This is the make-or-break window for sellers

For sellers launching a listing this summer, the initial price could make the difference between igniting a bidding war for top dollar or having to offer concessions and settle for a below-asking price.

According to a new report from Realtor.com®’s economic research team, timing is critical and the first four weeks of active listing represent the definitive make-or-break window for sellers.

Selling a home typically follows a familiar pattern: the owner starts by looking at comparable homes (coms) that have recently sold on their market and sets an initial asking price within that range.

If the price is too low, bids may come in at or above the asking price and a bidding war may ensue.

Conversely, if the listing price is too high, few or no offers may come in, ultimately forcing the seller to lower the price to generate demand.

“Many sellers are still trying to set an aspirational price, hoping if they can find that one buyer who will pay what the Comps say is out of reach,” he says. Steve Jollybroker at Benchmark Real Estate in Nashville, TN, tells Realtor.com. “The trouble is that today’s buyers are smarter and do more homework.”

To quantify sellers’ decision-making around pricing, researchers used a sales-to-list price ratio, which is the final sales price divided by the initial or final asking price. A ratio above 1.0 indicates a tight seller’s market where buyers have minimal leverage.

Notably, the ratios vary by season, region, property type, price level and broader market conditions.

Data shows a direct correlation between market time and profit: the longer a listing lingers, the lower the sale-to-offer price ratio falls.

This trend shouldn’t come as a surprise to any real estate agent: Homes that have been on the market for an extended period of time are less likely to see an offer beyond the initial asking, often because it was too high. On the other hand, well-priced properties that spark bidding wars and sell for a higher price than the listing price are typically properties that went under contract shortly after they hit the market.

“Starting too high and chasing the market is never fun,” Melanie Sparrowa real estate agent associate at Douglas Elliman in Aspen, CO, tells Realtor.com. “Our sellers are smart and sophisticated, and I believe they understand what happens if they over-quote, although many sellers think buyers will make an offer if they want the property.”

When economists at Realtor.com compared the sales-to-list price ratio for homes that sold after different numbers of weeks on the market, they found that sellers saw the best results when their listing closed four weeks after they hit the market.

“Whether homes sell above or below asking price, a home that closes four weeks after listing will likely fetch a higher sales price than a home that sells in any other week after listing,” says Realtor.com’s senior economist.Joel Berner.

At the same time, the four-week period is also when price reductions peak, underscoring that the first month of a listing is a crucial point for the seller, driven by their initial pricing strategy.

“Right now, in almost all markets, a well-priced home goes under contract within a few days. If the home has been on the market for three or four weeks, it has already sent a message to the market,” Jolly explains. “A price reduction helps sell the house, but usually the seller doesn’t get the full amount he would have received at the right starting price.”

A closer look at the figures shows that houses with the highest premiums in relation to their asking price go under contract in the first two weeks.

On the other hand, sellers see the worst results when their home is sold 18 weeks after listing. Jolly says that buyer psychology plays a major role in this.

“Once a house is listed and sticking around, the buyer, thinking quickly, goes ‘Is this it?’ to ‘What’s wrong with it?’ That is very difficult to overcome, even with price reductions,” the Nashville real estate agent explains.

Kristina Quesadaan agent with the Yost Quesada team at Douglas Elliman in San Diego, agrees, adding that once a listing is perceived as outdated, future price reductions may be seen by potential buyers as a sign of weakness, rather than an opportunity.

“In many cases, sellers end up receiving less than they would have had they paid the right price from the start,” she tells Realtor.com.

A look back at prices during the COVID-19 pandemic

The report shows that during the crazy COVID-19 pandemic years of 2021 and 2022, the market was firmly in seller’s territory. Even during the typically slower winter months, the sales-to-last listing ratio was 1.0, while during the busy spring season it reached 1.03.

At the time, record low mortgage rates stimulated buyer demand, making price cuts rare and excessive sales the norm.

“In that environment, pricing was often less important as buyer demand far exceeded available supply,” Quesada says. “Today’s market is much more balanced. Buyers are assessing affordability, interest rates and value more carefully than they have in years. As a result, pricing has once again become one of the most powerful tools in a seller’s marketing strategy.”

Market analysis clearly reflects this shift: since 2022, the price ratio between sales and listing has plummeted. With recent highs well below 1.0, buyers now have more leverage and the average home is selling for less than both the initial and final asking price.

The problem with unrealistic expectations

Quesada and Jolly argue that overpricing sellers today poses a significant risk of alienating buyers and causing real estate to stagnate.

“Many sellers assume they can start high and lower later if necessary, but that strategy often backfires,” the San Diego agent warns.

Jolly emphasizes that a successful seller is one who has done his homework before putting it on the market, not after his house has been on the market for two weeks.

Juliette Hohnenan agent at Douglas Elliman in Los Angeles, offers a great example of how strategic pricing rewards sellers.

“My clients wanted to list for $3.75 million because they said it was their comp,” Hohnen tells Realtor.com. “I said we’re in a slightly different market, but we could still get more than $3.5 million if we paid a price of $3.5 million.”

The seller trusted Hohnen’s judgment and ultimately sold the house for $100,000 above the asking price. Meanwhile, two neighboring houses in worse condition, but with the same price of $3.5 million, are still waiting for buyers.

This story reminds us that the margin of error between correct and misguided pricing is razor-thin and carries major financial consequences.

“We are in a precision market, and while properly priced homes are still moving quickly and near asking price, the market is no longer doing the sellers’ pricing work,” Jolly concludes.

Quesada also reminds sellers that first impressions matter.

“The most successful sellers understand that the initial list price is often the most important marketing decision they will make,” she says. “The first two weeks on the market generate the highest level of attention from buyers, and if a property misses the market during that period, it can be difficult to regain momentum later.”