For at least five years, until last summer, home sellers had a firm upper hand in metro Denver, but the power dynamic is shifting. One sign of that — more sellers are having to accept offers below their original price.
“If you aren’t getting offers in the first two weeks, time to make a price adjustment,” said Jill Schafer, chairwoman of the market trends committee at the Denver Metro Association of Realtors and a local agent.
A lot more sellers, six in 10 last month, found themselves doing just that to get their homes sold.
DMAR’s counts show that only 17.3 percent of the homes sold in January went for above the initial list price, while 60 percent went under it. Contrast that with January from 2015 to 2018, when 27 percent to 30 percent of homes in metro Denver sold for above list price. Around half went for under the list price.
Zillow, a popular online site for listings, also tracks that measure. For 2018, it estimates that 35.4 percent of homes sold in metro Denver went for above the list price, not too far off the 36.1 percent averaged across 2017.
But the seller advantage has deteriorated rapidly. Zillow reports that only 23 percent of homes sold in metro Denver in November went for above the list price and by December, only 20 percent did so. That’s happening nationally as well, but not to the degree seen in once-hot markets like Denver.
In theory, if sellers and their agents remain objective and do their homework on prices, they will meet buyers where they are at. But life isn’t that simple. List prices are usually based on the prior six months of sales or comparables. When the market is softening, sellers can find themselves with outdated information.
And there are those pesky emotions: like the denial that the market has peaked, or the pride of wanting to make more than the neighbor who sold last spring, or plain old greed.
“What a seller wants is the highest dollar at the end of the day. If you went in there with a realistic idea of where that property will trade, you might lose a listing,” said Jason Shepherd, a managing broker with Atlas Real Estate Group in Denver.
Whether from online valuation services or sycophantic agents, sellers want information that confirms the bias they already have toward going with a higher price.
“Be aware that there are people who will promise you the world,” Shepherd said. “We try to be very cognizant of not overpromising and underdelivering.”
Agents who tell potential clients what they want to hear aren’t doing them any favors, both brokers said.
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“You get your biggest bang in that first week you list on the market. If you aren’t priced right then, you are chasing things,” Schafer said.
A listing that stumbles out of the gate can prove costly in money and frustrations. Listings that linger are at first viewed as stale, then not worth bothering with, and eventually as defective.
Schafer said there remains a strong seller’s market for homes under $450,000 and properties closer into Denver. Those are the most likely to still get offers above the list price. Move higher up in price or further out into the suburbs, and buyers have more power.