An Emerging Trend: properties selling below the guide price

As buyer's agents, we are witnessing a noteworthy trend in our local real estate market over the past couple of months: an increasing number of properties are selling for prices below their listed guide. Additionally, guides are being lowered online numerous times before a property finally sells. This phenomenon, relatively rare in past years, is becoming more commonplace, prompting both buyers and sellers to rethink their strategies. We believe it is likely to last for the foreseeable future until rates start to decrease or the cost of living softens.

Let’s explore the factors contributing to this shift and what it means for the current landscape of property transactions.

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Understanding the shift

1. Market correction

After a period of rapid price growth, the market is undergoing a necessary correction. Many buyers who are struggling with affordability in various areas, including their desired purchase, are sitting on the sidelines leading to less competition for properties. Sellers may be finding it harder to attract offers at or above their initial expectations, leading to lower sale prices.

2. Interest Rates

The stagnation of interest rates at a higher levels has had a significant impact on buyer sentiment. Higher borrowing costs, and simply the higher cost of living in general mean affordability becomes a primary concern and people are willing to pay less overall for property.

3. Increased stock levels

A surge in available listings in the last month has led to greater competition among sellers. With more choices available, buyers are exercising patience, which can drive down prices for properties that might not meet their criteria. This shift in supply and demand dynamics can result in properties being sold below their original guide price.

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Implications for buyers

For buyers, this trend presents unique opportunities. With many properties selling below the initial guide, buyers may find more negotiating power and potentially score a better deal. It’s an advantageous time to consider making offers on properties that might have previously seemed out of reach.

However, buyers should remain vigilant and do their due diligence; just because a property is listed at a lower price doesn’t mean it’s the right fit. The focus should be buying the right property for the right price in the market conditions. Engaging a knowledgeable buyer’s agent can help you focus on good quality assets, not a cheap deal you really should walk away from.

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Considerations for sellers

Sellers must adapt to this new environment. Setting realistic expectations is crucial; properties should be priced based on current market conditions rather than past trends. Do not engage a sales agent just because they promised you a price that is higher than other appraisals. Monitor the market yourself as you approach your window for sale, ask for appraisals to be backed up by comparable sales data, and ensure you are engaging a good agent on their process, not their promises.

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Conclusion

As buyer’s agents, we see the landscape shifting in real time. Properties selling below their guide price may initially seem concerning, but this trend could signify a healthier, more balanced market where buyers can secure homes without overextending themselves financially. For sellers, it’s a call to adapt and align with the current market dynamics.

Navigating this evolving market requires a keen understanding of these trends and an ability to pivot strategies accordingly. Whether you’re buying or selling, being informed and adaptable will be key to achieving success in this changing real estate environment.

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