Comparable Market Analysis (CMA) can tell you what buyers recently paid for homes similar to yours, but that’s not all you need to know to choose the right listing price. You need to know the market’s appetite for your home, and that can only come from an overview of your community’s current market conditions.
Market conditions are like a weather report; it helps you predict what the current crop of buyers will do. Using this knowledge, you can price your home to sell quickly, and for the most money possible.
Why is a quick sale important? The right price generates a bumper crop of buyers. If you price your home too high compared to other similar homes, you’ll appear to be testing the market. Buyers will assume that you’re going to be too difficult in negotiations.
Here’s what you need to know – what kind of a market are you in? Market conditions are formed by buyer attitudes, made sunny or cloudy by jobs, incomes, mortgage interest rates, and overall consumer confidence.
It’s possible that your community could have buyer’s and seller’s markets simultaneously. For example, your neighborhood may be hot, while the subdivision a mile away is stone cold.
A seller’s market is characterized by confident buyers, short “days on market” and low inventory levels of less than six months on hand. This usually results in rising prices.
A buyer’s market is characterized by longer “days on market,” and high inventory levels of seven months’ supply or more. To get buyers to come in from out of the storm, sellers must offer incentives such as seller-paid closing costs or lower prices.
The market conditions will tell you the long and short-term trends. If the market is heating up, you can ask a little more for your home. If the market is cooling, you may need to price your home slightly under the market in order to attract more buyers.
One thing you absolutely should never do is ignore market conditions. It’s said the market is always right. If you price your home too high, you’ll know when you get few to no showings.
That’s why it’s important to ask your real estate agent for occasional market updates as well as a fresh CMA. You’ll get a better idea of what your home will sell for and how long it will take to sell.