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Compelling Reason to Price Your Home Right from the Start

Although these numbers are from the data within Westchester County in New York, I think that the Realtor (r) really touches some strong points on why its important to list the home at the right price to begin with.

Its possible that if your home is listed to high, that even with a price reduction it will always be behind the market. Be smart when listing your home or listing someone's home.

I review market statistics ever quarter, and since we just passed the halfway point of 2011 I found some very powerful data on the relationship between percent of asking price that Westchester County homes sell for and how long they have been on the market. As the table from the Empire Access MLS below illustrates, the percentage of asking price a home sells for decreases the longer the home sits on the market, all the way down to a whopping 7% average loss for older listings.

The sample size, over 1700 closed single family homes in the first half of 2011, is plenty large enough to draw accurate conclusions. The longer your house is on the market, the less you can expect to net. 

Days on Westchester Count real estate market

  • 0-30 Days. There are very few home on the market 30 days or less. Even in a cash transaction, closing in 30 days is not easy. But of the handful that did close, they averaged above asking price by more than half a percentage point. 
  • 31-60 days. This is also considered a fast closing, and the home would probably have to sell in the first week or two to close this quickly. Obviously, these homes were priced right. And in a severe buyer's market, they averaged well over 97% of asking price. 
  • 61-90 days. This is a larger sample, and represents over 12% of the market. These homes did sell quickly, and just over 96% of asking price was the average closing result. 
  • 91-120 days. There is only a small difference, but still a difference, for the homes that took up to 4 months to close. This is just under 96% of list price, and represents almost 18% of the market activity. 
Drum roll...
  • 120+ days. This group represents virtually two thirds of the market, over 1100 closings. Homes that were on the market over 4 months averaged only 93% of asking price. In a county where the median sale price is almost $600,000, that equals about $40,000. The chief reason a home takes longer to sell is that it is priced too high. How ironic. The people that tried for more ended up with less. 
Many of these homes were on the market longer. This simply represents their latest listing contracts with the broker that sold them, so regardless of how long they were on prior to the data recorded, once their price was right they sold. 

There is another rough fact behind the numbers that isn't obvious from the table. If overpriced homes take longer to sell, then it becomes clear that the homes on the market for longer than 120 days may have had price reductions along the way! I've seen homes sold in the low $500s that started out asking over $700,000! If they had started out realistically, they very well may have sold for mid or high 500s! Asking for more and chasing the market cost the sellers upwards of $50,000! How ironic! In a high cost place like Westchester, real estate mistakes are very expensive. 

Pigs get fat, hogs get slaughtered. 
Price it right from the start and you'll net more. Be objective, think like a businessperson, and base your decisions on market data and not sentiment. The statistics aren't kind if you don't. 

 

 

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The views expressed on this site are mine alone and do not reflect the views of my employer.

Comment balloon 5 commentsJohn Cannata • July 07 2011 04:07PM

Comments

Great re-blog and Phil is always sharing great information.  My question is, if a house is overpriced in its market by 20K, are you "lowballing" to offer 25K less than asking price?  I see it all the time...overpriced owners hoping that someone will miraculously purchase THEIR home, despite the price.  They are in for a wait!

Posted by Cara Marcelle Mancuso, Call a Marana neighbor, I'm THERE! LONG REALTY (Long Realty - Dove Mountain, Marana AZ) about 7 years ago

I have a friend who is selling his house. He is a mortgage professional and KNOWS better than to over price the house... but still he listed too high and its been sitting for a little while. Lots of showings, but not one offer. He's now considering lowering the price a second time.

Sometimes you have to drop a LOT to catch up to the market. Its never a good decision to list your home to 'test' the market. You either want to sell or you don't.

Posted by John Cannata, Texas Home Mortgage - Purchase or Refinance (214-728-0449 http://TexasLoanGuy.com) about 7 years ago

Hello, John! This is off topic, but I'm stopping by to say that I've read and enjoyed your blog in the past and have now subscribed to stay more current on mortgage news. Thanks for providing your insights here on the Rain! (As a way of introduction, you may know my broker Paula Hamilton in The Woodlands, TX.)

Posted by David Companik, Realtor ▪ The WoodlandsTX ▪ davidcompanik.com (Keller Williams Realty - The Woodlands) about 7 years ago
Thank you David. I in return have subscribed to your post. Looking forward to speaking with you many times on AR, Facebook, and all other networking sites. Have a great day!
Posted by John Cannata, Texas Home Mortgage - Purchase or Refinance (214-728-0449 http://TexasLoanGuy.com) about 7 years ago

John - Great re-blog!  J Phillip is such a great writer and always gives excellent advice.

Posted by Michelle Gibson, REALTOR (Hansen Real Estate Group Inc. ) almost 7 years ago

Participate