Last year, when doing a CMA (current market analysis), I would use recently sold properties as comparable's. I would try to find homes similar to my clients property that had sold within 3 months to base my assessed value off of.
At the start of July, after the first time home buyer tax credit expired, I started to notice a trend in my market. Homes were starting to sit on the market longer and there were many sellers dropping their prices in order to get their homes sold. This caused a lag in pricing for some of my sellers as they weren't keeping up with this trend. (Totally my fault!)
As a real estate agent the most important thing I can do for my seller clients is to give them accurate information when helping them price their homes. If their priced to high their home will linger on the market costing them and I more money. I had to find a new way to get my clients homes sold.
So, I had to change the way I worked with my sellers. I had to completely change the way I determined a price assessment. I now base all of my CMA's off of active listings. Sold listings just don't cut it anymore.
Sold Comparable's Just Don't Cut It Anymore! You Have To Look At The Current Competition.
If you want to sell your home, and you're competing against short sales & REO's (bank owned homes/foreclosures), you have to be competitive. It doesn't matter that a home in your neighborhood sold 2 months ago for $200,000, you now have two short sales in your neighborhood priced at $180,000. You have no choice but to price competitively, or you won't sell.
No longer does a sold home matter when pricing your home with today's market. Home prices are changing everyday, and if you don't price ahead of the trend, you're going to be losing a lot of money. From now on, I only use active listings as comparative properties, otherwise, I would be doing a disservice to my clients. They have no hope of selling if there are 5 properties just like theirs priced 10% below last months market value. It just won't work.
To all you home sellers out there, if you want to your home to sell, you have to be better than your competition and that's it. What sold last month doesn't matter anymore. It's all about who's selling today. Your neighbors determine your selling price; not your agent, not your equity, not our commissions.
To all you real estate agents out there, if you want to get rid of your long standing inventory, you better start looking at active properties. You better start learning how to calculate absorption rates, and you better up your game. It's your job to get that home sold, and if you're pricing based on what sold last month, your way behind the curve.