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  • Writer's pictureDon Stocker

The New Strategy In Pricing a Home In Sacramento's Hot Real Estate Market

The Sacramento real estate market has been on fire since the first of the year. It was heating up last year but being in the business, it felt like it exploded January 1st. Limited inventory and a very large buying pool have caused prices to soar and homes to get multiple offers in a matter of just a few days.

There is a false narrative out there that you can price a home at any price and you will see multiple offers pouring in and the home will sell for more. Don't be fooled. A good agent will. look at several data points to come up with the correct price to list. This post will identify what those points are and why they are important.

Recently, I had the opportunity to talk to some past buyers about possibly listing their home to sell. They reached out and like I do with any possible listing, I really drilled down on the numbers in their neighborhood to get a very detailed accounting of what was going on. We met and afterwards, knowing the number they needed to get out of the house, I suggested we list at a number below that, a number that would bring the most buyers to the table and because of that, the price would be driven up by multiple offers. I know that in a regular market that would sound counter intuitive, but in today’s market, we really have to know the buying pool and what they are looking for. Dealing with buyers as well, I know that currently their mindset is a house is going to sell for more than it is listed for. That isn’t always the case, but that is the first reaction for anyone looking at homes. Because my past clients were nervous about the information I gave them, they started looking for other agents and found one that agreed to put the home on the market at the price they wanted.

If you live in a Sacramento neighborhood, even if you live in a smaller home, because of the increase in prices, many people have been priced out of the buying pool for your property and know they have to look in other areas. Because of this, it is important that you really look at the threshold that a home of your size has. Say you live in a 3 bed/2 bath home in a nice neighborhood. A good agent will look and see what homes of your size have sold for in the past 3 to 4 months and also look to see what they were listed for. A phenomenon that we are seeing play out here is much like the market that the bay area has been dealing with for years. We are playing a numbers game. In some areas, it is easy to see how high you can price a home to get the most impact. You want as many people to see your home as possible. Like I said earlier, most buyers are programmed automatically to know that in this market, a home is going to sell for more than it is listed for. This has all happened in the span of about 7 months. What we are seeing is that if a home is priced below that threshold, it will sell for well over that threshold. Conversely, we are seeing homes that are priced above that threshold stay on the market longer and selling for less than they were listed for. Don’t be tempted to overprice your home. In the long run, the market is going to dictate where your home lands, but the way you can help control that is to price it where more people are going to see it.

Let me try and explain why this price threshold is so important. When we set up a search for our buyers or when they go onto any of the real estate sites, there is criteria that they put in to help filter and customize their search. One of the criteria is price. Most buyers will set those at big incremental numbers. Examples would be $400k, $450k and so on. When I see a home priced at $479k and that number is the top of pricing for that market, I know their agent has done them a disservice. Because of the incremental searches, only buyers that have searches set at $500k and up are going to see that home. They have eliminated the majority of their buying pool. Even a rare buyer that has their search set at $475k isn’t going to see that home.

It is easier now with the data available to really see what the threshold is. Say you have a 2 bed/1 bath home. We can pull up data to see what homes of that size have been listed for, how many offers they received and what they ended up selling for. All three of these data points are important. Some agents and sellers will look at the data and be tempted to list a home at the price that a like home has recently sold for. As recent as last year, this would have been fine, but Sacramento’s real estate market has changed. That completely ignores the most important data point, what like homes were listed for that garnered multiple offers. Not to sound like a broken record but here is why this strategy no longer works. Remember, buyers automatically assume homes will sell for more than they are listed for. If they see a house listed above their set price, they immediately write it off. Because the market is moving so fast, they really have to focus on homes that are within their range. Many buyers set that price below what they can actually afford. We know this because most offers come in above the asking price even when we have identified the price threshold for that market. I can’t emphasize this enough. Our market has become a market where getting the most eyes on a home will more than likely drive up the demand and the price. Numbers matter and in our market those numbers are buyers. The more buyers who see your home, the more likely you will get multiple offers and maximize your selling price.

Like anything in real estate, this isn’t fool proof, but I’ve seen it work more often than not. We used to scratch our heads wondering how agents in the bay area came up with the listing prices for their homes, but now that our market has become a hotbed of low supply and high demand, it makes more sense.

If you own a home, I’m sure you are getting a lot of mail and other correspondence letting you know who much your home has gone up in value. If you are tempted to sell, please reach out to an agent who will do the work and really come up with a winning strategy for you. There are plenty of agents out there who will throw a home on the market at any price believing that it will sell. I promise, that doesn't always work. Pricing it correctly will help maximize your profit.

If you are reading this and want to know the best listing strategy for your home, please feel free to reach out. I'm always happy to help. You can click on my name below for all of my contact information.

Until next time, stay safe!

Real Estate ReInvented | Sacramento CA


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