"I received your marketing piece earlier this week," came the friendly email, and it says "'transparently priced' on one of your houses.' (Yes, it did.)
"That doesn't mean anything," the man continued, "instead it should say 'correctly' priced." (Say, aren't there better things to do with your time, like cleaning out the garage . . . ?)
I get this gentleman's well-intended meaning and I appreciate that he took the time to write, but wordsmith or not, his conclusion isn't exactly right and here's why . . . .
For the last decade plus, it's been a Sellers' Market, meaning that demand has far outpaced supply, and therefore, Agents could typically expect multiple offers on nearly every property we represented, AS LONG AS we had priced appropriately, the property was dressed to the nines, and there were no fatal flaws. In fact, we usually - and strategically - priced listings 10-15% under market expectations, only to be thoroughly delighted once the offers came in two weeks later and the house sold 25-40% OVER the asking price! Agents looked like magicians and Sellers, by and large, were thrilled. It was a win-win.
Buyers, on the other hand, had a much tougher time understanding the "market value" of properties and if I'm being totally honest, were often legitimately frustrated by this pricing strategy, feeling that it was disingenuous at best, and almost criminal, at worst. (Criminal? No. Disingenuous? That's debatable.) If it appeared like "value" was a moving target, it's because it was. Each subsequent sale seemed to set a new bar, making it tough to guess where the sales price might land on the next go round, OR on the property down the street, OR on the house next door; each week brought a new high.
Consequently, when asked by propspective Buyers, "Where do you think this house will go?" even an experienced Realtor's answer tended to be, "I don't know. What are you willing to pay for it?"
Sure, we could give you context, market graphs, nearby comps, and our best guess, but when push came to shove, if eight other parties were writing on a property, chances were it was selling WELL beyond the asking price and nobody knew exactly how far (including the Realtor), AND if "the gift" happened to appear, so much the better. ("The gift" is the offer that's head and shoulders above all others at the table.)
Cut to: Coronavirus and Covid-19, mounting fear, NO Brokers' Tours, NO public Opens, SIP, Cal OSHA rules and regulations, C.A.R. mandates and suggestions, County of Alameda mandatory ordinances, new disclosures, revised disclosures, revisions of revised disclosures (land on one already), masks, gloves, hand sanitizer, Clorox wipes and unfriendly warnings posted at the entrance to every home leading one to believe that the only safe way to view a house involves a HASMAT suit or some other crazy get-up.
Given the uncertainties and a world gone upside down, it's frankly more than a bit surprising that homes are selling AT ALL, let alone with more than one offer, but they are - at least here in the Bay Area. Still, given the hoops we have to jump through just to show a property, you can begin to see that the multiple-offer scenario is much tougher to rely upon and is likely to become scarcer still.
Not that we aren't still receiving multiple offers on many of our listings, but that they are becoming further and fewer between, simply because, like the buffalo, we've all but eliminated "the herd." (NOT the U.S. government's finest moment, if you ask me.) Without other Buyers to confirm your feelings about a MAJOR purchase, it's much harder psychologically to step up and buy, especially in the midst of a pandemic. Without the crowds, without validation, without competition, "the bird in the hand" is often our one and only offer. (Thank you, we're glad you showed up.)
So with this new, starker reality in mind, many Agents are now pricing homes "transparently," meaning it's a price the Sellers are willing to accept if offered that sum today.
And the reason we're NOT pricing them "correctly," as my studious reader suggested, is that such language might be interpreted to mean that up until now, we've been pricing properties "incorrectly," and that's just not true, even with respect to "strategically-priced" homes where below-market prices were purposely set to bait Buyers and reel them in.
With both Buyers and Sellers in mind, in a Sellers' Marketplace, that strategy was absolutely "correct" to secure the highest and best price (which is the Realtor's mandate in ANY marketplace). In a Buyers' Marketplace (should we get there), we may see houses purposely priced ABOVE market values, with the expectation that offers will come in below the ask. (It could happen; it's standard practice almost everywhere else.)
Either way, the simple truth is this: the value of a property is determined by what a qualified Buyer will pay for that home at any given point in time.
So it follows that for me to price a property, "correctly," I'd have to know - BEFORE I priced it - what the market will bear, and between you and me, I don't possess that particular power (nor does anyone else). At the risk of parsing language, we're in the business of selling homes; therefore, getting it right means a great deal to me, and "transparent pricing" means exactly that; it's the naked truth. No, Sarah and I may not always price "correctly", but when it comes to your homes, when it comes to business, when it comes to integrity, I hope we're getting it right.
"PotAto, potato, tomAto, tomato, let's call the whole thing off." Whatever you want to call it, we're here to help you transparently achieve your goals.
How can we help you?
Julie Gardner, has been writing The Perspective for 17 years and has published more than 650 essays. She is also a frequent contributor to the Sound Off column in the Real Estate section of The San Francisco Chronicle.