Indicator #1 – A healthy wind is necessary for the forward movement of a sailboat. When it does not exist, the boat sits idle.

The same is true of a real estate market. It needs a healthy supply of buyers. When the buyers are scarce, the market remains flat or sinks in value.

As the property enters the market, there is usually some level of “pent up demand” for the new listing. The agent that usually gets hired by the seller is the one that can best describe “market conditions” and property valuation better than the competing agents.

So how do you know truly know the volume of buyer “pent-up-demand” and how that affects the asking price?
Comps never tell you the depth of buyer pent-up-demand nor does price per square foot. Those are the number one methods used by traditional agents to determine an asking price. Yet they don’t measure the most important thing when you are selling a home. This is why some properties get 11 offers in 24 hours and some get none after trying for a year.

Have you ever had a seller want to list a property higher than you thought practical?
We all have! The objective of the traditional agent during the listing interview is often to discuss their “marketing plan” while the objective of the Agent Economist is to discuss their knowledge of “market conditions.” As agents, we should double the time we invest during the listing interview talking about the marketplace, and cut in half the time invested in a marketing plan. HomeZoop equips you for that conversation.

Indicator #2 – Do failed or expired listings affect the property value?

Most Realtors and consumers review closed sales to determine a list price for their home. However, rarely are failed listings considered. In fact, failed listings (expired or withdrawn) are often guideposts to tell you where “not to price your property.”
It is okay to have expired or failed listings, that is to be expected, just not too many.

If your report shows just 10% failed listings, as a result of high-demand by buyers, you are possibly seeing 30-40-50% selling over the asking price. In addition, you are probably seeing more under contract than there are for sale. This local economy is most likely experiencing appreciation.

However, if your report shows 40-50% of the listings expiring, failing to sell, as a result there may only be 10% of homes selling at list price. And there is most likely 2-3-4 or more sellers for every one buyer. For sellers, there is often a sense of urgency to “get the next buyer in the marketplace” as buyers are scarce. A scarcity of buyers for any product, will create a reduction of value. This local economy, in its particular price point, is quite possibly experiencing depreciation. A painful reality for homeowners.

Indicator #3 – Can properties selling over list price cause our home value to go down?

Most real estate markets across the USA, have some level of buyer pent-up-demand that cause some properties to sell at or over the list price.

In a healthy market, you will often see about 30 of every 100 homes sales close at list price or above, which is often a contributing factor to 2-3% appreciation rate for property. When it becomes 50-60% of sales reaching that pinnacle, it is often a sign of “super high buyer demand” and oftentimes under pricing has occurred.

On the other hand, a warning sign that the market may be declining in value, is when only 5-10 out of 100 properties sells at or over the asking price. It shows a weakness in the market. An absence of buyers bidding against one another. This often causes property value to remain flat or possibly depreciate.

So yes, when there is an absence of “over bidding” it is a warning sign that there is a low presence of buyers in the market.