Compelling Reason to Price Your Home Right from the Start

By
Real Estate Broker/Owner with J. Philip Faranda (J. Philip R.E. LLC) Westchester County NY License # 49FA1074963
http://actvra.in/drR

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. 

Days on Westchester Count real estate market

  • 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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Re-Blogged 7 times:

Re-Blogged By Re-Blogged At
  1. Marte Cliff 07/04/2011 07:21 AM
  2. Michael Brown 07/04/2011 07:45 AM
  3. Praful Thakkar 07/04/2011 05:02 PM
  4. Mike Cooper 07/05/2011 01:09 AM
  5. Barbara Martino-Sliva, Top Producer 07/05/2011 02:07 AM
  6. John Cannata 07/07/2011 09:07 AM
  7. Gabe Sanders 07/10/2011 11:51 PM
  8. Lori Cain 07/11/2011 07:09 AM
Topic:
Home Selling
Location:
New York Westchester County
Groups:
I Love NY
Learn to be a Top Producing Listing Agent
Posts to Localism
Market Reports
Westchester County
Tags:
pricing it right
market reports
westchester real estate market

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Rainer
49,598
Craig Reeves
Keller Williams Realty Jupiter - Jupiter, FL
HIGH Information...NEVER High Pressure

GREAT information. Straight to the point. Thanks for sharing.

Jul 05, 2011 02:29 AM #44
Rainer
253,384
Kathy Burke
Sensational Home Staging~~Danville, CA - Danville, CA
S.F. East Bay Home Staging

Charts are a GREAT way to silently get a point across....takes some of the defensivness out of the "conversation"!  This PLUS the chart that Debe (#4) uses would make me think hard about setting a price up front that made market sense!

Jul 05, 2011 03:31 AM #45
Ambassador
932,063
Robert and Lisa Hammerstein -201-315-8618
Keller Williams Valley Realty - Hillsdale, NJ
Bergen County NJ Real Estate

Phil - Yep now if we could only convince the sellers of these facts and show them the charts without their eyes glistiening over. Numbers don't lie... But alas it's always up to them to price it where they think it's appropriate no matter how many ways we tell them that it wont help them to "test" the market. Great post!

Jul 05, 2011 04:00 AM #46
Rainer
439,992
Lori Gardiner
RE/MAX River's Edge - Bristol, RI
GRI, SRS, ABR, e-PRO

Hi Phil,

Great info, data table and to the point!  Thanks for sharing.  I am in the same predicament...I recommend a price but the Seller always wants to start higher and the home sits on the market that much longer....ugh!

Jul 05, 2011 04:16 AM #47
Ambassador
868,368
Mike Frazier
Carousel Realty of Dyer County - Dyersburg, TN
Northwest Tennessee Realtor

J Philip, this proves what I try to tell the people who list with me. Price is right and most probable will sell pretty quickly.

Jul 05, 2011 04:27 AM #48
Rainmaker
408,217
Tni LeBlanc
Mint Properties, Tni LeBlanc (805) 878-9879 - Santa Maria, CA
JD, MA, REALTOR, CalBRE # 01871795

This is a powerful piece of evdience, Phil.  

And I'm sure it is a blog post you will be referring people to for a long time to come. 

Very true.

Jul 05, 2011 04:38 AM #49
Rainmaker
571,412
Bill Gillhespy
16 Sunview Blvd - Fort Myers Beach, FL
Fort Myers Beach Realtor, Fort Myers Beach Agent - Homes & Condos

Hi Phillip,  Just joining the crowd to add my thanks for a superb post.  That said, there are other costs associated with " staying too long at the party " !!!

Jul 05, 2011 05:20 AM #50
Rainmaker
607,555
Morgan Evans
Douglas Elliman Real Estate - Manhattan, NY
LICENSED REAL ESTATE SALESPERSON

Your words of wisdom are always worth listening to, Phil.  Another featured post well done!

Jul 05, 2011 06:30 AM #51
Ambassador
1,826,923
Gary Woltal
Keller Williams Realty - Flower Mound, TX
Assoc. Broker Realtor SFR Dallas Ft. Worth

Philip, I always think this trend relates to supply and demand. There is more demand for that initially listed home if it is a good one. The bad homes do languish, cause well, not many people want them. But price is a huge factor no matter what.

Jul 05, 2011 07:08 AM #52
Rainmaker
617,355
Nancy Conner
Managing Broker - City Realty Inc - Olympia, WA
Olympia/Thurston County WA

What a great visual to help this crucial info to really get thru to sellers!  And I know that our market has very, very similar stats about the devastating impact of starting too high to "test the market". 

Jul 05, 2011 07:08 AM #53
Rainmaker
75,131
Shantée Haynes
Berkshire Hathaway HomeServices PenFed Realty - Washington, DC
Your Congress Heights Resident Agent

HA! The best way to explain is good ol' DATA!! Real stats will bring them the point everytime! Not to mention it gives them better insight as to why their "theorized" idea to list high to have negotiating room defeats the purpose!

Jul 05, 2011 08:27 AM #55
Rainer
85,078
Scott Silverstone
William Raveis Real Estate - New Haven, CT
www.CTProperty.com, Connecticut Luxury & Waterfront Realty

Great post - Sellers often do not realize that they may cost themselves money by pricing too high. Your chart demonstrates that a well priced home will sell for that price. I use market statistics to educate my sellers so they understand the pricing and strategy our team uses to market the house don't come from a gut feeling - the housing market on the CT Shoreline determines the fair market price.

Jul 05, 2011 09:56 AM #56
Rainmaker
174,195
Sonsie Conroy
I serve buyers and sellers everywhere in San Luis Obispo County - San Luis Obispo, CA
Energetic, Enthusiastic, Knowledgeable Realtor

But Gary (#53), even the least desirable home will sell fast if it is properly priced. The worst dog in the neighborhood would sell if you priced it at $10,000 (and probably at $100,000 in many markets). That's not to say some houses are just nearly impossible to sell--but IMO it is mainly because the seller will not bite the bullet and price the darned thing where it will sell.

Jul 05, 2011 10:39 AM #57
Ambassador
1,670,777
Tammie White
Franklin Homes Realty LLC - Franklin, TN
www.FranklinHomesRealty.com or (615) 495-0752

Well, now you've got me thinking. I've got to do this for my area to see what the difference in price is. This is such valuable information for your Westchester County NY sellers. I hope they heed your advice.

Jul 05, 2011 04:59 PM #58
Rainmaker
631,225
DeeDee Riley
Lyon Real Estate - El Dorado Hills CA - El Dorado Hills, CA
Realtor - El Dorado Hills & the Surrounding Areas

Philip,

This is a great way to look at the market and how overpricing a home can hurt in the long run.  I'll have to see what our statistics look like for El Dorado Hills!  Thanks for sharing.

Jul 05, 2011 06:11 PM #59
Rainmaker
1,265,690
Lyn Sims
RE/MAX Suburban - Schaumburg, IL
Schaumburg IL Area Real Estate

Wish I could recover this data from my MLS. I asked months ago & it's not possible. Great info for sellers that show chasing the market costs you money.

Jul 06, 2011 03:30 AM #60
Rainer
124,066
Jeff Coon
Annie Mac Home Mortgage - Toms River, NJ
Branch Manager

Very helpful info, thanks for posting it & sharing with the community.  Sellers take note!

Jul 06, 2011 05:03 AM #61
Rainmaker
1,548,253
Carla Muss-Jacobs, Principal Broker (503) 810-7192
BuyersAgentPortland.com | Portland Metro Exclusive Buyers Agent | 100% Buyer Representation ~ 100% of the Time - Portland, OR
Buyer Focused ~ Buyer Results

Love this post . . . really paints the picture of The Price is Right!!

In our MLS, we can pull up similiar stats, but ours isn't a percentage of the "asking price" -- but the "original list price."  If the "Original" list price was $250,000 and it sold after 163 days at $229,000 (but had a price reduction to $239,000, which is the price point that brought in the buyer), the % of SP/LP would be based on the "original" list price. 

Jul 06, 2011 09:59 AM #62
Ambassador
3,247,134
Jeff Dowler
Solutions Real Estate - Carlsbad, CA
The Southern California Relocation Dude - Carlsbad

J. Philip

An excellent read. We all know this and talk about it, but having the data to support it makes so much sense. Great visual to share with prospective sellers. I'll be doing more of this in the future.

I'm curious about your average marketing time and the overall average Sale Price/List PRice Ratio.

Jeff

Jul 06, 2011 06:21 PM #63
Rainmaker
240,765
Jay O'Brien
RE/MAX Revolution - Kansas City, MO
Kansas City : Social Media Guy

Great stats and thanks for pointing out that we can get these numbers right from our own MLS!! 

Mar 28, 2012 07:01 AM #64
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