This is a common refrain from prospective home sellers in today’s market, and we understand that sentiment. No owner wants to get less than their home is worth, and when we’re representing a seller it’s our job to make sure they get full market value. An important part of that task is making sure that the homeowner is equipped with the best information about the market to help them make rational decisions.
This can be a rough market, and sometimes sellers don’t have any choice but to sell. A job transfer, a tough time making the mortgage payments, a change in family circumstances – any of those factors and more may necessitate a sale in less than ideal market conditions. And even when the sale is by choice, sellers can get pretty ornery when confronted with what it takes to sell. It’s their home, and the prospect of making changes to accommodate an as-yet-to-materialize purchaser is just too much to handle. Along with our headline statement, here’s a sample of things we’ve heard from defensive sellers:
I know what the comps are, but I need to get more to buy my next house.
I hung that wallpaper myself 15 years ago; I love it and I’m not going to take it down.
My daughter loved that deep red color in her bedroom and we’re not going to change it.
We lived with it that way for years and it never bothered us.
I’m not going to take up that 20-year old carpet.
I don’t care that the same model sold for $50,000 less than my house – my house is better.
Here’s the best piece of advice we can offer to sellers: Buyers don’t care about any of that, and are in no mood to reward sellers who are not realistic. That’s a simple fact, and it shows up in the numbers. In September 2011, 45% of the homes in Loudoun County that went under contract were on the market for 30 days or less. Only 10% of those homes had any reduction in their list price before receiving a contract, and those price reductions averaged just 4.1%. By contrast, of those homes that received contracts after more than 30 days on the market, 71% had to reduce their original list price before receiving a contract, and the average price reduction was 8.0% of original list. And that’s for properties that went under contract – what about those that are still on the market? At the end of September, 75% of the fully available homes had been on the market for more than 30 days, and slightly more than half of those had reduced their price. Buyers will recognize a properly priced home and will make a move – and will happily take a pass on those homes that aren’t priced right.
So, if you are thinking about selling your home, ask yourself this important question: Am I a tester or a seller? Testers don’t think price and condition really matter because there will be that one buyer who will fall in love with their home and will give them what they need. Sellers adopt the attitude that they aren’t selling their home, they’re selling an asset that needs to be presented to the market in the best way possible and will do everything necessary to make that happen.
FULLY AVAILABLE LISTINGS
Inventory decreased in four price categories compared to September 2010, with overall inventory down 4.5%.
44% of all homes on the market have had at least one price reduction since coming on the market, indicating that a lot of homes come on the market at an unrealistic price.
The overall supply of homes on the market at the end of September was 4.5 months, up a bit from 4.1 months at the end of September 2010.
The market for the lowest price category is very tight, with only 1.7 month's supply.
RELATIONSHIP OF SALES PRICE TO ORIGINAL LIST PRICE vs. DAYS ON MARKET
Homes settling in September 2011 that received contracts their first week on the market sold, on average, for 0.12% below original list. Those that took 4 months or longer to sell sold for 11.3% below original list price.
Initial pricing really matters, and there is a great opportunity to sell a house quickly if the price is right.