‘Price improvement’ a sign of new real estate market

Friday, November 25, 2022, Vol. 46, No. 47

940 Gale Ln #102

Emails are flying in from all over the county, each loaded with euphemistic phrases such as “price adjustment,” “new price” and the reigning favorite “price improvement.” By improving the price, the listing agent is referring to a term that Zillow interprets as a “price drop,” and the popular listing site lets the world know that the price has dropped.

Most of the sleeves that ride atop “For Sale “signs usually accurately define the situation as “Reduced Price.” The market is fiercely trending toward with 329 price reductions among the 2,379 Davidson County listings during the last seven days. The 329 reductions translate to 13.8% of the listed houses.

Last week there were 461 closed sales, nearly 1,600 pending sales and 281 new listings. In short, the market is alive and well, but not as alive and not nearly as well as it would have been had the current crop of listings been for sale a year ago.

It is taking some sellers and listing agents alike some time to absorb the reality of the realty.

Last week a property sold in the neighborhood that veteran Realtor Chris Fumia identified as South Tower and located in the popular development located at 940 Gale Lane. Fumia, a Realtor with a successful career under his belt, listed the property for $530,000 in late July, slightly lower than a home that sold for $540,000 in May that had been listed for $399,000.

Last year, listing a price for $10,000 less than the last sale would have garnered numerous offers for more than list price. But that was then, and this is now.

And historically speaking, there were sales in April and May 2021 for $235,000 and $369,000 respectively. So the $540,000 appears to be an anomaly.

The owner of this home had moved and was apparently eager to sell. He reduced the price to $510,000 a couple of days after the property was listed, a number now considerably lower than the highest previous sale.

That “price improvement” didn’t result in a deal, so 29 days later the price was reduced to $500,000. Three weeks later, it was dropped another $15,000 to $485,000. Crickets chirped.

Finally, Sept. 29, 90 days after listing the condo and after three backward price movements, the price was established at $450,000. At that point, it sold in one week for $445,000. He gave it away, right? Not so fast.

As earlier noted, these Gale Lane properties have been some of the most desired real estate in the city for years. The development offers several floor plans with different sizes, and units similar to unit No. 102 – with its 1,144 square feet, two bedrooms and one and a-half baths – entered the market in 2005 at $195,000, the original sales price of this unit.

In the slow times of 2009, the price dipped to $190,000 before selling again in 2011 for $195,000. By 2016, the market was blossoming, and the home sold for $282,000. The current seller purchased the home for $315,000 in 2020.

Despite the four price drops over the 90-day life of the listing, the owner sold it for $120,000 more than he paid for it two years earlier in what was considered a white-hot market.

This answers the question: “What is going to happen to all of these people who bought in 2020 and 2021?” The answer is that they are going to fare well, but they should not expect the same procedure as when they bought these homes.

Not only did the house sell within a week of its final reduction, it now holds the record for one of the highest sales of comparable units in the development. Bryan Bennett of Real Estate Advisors represented the clients who benefited from Bennett’s eyes on the market.

If the Gale Lane property is representative of what is happening, the strategy seems to have shifted to listing under the market and hoping for a bidding war. Additionally, it seems to follow suit that houses with furniture bring a higher price than those that are not furnished.

Famed real estate broker Whit Clark has long maintained that removing the furniture decreases the price by 15%. Others feel removing furniture helps in situations in which the floor plan itself does not lend itself to furniture placement.

In the study of the two Gales, the furniture seems to have helped, as did the lower pricing.

Richard Courtney is a licensed real estate broker with Fridrich and Clark Realty and can be reached at richard@richardcourtey.com.