In general, there is no "best time" because it varies from community to community. In Newport Beach, the average home has 2.3 residents, so it is not impacted by the seasonal events of school. For the luxury market, it does receive a "bump" in the summer when people from other countries come to look at property.
One of the best factors in answering this question is measuring supply vs. demand. In Q4, 2020,
The best time to price a property correctly is at the beginning of the listing period. Within the first three weeks, is when there is the most buyer activity and interest in a property.
Some people focus on a timeframe within which to adjust a price, however, the best practice is to consider how much activity has occurred with, or without an offer being made. If there have been 20 or more showings and there is no offer, the property is overpriced. It could take one weekend, or five weeks, in either case, if there is no offer, then reduce the price.
Supply and demand. Carefully analyze how many comparable homes are on the market, and how many have sold or gone under contract within the past 30 days. Understanding the demand for your property is key to adjusting the price accordingly.
Most sellers believe they are obligated to accept a full price offer, but they are not. This is critical to understanding that it is impossible to underprice a property. In a vibrant market, such as the real estate market, a property that is underpriced will attract multiple offers and find equilibrium when it hits fair market value. An experienced agent can adeptly use the counter offer process to buoy the best offers to the highest market value.
An overpriced property becomes stagnant past about four weeks (depending on price point), and the market will begin to doubt the value of the property and wonder if there is an issue with the condition or location. When this happens, with almost certainty the property will eventually sell for less than fair market value. Only with competitive offers can you demonstrate that the property's maximum value was achieved.
Historically, the first price adjustment ranges from 4% - 8% lower. On a $1,500,000 property that can be significant at $60,000 to $120,000 off the original list price. But, that is what it takes to reenergize the market and get its attention.
It boils down to exposure. When you analyze the online engagement, the number of showings and inquiries, and you feel that you are achieving sufficient exposure but not generating offers, then it is time to adjust the price again.
Price adjustments should be viewed as another key feature of a property. And, the price should be set at a level that attracts offers, not necessarily at a level where you think the property will eventually sell. Additionally, the manner in which the price is adjusted makes a big difference. If you want to reduce the price of a $1.0 million property to $950,000, it is sometimes best to stick to a strategy that signals to the market that the price will be adjusted until an offer is submitted. So, it may be best to reduce the price by $5,000 every other day over 20 days, versus making a $50,000 adjustment on day one.
TriVista Real Estate Steven Lockhart Newport Beach
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