In the Tri-Valley, which includes Dublin, Danville, Pleasanton and San Ramon, I have started to notice more price reductions, especially homes that are over $1.4 million. Does this mean there is a market slowdown, or is it just because of incorrect pricing strategy? It seems as though many homes have been listed anticipating that prices will continue going up as it has in the past few years. I think this is starting to slow down. For example, Dublin Ranch has been super hot in the past few years but there is currently a home on the golf course that was originally listed for $1,5888,888 and recently cut its price to $1,399,999. This is nearly a $200,000 drop! Two years ago, this would not have happened. I am starting to see more and more examples of this.
Make no mistake, the market is still very good and this is not to say all homes in this price range need price cuts, but that pricing strategy should be in line with what buyers are feeling. If a home is priced in anticipation of a 14% increase, then it might be priced too high and will need to be adjusted down. When a home is priced too high to start, it will get less attention than if it is priced at market value or slightly less. If a homeowner must reduce the price on a home, they have much less leverage in negotiations moving forward. On the other hand, if a home is priced at market value or slightly below, it will get much more attention and potentially more offers. I recently listed a home for $1,299,900 and it ended up getting eight offers and will close much higher due to multiple offers. The end result was that the sellers got the number they were looking for. I am not saying this strategy is the correct one for every situation but you must be aware of the market conditions in your specific neighborhood to come up with an effective pricing strategy.