I have received numerous contacts over the past few weeks from real estate blog readers, customers, and friends asking me different forms of the same question…. What does it take to sell a home in today’s market? How much time does it take? Can you really quickly sell a home in Tallahassee?
These are questions that have their basis in the fear that has been generated and perpetuated by a media establishment caught up in the frenzy of the housing credit problems. While we are certainly in a buyers’ market, homes that are positioned correctly are selling every day. The key to getting a home sold in today’s real estate market is to first understand market liquidity (and thus absorption rates), secondly maximizing the distribution options (marketing), and finally choosing the correct market positioning (pricing the home to create immediate interest).
Understanding Liquidity In Real Estate (Absorption Rates)
As we can see from the graphic above, there are more people who can afford less expensive homes than there are buyers that can afford higher priced homes. The more homes that are selling in a given price range, the more “liquid” we say that the market is. More liquidity in real estate = more information and a more certain estimate of the value of the home. Less liquidity in real estate = less information and uncertainty in the market acceptance of the home. That is why we see homes priced at $200,000 selling for 99% of their asking price, while homes priced at $5,000,000 sometimes selling 20% off of the asking price.
Once the liquidity level is determined, one should determine the absorption rate for homes being sold that are similar to the subject property. This must be done with good information, not with limited data (many web sites contain samplings of home sales). Once determined, the absorption rate tells you how many homes similar to the subject property will sell each month.
Marketing A Home To Get It Sold
I am always amazed when some people will decide to sell their home and think that it will sell itself. Whether in a buyers’ market or a sellers’ market, it is critical to get as many people excited about the home as possible. This excitement will drive-up the final selling price. Marketing a home to get it sold requires a sound plan.
Real estate marketing is like an auction. The more people that are attracted to the home, the more excitement that will be injected into the bidding, and the higher the price will go. Conversely, the fewer the people that are excited about a home, the less interest and excitement are generated, the lower the bidding will go. That is why you see some sellers “dump” their homes, even though the homes could attract a higher price. When marketing a home to get it sold, it is about maximizing exposure about the sale-able features of the property across a large, diverse distribution channel.
Positioning A Home To Sell
The key to positioning a home to sell is to understand where the buyers are in their buying cycle. You see, most buyers (over 90%) are working with real estate professionals. When a new property hits the market, it is exposed to 100% of the buyers in the market (see green flag above). The buyers that are prepared to buy give it immediate attention. If it is not positioned correctly, the prepared buyer chooses another home and that buyer is lost. Over time, the only buyers that come to see the home are buyers just entering the market, and they are not ready to buy!
Here is how that process works. After the first week we will begin to see the traffic taper off. These buyers do not have that same sense of urgency the first wave of buyers had. They are not as excited, and these buyers are asking the question, “I wonder what this property is worth.” By the time we enter the third week of marketing, the showings will have dropped off dramatically. These are buyers just entering the market and not ready to make decisions – they are not educated, nor experienced in the process. They have just started their home search adventure.
The buyers visiting your home in the first few days on market were not attracted to your home by an advertisement. In fact it is highly possible that no ad will have appeared during the first week of exposure. These are the buyers who answered ads 60-90 days ago in order to be today’s seasoned purchaser. The buyers we see coming in after three weeks are buyers new to market and not typically prepared to buy for another 60-90 days. This is why advertisements do not sell houses, rather positioning a home to sell is what sells houses!
Summary
You can sell a home quickly in today’s real estate market by determining the market absorption rate for your size and type of home, positioning your home where it will most excite potential buyers that are prepared to buy, and then marketing the home through the best available distribution channels. If you have a sound follow-up plan, you will be able to create the excitement that is required to quickly sell a home in today’s real estate market.
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Joe Manausa is the Broker and Co-Owner of Century 21 First Realty. He can be reached by clicking on the comments button below, via e-mail through his company website at www.manausa.com, or by calling (850) 386-2001.
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