���Pricing: The Most Difficult Thing to do in Real Estate?

May 2025

What Sellers Want – What Agents Want

• Sellers always have an idea what they want to sell their house for.
• They may – or may not – be well-informed and objective. If they aren’t, that’s perfectly understandable and it’s our job to listen to their objectives, educate them about the market and help them arrive at a list price.

What Sellers Want – What Agents Want

• Are their goals and ours really that different?
• “Combat pricing” and how to avoid it
• Sellers may think we want to underprice for a quick sale, and we need to show them how their interests and ours are the same.
• “It’s in my best interest to get you the highest price:
• I want _______________________
• I want _______________________
• I want the same thing as you do

Price For The Market You’re In

• We want to maximize return without driving away buyers – we’re pricing for traffic
• Traffic is generated by the value proposition – the most traffic (hopefully) generates the best offer
• The myth of the “right buyer”
• “I’ll just wait for the right buyer to come along”
• That really means someone who wants what the seller has, doesn’t want what the seller doesn’t have and wants to pay the sellers what they want for it.

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Traffic vs. Time on the Market

• A tale of two listings
• Two homes listed by the same agent in the same neighborhood with very different results

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Traffic vs. Time on the Market

• Property #1 sold in 6 months – 2 price reductions totaling 8.5% and offer was 2% below list price
• Property #2 sold in 6 days 1% above list price

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Trying a Price and the “Great Abyss”

• Trying a price that is not in line with the market means losing people.
• “Time kills”
• The trick is finding the balance point – and that’s why it’s hard
• Even in a hot market, not everything sells

“Velocity”

• How does traffic reflect in results?

Our Job . . .

• Our job is to generate a stream of qualified and interested buyers to your house, either online or in person . . .
• to make sure when they come through the door, they are happy with what they see . . .
• to make it really easy for the other agent to write an offer . . .
• and then to help you negotiate the offer when it comes in and oversee your requirements under the contract.

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Pricing: Active, Pendings and Solds

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• Actives
• These homes haven’t attracted a buyer? So what good are they?
• Actives – particularly those that have been on the market for a while, indicate what the market is rejecting
• They are a snapshot of the competition
• They are of more value is a hot market for pricing guidance
• In other market conditions, they are best used as a guide of what not to do

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Pricing: Active, Pendings and Solds

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• Pendings
• You won’t know what they sold for, but there is other important information
• What kind of list price was required to get an offer?
• What happened after price adjustments
• What was their “sell by” date?
• Starts to give some insight into “Buyer Bias” – what are the similarities in what has gone under contract?

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Pricing: Active, Pendings and Solds

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• Solds
• Lots of information – and not just the sold price
• “Shelf Life” – not just average days on market, but how long were the properties on the market with original price and/or after a price adjustment?
• Sales Price to Original List Price
• Subsidy – amount, frequency, reason
• And not just averages, but distribution
• Remember that solds are a snapshot of market conditions 1-2 months ago

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BUYERS LOOK AT AND KNOW WHAT IS SELLING

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Absorption Rates

• What are absorption rates?
• How do they relate to pricing?
• Where do I find them?

MyMcEnearney.com

Statistics

Absorption Rates

Year

Month

Area

• Timing: Usually published by the 6^th of the month

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Absorption Rates

Calculating the absorption rate:

• Number of contracts / (Number of Active Listings + Number of contracts)

Example:

• There are 25 properties currently on the market
• There have been 7 properties go under contract in the last month
• The absorption rate is 7/(25+7) = 21.9%
• This simply means that the market is “absorbing” 21.9% of the inventory per month
• Put another way, a seller has roughly one chance in five of selling their home in a given month

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Absorption Rates

Absorption Rates

Price Matters

We started doing research on “Price Matters” about two years ago to help give you and sellers insight into the impact of the right – and wrong – pricing strategy. Here’s an example for the Fairfax County & City for April 2025

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Thank You!

Price may not be the problem – but it’s usually the solution!

• True confession: I have shamelessly borrowed from the wisdom of Michael Briggs
• https://vimeopro.com/mcenearney/university/video/52647379– password is MCEdifference