by Osman Parvez
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It pays to understand the market.   It’s painful ($$$) when you don’t. 

The chart above shows the ratio of houses sold in Boulder during the last twelve months (LTM) compared to available inventory, separated into price ranges.    In the $1.0 to $1.5MM range, there were more than 6x the number of sales during the last twelve months than current listings.    In the $1.5 to 2.0MM range, the ratio drops to just under 2x.    In the top tranche, homes priced from $2.0 to $3.0mm, the ratio falls to 1.4x. 


What’s the Significance?  
The Boulder real estate market is more than twice as competitive for homes priced in the $1.0 to $1.5 range than in the $2.0 to 3.0 range.   


Sellers who want to maximize price need to adjust their strategy by price range and location.   There is much more at risk with marketing and negotiation at the upper end of the market. 


This isn’t just academic.   Take a look at the history of price reductions for 2480 Agate Lane. We generally don’t discuss active real estate listings but now that the deal has closed, we can talk about it.   

Listed at the end of last Summer’s selling season, the listing agent set the asking price for 2480 Agate Lane at just over $1.3.    As Autumn turned to Winter, the listing agent dropped the price not once but twice.   Despite this Spring’s intense seller’s market,  2480 Agate still didn’t find a buyer so they dropped the price yet again before it finally attracted a buyer at 13.2% below the original asking price. 


It’s not just the $200K price reduction.   The home was on the market for nine months, a period of time that the owners were exposed to the risk of a market downturn.  They also were stuck keeping the home in show-ready condition, incurring substantial carrying costs, and not moving on with their lives. 


Should a home take 276 days to sell in this market?   Not if the property is professionally marketed.   The most important piece of a comprehensive marketing strategy?   The asking price.    


Understanding Risk


For sellers, it’s tempting to try to take advantage of this overheated market by asking top dollar.   The risk is the property will take longer to sell and you’ll end up getting far less than if you priced it right from the start.   


Yes, even in this market.  


Choose your agent on their track record, their professional experience, and their negotiation skills.    Don’t go with the shark-skin suit who tosses out a make believe selling price, they’re blowing smoke.  




Here’s another example:  3169 8th Street.

The listing agent set the asking price at $1.8 when it hit the market last Fall.   After a month, they dropped the price $100K.   It sat on the market all Winter and this Spring.  Eventually the sellers accepted a sale price of $1.5K, or 16.4% below their original ask. 


If it were priced right, it most likely would have sold faster and for more money.  Instead, every buyer walking into the place wanted to know one thing.    What’s wrong with it? 


As it happens, I took one of our buyers to see this one personally.   For a Newlands house, it didn’t make any sense at the asking price.   Plus, with so many days on market and the giant stack of business cards on the counter, it felt like a well picked shirt hanging askew on the bargain rack.  At $1.5 however, my buyer might have seen the value. 


Take Home Points
– For sellers, the most important decision you face is where to set the asking price.  A careful analysis of recent sales and review of current competition is  how you establish the asking price.   It’s the most critical piece of a successful marketing strategy.   You still need high-end photography, a wide distribution of the listing on the web, and all the usual components of a full service, professional listing.


– For both buyers and sellers to negotiate well, you need to understand depth of market for the price range, location, and property type.    If the market is deep (high transaction volume) and there are few available listings, competition between buyers will be fierce but more options will be coming down the line.   If the market is shallow (low transaction volume) and the home has been on the market for a few weeks, negotiation leverage shifts to the buy side.  


Note: The charts above were current for when this blog article was written.   Market conditions change frequently and are highly specific for neighborhoods, down to the street level.   For the latest on market conditions relative to your unique situation, call Osman at 303.746.6896. 

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