Inventory Woes

In Houston’s Pearland suburb, listings are selling so quickly that in May median days on market dwindled to 11 – far below the city’s overall median of 47. While demand in Pearland is significant, the effect is only amplified by the area’s low inventory, which most recent data put at a 1.9-months supply – a “normal” supply is considered six months, and Houston’s total supply is about three months. The coupling of high demand and low inventory has turned Pearland into one of Houston’s top selling suburbs, and the case is much the same in several of the city’s nearby suburbs and neighborhoods.

“The impact is especially obvious below $350,000,” Sartin says. “It pressures buyers to put in solid offers at or near asking price rather than trying to lowball.”

Adding to Sartin’s comment, Lancton says that buyers who hesitate on a purchase “will” lose out on the property, but clarifies that a need to make an offer isn’t a license to overprice.

“If a buyer finds a home they like, they need to jump on it,” Lancton says. “Some agents are trying to list them higher for that reason, but the appraisals don’t come in that high and then it doesn’t work out. As long as a home is priced accurately, many homes in all price ranges are selling within 30 to 60 days in Houston, max.”

In Houston, as in all markets, Trujillo explains that a competitive pricing strategy will always be dictated by the attitudes of buyers, because you want the price to be alluring. However, she adds, with low-quality inventory the advantage is on the seller’s side, so agents can sometimes push the envelope of what buyers are willing to pay. Mostly, though, she says, it’s about pricing to comparable homes in the area.

“I haven’t seen any strategies as successful as pricing within the comps for the features and condition of the home you’re selling,” Trujillo says, conceding however that some agents have found success in actually underpricing properties in hopes of inciting a bidding war.

“Sometimes it is successful,” she says, adding it’s not a strategy she would ever employ for her own seller clients. “I’m working for my clients to get them the best price for their area, and I don’t want them to grossly underprice their home.”

Sartin, who prices according to comps and avoids even numbers that can hurt search results, takes a similar approach to fabricating bidding wars, something she describes as a “risk.”

“Our responsibility to our sellers is to get the best price possible for their home, and this tactic poses risks,” she says.

The hope is that by lowering the entry point, a property will attract a larger number of quality, legitimate buyers, who in their haste to purchase, will extend a series of competing offers that climb in size until they’ve exceeded the home’s real value. The danger comes in failing to attract multiple offers.

“I tend to feel it does discourage serious buyers,” says Lancton. “I know it can work, but I also know that some buyers don’t want to get involved in that.”

Her strategy is simple: price it right, and both parties will walk away happy.