Even in a seller’s market, the purchase price must be correct

Within an industry when demand is strong and it’s difficult to figure out what buyers are willing to pay (a principle called Price Elasticity), how do real-estate agents establish the correct price tag for a house?

With most agents, it is a guessing game.  Agents often start out with at a higher value than is borne out by the actual market details and then adjust downward from there.

Supply and Demand have always dictated price, as any economist will tell you. Clearly, if the supply is small, the cost should be raised to generally meet it. Many agents, however, just look at the Comparables to tell you what the market has been paying – in the past, without factoring in market changes.  Your average agent uses this to set a price, then when the market refuses to pay that price within 14 days, they start reducing the price.  Other agents know that.  They can see the downward trend and will wait until the value is under market before bringing in their offer, perhaps 3 months after it could have sold.  The key is pricing right the first time.

Comparables are very valuable to ensure that the market does not overheat or to understand why one property is out of tune with the rest in its neighborhood.  But they are only one factor.

We at Home Expo Gallery know the current market trends and we can make sure that you buy or sell at the right value. We know the impact of a shrinking inventory, or a hanging “shadow” inventory (what’s that?  Call us and ask!  You need to know this…) in your area.  We watch what is happening with listing prices and offer amounts.  We have analysts that compare local trends with national figures to understand what is happening in the overall and local markets.  Give us a call and we will help you answer all your questions.

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