I decided I needed a new series.
Redfin has a series they call the "Real Estate Scientist":
The Real Estate Scientist is Redfin's program to develop data-driven best practices for buying and selling homes. This guidance is based on the best academic research and our own analyses of listing databases and website traffic.
In my series, I am going to talk about the reality of their experiments. When they bring out new info, I'll congratulate them for the finding. When they trot out old stuff and call it amazing research, I'll call them on it... In the first part, I will be tackling their Seven Tactic for Selling a Home(pdf warning).
1. Don't overprice your property. In a 2002 study of 3,490 Stockton, California listings, homes without a price reduction sold for 97% of initial list price, whereas homes with a price reduction sold for 88% of initial list price, a difference likely greater than the amount of the price reduction.
First... duh. Ask even the slowest of real estate professionals and they are likely to say that over-pricing is sales suicide. Even more so in a market like we have right now. But, the basis they are using is a stretch. It looks like they knew that they needed to say "don't overprice" and needed to get their science to show it. Without knowing the extent of the reductions, the science is weak at best.
2. Set your price to show up in web searches. According to a September 2007 Redfin analysis of its own traffic in the San Francisco and Seattle markets, moving from one price band down to the next can increase online activity by as much as 7.1%.
Again... duh. Now, I will say that the stat of 7.1% is good, but look through the MLS and you will find price clusters. Listen to buyers and you will hear the range breaks. Everyone (even consumers) knows that there is a lot more traffic at $399,000 than at $401,000. But, I'll give them the props for the data.
3. Debut on Friday. According to a December 2007 analysis of Redfin’s website traffic for 119,079 listings in the Boston, Los Angeles, San Diego, San Francisco, San Jose, Seattle and Washington, D.C. areas, listings that debuted on the best day, Friday, got on average 7.7% more visitors in their first seven days than those that debuted on the worst day, Thursday.
This is probably the gem of the seven. Frankly, I'm surprised that Thursday was the worst day. We all know that the closer to the weekend the better. I will be trying to make sure that my properties hit the MLS at a better time, but the problem is that there are so many outlets, and the information staggers out of the MLS at different rates... so, hitting the MLS on Friday might mean that some of the outlets might not show it until Monday. Regardless, this point needs more looking in to.
4. Stay engaged. A 1998 survey of 115 sellers in Columbus, Ohio found that motivated sellers are able to sell their property as much as 30% faster than typical sellers; one factor may be that motivated sellers are more willing to bargain, but the authors also speculate that such sellers motivate agents to be more aggressive on their behalf.
Vaporous at best. They quote two other studies. One, the Madison, WI study is pretty weak. I covered it last year, and there is a giant hole in the study. There are a few little holes as well. But, to say that the motivated sellers sold faster because they hounded their agents rather than because the properties may have been priced more aggressively is a big stretch.
5. Market the property online. Of these sites, the online community craigslist generates a significant amount of visits to a listing web page; in our experience, craigslist draws more visitors than any other site. A Redfin study of 121 of its own listings in the Los Angeles, San Francisco, Seattle and Washington, D.C. areas found that, from September 1, 2007 to November 30, 2007, a craigslist posting about a listing generated an average of 6.8 visits to that listing on Redfin’s website.
Duh. Our numbers show that 84% of buyers begin their search online. The Craigslist numbers surprise me. I would hope those are daily numbers, but there is nothing in their excerpt to say that. I know that my listings on Craigslist generally produce about 6-8 site visits per insertion. The big question, with any particualr website, is how many of those are buyers that are unique to that site.
6. When selling your home, stay put. The pricing study of 3,490 Stockton listings found that vacant homes were 9.5% more likely to undergo a price reduction, which the author speculated was the result of a perception among buyers that the owners were anxious to sell.
Vacant homes are generally less attractive (I've seen some pretty ugly furniture, though), and the sellers are more motivated... that second mortgage payment tends to be a motivator.
7. If you can, wait until neighboring foreclosures are off the market. A November 13, 2007 report from the Center for Responsible Lending estimates that a foreclosure costs neighboring homeowners an average of $5,000 when listing their property.7 The banks selling foreclosed properties are often eager to sell, creating an underpriced competitor in your area. Before listing your home, visit a foreclosure real estate site to determine if any nearby foreclosed homes are for sale; most pricing analyses prepared by real estate agents exclude this inventory. If you can’t wait to list your property until neighboring foreclosures are off the market, you will have to account for the effect of the foreclosures in your own pricing.
I'm sorry. I fully appreciate the implications, and I follow the logic, but there is one GIANT problem here. What happens when you get into the listing period, and a foreclosure pops up for sale? One NEVER knows when a short sale or foreclosure is going to come on the market in a given neighborhood. You can wait and wait and wait... then list your home and have the house across the street come up as a foreclosure or short sale.
Please don't take this as being flippant. As a real estate professional, the information I rated with a "duh" is just stuff that has been drilled into us. It simply isn't new or shocking. If the 72 year old agent in the office that has no need for an email address or "fancy-dancy" cell phone knows it, and has been practicing it since her teen years, it doesn't qualify as ground-breaking science.
When you are ready to talk to an agent that has been doing it since before Redfin thought it was cool, call me.
;^)
Comments (4)Subscribe to CommentsComment