real Estate. Opinions expressed here are only of the author, and not the opinions of Canzell Realty, its associates, or leadership. The information provided here is a public service and contains no endorsements.
#realestateonthespectrum copyright 2023 Wayne D. Lewis, SR.
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