If vieiwing available houses is like dating, and buying is like making a commitment, as a home seller, you don’t want buyers to be asking the equivalent question to: “Why are you still single?”.
Yesterday I met with the seller of a home in Windsor Park and he asked about the possibility in asking more than his house is worth, “leaving some negotiation room” in the list price. My response was that the best results come from putting the list price at or ahead of the market value, and that the market is to all intents and purposes somewhat flat in his area.
- If house prices are shooting up, I advocate choosing a list price above the current market price so that in 30 days, the market will catch up with the list price.
- In a declining market, you have to price below current market value – you don’t want to be chasing the market down, and never quite being at a price that appeals to buyers, lowering and lowering your list price continually.
- In a flat market, you need to price at what the home will sell for. It brings in more buyers, and increases the chance of multiple offers – a situation which tends to lead to better results for the seller’s bottom line.
So in today’s flat market, why not price it above the market and drop the price if no-one buys? (This is a common question) The short answer is “market stigma”, as if a home is on the market for too long, buyers start to think, “why has no-one bought it yet?” or “what’s wrong with it?”. Regardless of whether the local housing market is peaking, troughing or stable, buyers assume (rightly or wrongly) that a seller will take less for the home than the list price if the number of days on market is high.
I looked at MLS sales for 2005-2010 for single family homes in Austin listed between $200,000 and $400,000, and pulled some statistics which concur with this idea:
As you can see, the sales price to list price ratio goes down as days on market increases. This is true for the variety of market conditions we’ve seen here in Austin real estate in five years. If you look at the same period for homes that are on the market for a week or less, the average sales price to list price ratio is 99.61%.
So, if you don’t want homebuyers who are dating your home to ask “why is it still single?” in today’s market, list the home at the price you expect to sell at. Thanks to Davide for giving me this analogy.
Garreth Wilcock is a Realtor in 78723. 512.215.4785