I always love to hear the advertisements with a guarantee on the number of days it will take to sell your home - especially when you discover the small print requires massive discounting. I decided it was time to take a look at just the higher end of our market - San Diego Homes for Sale at $1,000,000 and above.
San Diego is home to communities of Coronado, Point Loma, La Jolla, Del Mar, Solana Beach, Encinitas, Carlsbad, Rancho Santa Fe, with the majority of the million-plus dollar properties being La Jolla homes for sale and Rancho Santa Fe homes for sale.
Looking at the chart, we can see the consequences of natural human pricing behavior - to create an imagined price point break at common numbers - usually where we roll-over into the next million. We see a spike in months of inventory at:
$1.9-2m range ==> 36 months
$2.4-2.5m range ==> 33.6 months
$2.9-3m range ==> 59.3 months
$3.9-4m range ==> 63 months
The $4m+ range just catches all the truly unique homes for which there are very few buyers.
It would seem to me that the best way to help your seller is to NOT be lumped in with all the other people trying to create an illusion about the home price. You could try to be tricky and market a property at $1,999,999, so as to not break the $2m barrier, and you should clearly inform your seller that they should expect the property to take 3 years to sell. But the reality is that you should expect to lose about 5% ($100K) on a negotiated price discout. How about cutting the time to sell the property by standing out from the competition. Market it at $1,899,999 and expect it to sell in less than half the time - a mere 17.9 months (and stick more tightly to the asking price during negotiations).
Not to be (too) flip, but when you get to this price range, $100K (asking) doesn't really make that much of a difference - it is all in the mind of the seller anyway. Ultimately, isn't it the selling price and the time on market that the seller cares about?
Back to the title... 6 years and 4 months. The other "clever" pricing strategy is to repeat digits. $2.2m or $3.3m. What an ugly mess that brings us to. The amount of inventory for homes listed from $3,300,000 to $3,399,999 is 76 months (6 years + 4 months). Did you advise your client they could go from childless to kindergarten before their home is expected to sell? Did you tell them their high school senior will graduate from college before their home sells (and on the 5-year plan as well)? But drop the ASKING price just one notch and the months of inventory drops to less than half (sadly it is still almost 3 years - so send the kid to vocational school instead).
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