Tucson Real Estate Establishing Asking Price
June 19, 2007
Post Tags: canoe-pricing , Determining-Asking-Price , submarine-pricing , Tucson Real Estate , tucson-homes-asking-price
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Tucson Homes Canoes and Submarines
The Tucson Real Estate Market has seen some huge turns in the past two years. It had a huge run up in 05 continued into the third quarter of 06 and then headed in a steady downward direction for asking price.
The sales prices continued to climb at a fairly steady rate right through to today. In May of this year 2007 we saw the second highest average sale price in Tucson history at $280,589.
The asking prices at the later part of 05 through 06 continued to increase. At the same time the sale price increased slowly from the double digit increases seen each quarter in 05 through third quarter of 06.
Canoes and Submarines Asking Price Strategy
The homes that are selling and usually selling in less than 60 days are pricing their homes just under the market, making them the lowest priced home of their type in the neighborhood or area. 
Determining Asking Price
During the run up in the market asking price was being determined by what other people with homes on the market in the neighborhood or subdivision were asking. Buyers were offering between 5 and 10 thousand dollars more than asking price at that time. Homes were being sold so quickly that asking prices would jump up by thousands in a matter of days.
However, determining asking price in a buyer’s market should be completely different. Asking prices should not be determined based on what others are asking. It should be determined by a combination of what recently sold in that area and current asking prices.
If everyone is asking $150 a sq. ft. and the last home sold in that area sold for $125 a sq. ft. on average, those homes are not going to sell. They are being priced too high for the market.
In a buyer’s market if you want to sell a home quickly you find the current market value based on dollars per square foot for recently sold homes of like kind and the lowest asking price per square foot currently on the market for homes of like kind and you price your home under that price per square foot.
This is Submarine pricing, getting under the market makes your home the best deal in that area and buyers and buyer’s agents are looking for those properties priced under the current market value.
Canoe pricing, is pricing where the asking price is coming down, but at the same rate all asking prices in the market are coming down, they are never ahead of the market, instead these homes are “Riding the Market Down”.
Too many homes in Tucson are being priced by:
- Last year my neighbor got . . .
- I need to make this much or . . .
- I want to clear at least . . .
- I was hoping to get . . .
- Well Let’s just try it . . .
The old saying is Location, Location, Location. Now it is Location and Price, but ultimately it is price.
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June 23rd, 2007 at 11:56 am
I’m confused.
Care to explain why we still have a huge surplus coupled to a rising price? What economic principles describe those numbers… there is surely an economic lesson somewhere in there.
June 24th, 2007 at 11:30 am
Greed.
Sale prices going up. Asking prices coming down. Sellers asking way over market value leads to huge surplus, unless your the government. I have 100 hammers I’ll be glad to sell you for $10,000 apiece. Any taker?
Hum, I can’t seem to sell a single hammer, the hammer market must be flooded.