Redfin estimates inventory could increase 6%-12% in markets where sellers have the flexibility to test out pricing strategies before listing
SEATTLE–(BUSINESS WIRE)–Redfin economists estimate annual housing inventory could increase by 6%-12% in markets where home sellers are given the flexibility to test out pricing strategies via ‘Private Exclusive’ and ‘Coming Soon’ listings (i.e., phased marketing) before formally putting their homes on the market. That’s according to a new report from Redfin, the real estate brokerage powered by Rocket.
“Every home is unique,” said Redfin Senior Economist Asad Khan. “That makes it challenging for owners to know what their home is worth and how to price it to sell—especially when the balance of power in the housing market is shifting rapidly. A lot of homeowners today are reluctant to sell because they don’t know how much money they could make and how long it would take to find a buyer. Offering sellers the option to gauge interest in their homes before listing gives them a clearer picture of their property’s value. When more homeowners feel confident listing, buyers benefit from more homes to choose from.”
The report is based on a Redfin analysis that estimates the value phased marketing provides to home sellers from 1) more accurate pricing (the ability to obtain a fair price while reducing price drops and unnecessary time on market), and 2) privacy and convenience. A detailed methodology is available here.
Redfin last month announced a partnership with Compass International Holdings that will give sellers more flexibility in how they introduce their homes to the market. Compass’s ‘Coming Soon’ listings are now shown on Redfin.com, and in the coming weeks, Redfin users will be able to find out if Compass has a ‘Private Exclusive’ listing that matches their search area. Rocket, Redfin and Compass International Holdings agree that offering sellers broader flexibility in how they introduce their homes to the market lowers the barrier to entry for sellers to list their homes, resulting in a larger inventory of listings for buyers.
Here’s why allowing sellers to test pricing could encourage more Americans to list their homes:
- There’s a lower risk of losing money from a price cut: Sellers who test pricing strategies via phased marketing are less likely to cut the price of their home once it’s on the market. This is beneficial because price drops can make buyers think something is wrong with a home, causing it to sell for even less. Consider the following scenario: A seller lists their home for $500,000 because they determined that is what it’s worth after gauging buyer interest via phased marketing. Their neighbor simultaneously lists an identical home for $600,000, but cuts the price to $500,000 after getting no offers. The original seller closes a deal at their $500,000 asking price, but Redfin economists estimate the neighbor’s home will sell for $475,000-$490,000 (or 2%-5% less than the original seller’s home) due to stigma from the price cut.
- There’s a lower risk of the home lingering on the market: Sellers who test pricing strategies with phased marketing are less likely to see their homes sit on the market, which also means they’re less likely to have to cut their price. Redfin estimates that overpricing a home by 10% or more can increase the time it spends on the market by more than a month. In other words, sellers who test pricing with phased marketing can save time without sacrificing money.
- Sellers can benefit from privacy and convenience: Not all sellers want information about where they live widely available on the internet. Maybe they’re a public figure, recently went through a sensitive life change or simply prefer discretion. Phased marketing allows sellers to market their homes without photos, addresses or listing history circulating online. ‘Private Exclusive’ and ‘Coming Soon’ listings don’t accrue days on market or price drop history. They also offer convenience; these marketing strategies can help a seller find a buyer without the hassle of staging, having dozens of people coming through on tour, and spending thousands on repairs.
While inventory has crept up in recent years as the mortgage-rate lock-in effect has faded, America still faces a housing shortage, which is keeping home prices high. Many homeowners are reluctant to sell because they have watched sellers in their neighborhood slash prices after waiting months for buyers to bite. Phased marketing empowers sellers to accurately price their homes by giving them the tools they need to make data-driven decisions, which should loosen up more inventory and give buyers more options, allowing more transactions to take place.
To view the full report, please visit: https://www.redfin.com/news/private-exclusive-inventory-increase/
About Redfin
Redfin is a technology-driven real estate company with the country’s most-visited real estate brokerage website. As part of Rocket Companies (NYSE: RKT), Redfin is creating an integrated homeownership platform from search to close to make the dream of homeownership more affordable and accessible for everyone. Redfin’s clients can see homes first with on-demand tours, easily apply for a home loan with Rocket Mortgage, and save thousands in fees while working with a top local agent.
You can find more information about Redfin and get the latest housing market data and research at https://www.redfin.com/news. For more information about Rocket Companies, visit https://www.rocketcompanies.com.
Contacts
Contact Redfin Journalist Services:
Angela Cherry
[email protected]
