How do realtors price a home in a falling market that is favouring buyers and when very few homes are selling? This is very challenging as a real estate agent. It is already challenging to accurately price a single family home because single family homes are very unique.
Realtors price homes using what is called a Comparative Market Analysis or CMA. A CMA works well when lots of homes are selling and when homes are selling quickly because as agents we have lots of homes to look at and lots of homes to compare the home we are putting on the market to. This has been the market in the Vancouver Westside Single Family market for the past few years, but recently the market has changed and is now strongly favouring buyers. In fact only 5% of homes priced over $3.5M are selling in the Vancouver Westside single family market.
So how do we find the market value for a home when only 5% of them are selling? We have very few homes to compare to at this point. The best approach at this point is to look at what choices buyer’s have. i.e. look at your competition. If a home down the street listed on the market at $3.5m is sitting on the market for months then you know your home is probably not worth $3.5m. If someone can buy a home similar to your home but with a $500k renovation for $3.5M then you know your home should be worth less than $3M. You get the point. In a falling market favouring buyer’s look closely at your competition and try to get under the market. In other words price lower than you would in a stable market. The idea is to catch the market as it falls.
I hope that this has given you some insight into pricing in a falling buyers market.