What is a market adjustment?
Buyers often ask us what a market adjustment is. They want to know if the market is stable and have price adjustments been made. To understand this, it is necessary to understand market value. The simplest definition of market value means the average price sellers are willing to accept and buyers are willing to pay are equal and trending across related properties. When this is not the case, an adjustment is necessary. In the past 12-24 months, when real estate slowed, buyers were not willing to pay the prices that we saw in 2005/2006, the most recent height of the market. Since then, motivated sellers have had to strategize accordingly. This happens in two ways:
1) Sellers negotiate significantly off the selling price. Even through last winter, we saw offers coming in at 80-85% of the list price (sometimes lower depending on the motivation and need of a seller).
2) Sellers adjust their prices down in hopes of attracting more buyers. This is what we have been experiencing in the past 6-9 months. Offers are now coming in at 85-95% of list price.
What does this mean?
Area sales have increased this winter. Why? In large part it’s due to sellers making the needed price adjustments. Today, we are seeing an average of 5-15% difference between offers and list prices. From a buyer’s perspective, these are still very good values and often still represent a significant reduction of the original list price.
How low can you go?
Most buyers are choosing not to view overpriced properties. Sellers have faced the fact that listing 20% higher than the competition is taking them out of consideration. The majority of sellers, whether they own slopeside or in town, have reduced their list prices to stay competitive with the market. They understand that pricing sensibly entices the largest number of buyers, which greatly increases their chances of selling.
Due to these market adjustments buyers are making more competitive offers. This increases the number of offers that are negotiated, which improves the offer-to-sale conversion rate.
We are in a market that still affords the buyer a great value but there are indicators that the market is shifting into a more balanced market and the time for deals will soon be over.
As a leading agency in the Sunday River/Bethel area we work closely with our buyers to educate them on current sales data. We want their negotiation to be successful- not only in terms of price, but in terms of securing the vacation home of their dreams.