I review market statistics ever quarter, and since we just passed the halfway point of 2011 I found some very powerful data on the relationship between percent of asking price that Westchester County homes sell for and how long they have been on the market. As the table from the Empire Access MLS below illustrates, the percentage of asking price a home sells for decreases the longer the home sits on the market, all the way down to a whopping 7% average loss for older listings.
The sample size, over 1700 closed single family homes in the first half of 2011, is plenty large enough to draw accurate conclusions. The longer your house is on the market, the less you can expect to net.
- 0-30 Days. There are very few home on the market 30 days or less. Even in a cash transaction, closing in 30 days is not easy. But of the handful that did close, they averaged above asking price by more than half a percentage point.
- 31-60 days. This is also considered a fast closing, and the home would probably have to sell in the first week or two to close this quickly. Obviously, these homes were priced right. And in a severe buyer's market, they averaged well over 97% of asking price.
- 61-90 days. This is a larger sample, and represents over 12% of the market. These homes did sell quickly, and just over 96% of asking price was the average closing result.
- 91-120 days. There is only a small difference, but still a difference, for the homes that took up to 4 months to close. This is just under 96% of list price, and represents almost 18% of the market activity.
Drum roll...
- 120+ days. This group represents virtually two thirds of the market, over 1100 closings. Homes that were on the market over 4 months averaged only 93% of asking price. In a county where the median sale price is almost $600,000, that equals about $40,000. The chief reason a home takes longer to sell is that it is priced too high. How ironic. The people that tried for more ended up with less.
Many of these homes were on the market longer. This simply represents their latest listing contracts with the broker that sold them, so regardless of how long they were on prior to the data recorded, once their price was right they sold.
There is another rough fact behind the numbers that isn't obvious from the table. If overpriced homes take longer to sell, then it becomes clear that the homes on the market for longer than 120 days may have had price reductions along the way! I've seen homes sold in the low $500s that started out asking over $700,000! If they had started out realistically, they very well may have sold for mid or high 500s! Asking for more and chasing the market cost the sellers upwards of $50,000! How ironic! In a high cost place like Westchester, real estate mistakes are very expensive.
Pigs get fat, hogs get slaughtered.
Price it right from the start and you'll net more. Be objective, think like a businessperson, and base your decisions on market data and not sentiment. The statistics aren't kind if you don't.
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