It goes without saying that when you sell your home, you want to sell it for the highest price in the quickest amount of time. The current environment of the real estate market already favors buyers and makes it more difficult than in past years to sell your home.
Don't make it even harder!
If you overprice your home, you'll face the daunting reality of losing out on up to $54,528 after your home languishes on the market for 9 months or more.
Yikes!
How did I come up with this figure? I thoroughly analyzed the sales of all homes in Alexandria, Virginia that came on the market and sold during the past 365 days.
Let's look at the good news:
- 1,460 homes that were listed for sale in Alexandria between January 6, 2008 and January 6, 2009 have actually SOLD!
- Most homes sold quickly in Alexandria: 1,125 of these homes sold in 90 days or less, or 77% of all the sales. Of those, 682 were sold in 30 days or less -- that's 46.7% of all the sales. Alexandria and Arlington are still hot markets.
- Only 37 homes that sold took over 9 months to sell.
Here's the bad news:
- 3,192 total homes came on the market during this time and only 1,460 sold.
- Almost 550 of these homes are still on the market (though most of those came on the market in the last 6 months).
- That leaves around 1,100 homes that did not sell -- they were either withdrawn from the market or expired.
- Only 48.5% of homes listed for sale in the past year actually sold or are currently under contract for sale.
Now, here's the Guaranteed Way to Lose $54,528 When You Sell Your Home:
Examine the following chart.
ALEXANDRIA, VIRGINIA HOME SALES – PAST 365 DAYS
|
DAYS ON MARKET |
# of SALES |
% of ORIGINAL LIST PRICE |
|
0-30 |
682 |
96.96% |
|
31-60 |
258 |
94.05% |
|
61-90 |
185 |
91.99% |
|
91-180 |
224 |
89.29% |
|
181-270 |
74 |
88.35% |
|
270-365 |
37 |
88.44% |
As you can see, the faster the sale, the higher the sales price as a percentage of the original listing price. The longer a home is on the market, the less chance of the seller getting close to the asking price.
The difference between a sale that occurs in 30 days or less and one that takes more than 9 months is a whopping 8.52%. With the average sales price of a single family home in Alexandria around $640,000, this equates to a $54,528 loss.
Further analysis shows that $30,975 of that $54,528 loss is due to price reductions that happened over time as the seller tried to chase the market down. The rest of the loss is due to buyers offering significantly less than asking price as they perceive more seller desperation the longer the home stays on the market.
Even homes that sold in a relatively quick 61-90 day timeframe suffered a significant decline in sales price/original list price ratio -- almost a full 5% loss. This would equate to $31,808 lost on an average single family home in Alexandria.
There's one very important lesson to learn from this, if you want to sell your home for top dollar, make sure you and your Alexandria real estate professional price it right from the start.
Here's some additional blog posts that I've written to get you started on the right foot when it comes to pricing your home for sale:
If you want my love then take my advice... Adjust Your Price
Will the Sellers Come Down on the Price?
Come on Down! You're the Next Contestant on The Price is Right
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If you plan to purchase or sell a home in the Northern Virginia or D.C. area,
you can visit my main Northern Virginia & D.C. real estate website at www.VirginiaRealEstateNews.net.
Brian, you are absolutely right. Overpricing a home initially leads to a lower down the road final price. This message needs to be brought up to sellers at the onset of selling their home.
This is an analysis we all can learn from. 'Next time I have an hour to spend at my computer, I'm gonna follow your example and perform this analysis for my area.
What an eye opening analysis that should be to potential sellers in your area. I can't even begin to imagine how long it took you to figure all that out!
Thanks Rainman!
My client lost over $100,000 because he did not take my advise. Shame.
Brian, this is an excellent and sobering analysis! Congrats on the gold star!
Bravo Brian ! Now THAT is how to make a point with analysis !!! (...how long did the research take for those 12 month facts ?!?!?!?)
Great Post !
Grrrr...there are other reasons that sellers make it impossible for us to sell their homes. The pricing is one thing. Not budging for a little negotiation is another. But being ridiculous on the pricing to begin with could cost them MANY days listed on the market....and cost them the sale of their home.
Your stats are wonderful. Sometime seeing figures help the consumer to understand more. :)
Brian ... you are amazing!
Overpricing, it works like a charm. It is on page 1 of the idiots guide to self sabatage.
Your report looks very familiar to what we saw in Las Vegas in early 2008. Best wishes...
Another way to lose that much money would be to try and sell your home right now.
This is a great analysis, Brian. I'll have to do something similar using Lancaster County PA real estate prices. Be careful though, you might be accused of "doom and gloom" spreading...
Brian, not only is your advice spot on but you have delivered it in a very thorough and easy to understand manner. Well done!
Brian, AWESOME post, seriously. I love stats and you've prepared the ultimate marketing piece to present your sellers. Great job!
Good analysis...I have taken all of my overpriced listings off of the market. I don't care that I no longer have a lot of listings. I am not going to spend my good money advertising something that's not going to sell. I had a seller tell me that they wouldn't reduce. That's what an offer is for! But no one is going to write an offer if they don't see the house cause it's priced too high!
Excellent analysis.
Brian Madigan
That is powerful info. for correct pricing in the beginning! I watched a house on my street already lose that amount in price reductions and it STILL hasn't sold. They were not priced right to begin with and now they are below the market value and still not selling!
You're better with numbers than I am, Brian. :) Now you've got me curious about my market. Congrats on your feature!
Brian,
I am gonna do this for my own neighborhood. Fantastic! You have done are name proud!
What a great post! We did this awhile ago in our market and our data had similar results. Having the data to back up this claim makes all the difference in the world! Thanks for the reminder.
Brian,
Thanks for a great post and congrats on the feature. You deserve it! I plan to share this post with clients wanting to over price!
GREAT Blog...I need to run those #'s for Cape Cod..
Excellant chart, well done post! I can't wait to look into the Myrtle Beach area ratios.
Nice work Brian. Your title begged my visit! :o)
You are so right. I've seen far too many homes priced to high and sit on the market. Worse yet is when the house is priced to high in a depreciating market. The seller lowers the price not low enough to keep pace with the market decline.
Hi Brian...What useful information. Like the others, I'm going to take a look at my area.
Here's to a successful and enjoyable 2009.
Kate
P.S. Just finished reading an excerpt in Commonwealth of your recent post on VARbuzz.com.
Pricing your home properly is 75% of the marketing. I just wrote a post today about this exact subject:)
Excellent analysis of your local MLS stats....it makes me want to look at ours here the same way. Great presentation!
Great post. I really appreciate the way you analyzed the data, documented your analysis, and explained your conclusions. Well done.
Brian - Getting sellers to understand the value of pricing their home properly is crucial. Putting it in dollars and cents like this is a great way to get the point across.
Brian,
Have you used it at listing presentations? What arguments did the seller use to object to your conclusion?
That is great news for sellers. Price it right the first time
Brian-Thanks for your post. So true, so true, so true!! I'm preparing for a listing appt and have all my stats ready!
Brian-You have really provided a great analysis, sellers in Alexandria would be crazy not to list their home with you.
That took a lot of patience... or a kicking bit of crunching. And if you guys are selling almost 50% of homes that get listed you are doing pretty well...
Thanks a ton for the effort. I will do the same here in Austin, as this falls within our philosophy of pricing to the market and negotiate little to none.
Brian,
I love it....simply love it!
What a wonderful way to make the math simple to understand....hopefully this makes seller pay attention!
Shoot Brian this ought to help you out tremendously in your market. Are you getting results by using it or how are you using these figures?
I am still seeing a lot of overpriced homes -- and severly discounted cobroke fees -- that is not a forumula for success! Nice post and I hope that sellers will understand how important pricing is along with working with a professional like yourself.
brian,
this is an excellent marketing piece for you. I really like that you said how many homes actuallydid sell in 2008.
This is so great! People love when you show them an analysis like this.
Nicely done Brian. It is widely known that when you price a house correctly to begin with, that the home sells faster and at a better price. That is why we use data - to show our worth. Someone who tries to sell their home alone does not have acces to that information and would make a critical mistake if they went by comparing it to someone else's home that is also on the market, when that home has not sold.
Wow, nicely done!
I can think of at least once seller here who overpriced a lot and turned down an offer two years ago. That house now priced significantly less than that offer amount. Pricing right is so important.
WoW Brian.. That is a HUGE number.. I would hate to see this happen to one of my sellers.
Gotta love the title, it made me want to read the post. Your logic is thorough and impressive. If I were a seller listening to this, it would be hard to refute.
I'm with everyone else agreeing that you have a great title! I'm going to have to see what overpricing will cost a seller in Huntsville:)
Thats great info and gives me an idea for PRICE reduction help.
Hi Brian~ I am going to have to look at market and see just how much sellers may be losing. Thanks for the ideas and inspiration!
Whoops, I think I underestimated when I said I'd take an hour... LOL.
Interesting analysis. Thanks for sharing your thought process.
Nest Realty
There is nothing more frustrating (and expensive) than chasing a falling market. For the want to gain a few bucks most loss out on so much more. INteresting you can actually put a price tag on it!
kk
This is truly important advice. Buyers tend to look poorly on property that has been on the market for sometime and often won't consider it later on.
Brian - this was a fasciniating analysis adn points out clearly the dangers of overpricing. The other costs, in addition to the loss, is the monthly mortgage, utilities, etc. for styaing in the home for an extenced period. The costs really add up but folks forget about this. Looks like this took some time to put together - thanks for your wisdom.
Jeff
Good post and credible data, you did alot of analysis to create this blog post which can be very valuable to your clients in your area.
This is some great data! I like the way you put this together - can I copy your idea??? You are always so clever!
Brian - great illustration ! Very creative and simple to understand the data. I can see this coming up on a lot of consumer searches. Great content !
Brian - great illustration ! Very creative and simple to understand the data. I can see this coming up on a lot of consumer searches. Great content !
These are great Stats Brian. It proves what we are always telling our clients - Price it right in the beginning!
Great post - a love to work numbers and although I try to tell sellers this information. Will they listen? Some will, some will not. Price means everything and following the market downward does not pay in the end.