Solving The Pricing Puzzle
Do more days on market mean less money for your house? If it sells too fast was the price too low? How can I get all the house is worth?
Almost every listing appointment comes to a point where the Seller wants to make sure they aren’t giving their home away. This is a totally normal concern. It’s a big ticket item and for many people, their home is an integral part of their financial plan. Even when the agent is well armed with statistical facts, Sellers can want to “at least try” and get more for their property. We all want to sell high and buy low. Well, in the case of home pricing the statistics may indicate that “trying to get MORE may actually get you LESS”. This has been the claim agents and real estate publications have been making for a very long time.
I decided to check the facts in a very non-scientific way with a perhaps flawed methodology. I really just wanted to see if there was market data that may support the claim. I got very local and looked at sold homes right here in Rogers, MN. over the previous 12 month. (3+ bedrooms; built 1990-2015- 142 units sold) Here’s what I found;
- House that were on the market 45 days or less, sold for an average of $133.14 per sq ft
- House that were on the market for 46 days or more sold for $129.54 per sq ft.
That doesn’t sound like much of a difference, does it? $3.60 per sq ft, BIG DEAL!!
Well, the average sale price in Rogers last year was $351,781 and that $3.60 translates to 2.78%. That means, houses that were on the market for under 45 days sold for 2.78% more than those on the market longer. The average would be something in the neighborhood of $9,792.
I want to caution against the thinking that goes “So what? I started $10,000 higher so I actually net more money” NOPE, NOT TRUE! (That logic is more flawed than my methodology)
The average assumes the actual market value of the homes sold. (market value = the price at which a Buyer and Seller agree to a deal). When a property starts above the actual market value it risks becoming market stale. That staleness usually results in one or more price reductions. In effect chasing the market down. The result is often a final sale price that nets the seller less money. The Rogers data seems to indicate that Sellers get more when it sells fast.
Anecdotally, I have seen properties that are initially priced below market value get multiple offers and usually sell for a higher than asking price. With the plethora of information available to Buyers today it is unlikely that home values are much of a mystery.
One other thing to keep in mind: time is not FREE. Holding on to a property has costs. Mortgage payments, utilities, taxes, maintenance, etc. That does not include the cost of lost opportunities when you can’t purchase the replacement home you’ve found. Also there is additional stress with continually having to be “on stage” and “showing ready” .
So, I have to say my limited research supports the “right pricing” strategy. “Fish where the fish are” is what my Dad would have told me….. still good advice if you want to hear this word……