Pricing a home is always a unique challenge for real estate agents, but it can be especially daunting in a low-turnover market. The current real estate turnover rate, or the rate at which homes change hands, is at its lowest rate in 30 years, according to a Redfin analysis.
One of the main reasons is that many people are unwilling to give up their relatively low mortgage interest rates, locked in during or before the COVID-19 pandemic. Another is that home prices have soared, making buying a new home out of reach for many people. Because of this low turnover, real estate agents will need new ways to analyze the market, highlight a home’s unique features, and market their listings.
Here are 11 tips for pricing homes in this unprecedented market situation.
Analyze local comps
In a low-turnover market, agents have no alternative but to price their clients’ homes based on limited inventory and cautious buyers. So, when researching local comps, take a more detailed approach than you would during an active market. For example, try to find the closest true comparable home, even if comps are older than usual. In addition to researching older listings, look at current active listings to understand the outlines of the overall market. The goal is to maximize value for clients without over-pricing the home, as this could cause the listing to sit for weeks or months.
Price homes competitively
After analyzing historical and local comps, consider what a competitive pricing strategy might look like. Many real estate agents don’t realize that even a slight price reduction can make their client’s home more attractive to buyers. Recent research found that roughly a fifth of buyers said they’d have to lower their home-buying budget if interest rates are 6% or more.
Consider pricing psychology
Many buyers use search filters when researching homes in their budget. For example, potential buyers might search for homes up to $400,000. For that reason, pricing a home at $399,000 instead of $401,000 can help attract a wider range of buyers. Additionally, pricing psychology shows that people typically read from left to right. So seeing a lower starting number, like $399,000 instead of $400,000, makes a house seem like it costs far less. This is also referred to as charm pricing.
Invest in professional staging and photography
In hot markets, homes sell even if buyers don’t put away clutter. However, during slow markets, taking the time to update a home, clean it professionally, stage it, and photograph it well can make a difference. According to research from the National Association of Realtors, 83% of buyers said staging helped them see themselves living in the home. That, coupled with professional photographs of the home, can help your listing stand out.
Many real estate agents have a social media presence, but to stand out in a low-turnover market, consider more advanced strategies. For example, real estate agents can consider social media advertising, local influencer advertising and more. Regularly posting on social media and partnering with well-known social media personalities from the area can help real estate agents get more visibility on listings.
Showcase hard-to-find features
In a slower market, showing off what makes your client’s house stand out is even more important, especially if you choose a higher list price. There are many houses with beautiful kitchens and updated bathrooms. However, if something stands out, make sure to feature it. For example, does the home have stained glass windows, proximity to a park or elementary school, an extra parking space, or a full kitchenette in the basement? Take the time to carefully think about the home and what you can showcase to set it apart from everything else on the market.
Create unique marketing events
Sometimes, successfully pricing and selling a home in a challenging market means getting creative with marketing. For example, you could host a champagne preview for agents, inviting other local real estate agents to view the home. Another event idea is to host a neighborhood-focused open house, inviting those living nearby to view the home early in case they have friends or family who might be interested. There’s also a twilight open house option, which is especially effective if the home has a unique outdoor space. Hang twinkle lights, showcase the landscaping and welcome people to show the house at a different time of day.
Invest in a virtual tour
Though virtual tours have become more common, not all real estate agents use them. However, being able to show potential buyers what it’s like to walk around the home ahead of a showing is helpful. Not only that, but if potential buyers book a showing after viewing a virtual tour, it’s a good sign that they’re interested in the home.
Keep showing opportunities open
In a fast-moving market, real estate agents may have to manage boundaries around showings, such as not accepting last-minute appointments. However, in a low-turnover market, every bit of interest is important. Schedule showings for many different times during the day, on weekends and even late at night if necessary. Allow last-minute showings, and be ready to accommodate potential buyers. Listen to feedback on pricing, and share it with your clients if necessary.
Prepare sellers to be flexible
When speaking with sellers about listing their houses on the market, having clear communication about pricing is important. Letting them know that they might need to be open to flexible pricing strategies and unique marketing ideas can help them prepare to sell in a more challenging market. Ultimately, managing sellers’ expectations in advance can help ensure the selling process goes smoothly.
Grow your professional network
Most real estate agents know the value of a strong network, but during a low-turnover market, growing your professional circle becomes even more important. Attending open houses, taking the time to show an interest in other agents, mentoring new agents, and supporting colleagues can all go a long way in expanding your network. The more agents you know, the greater likelihood you’ll hear about trends, buyer needs, and even unique opportunities, like pocket listings. Knowing more agents can also help you price homes appropriately because you can ask for feedback on your strategies.
Luke Babich is CEO of Clever Real Estate.
This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.
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