You property listed “FOR SALE” and you’re wondering if you should reduce your asking/listing price.
Here are four key things to consider in answering the question of price reduction. As an example, I’m going to include some statistical information for the market I work and play in, The Woodlands, Texas. The philosophical approach using accurate data will work in all real estate market.
Let’s start with a few important qualifiers before we dive into the hard facts. Things that effect salability you probably know; location, condition, price, marketing/advertising. You can’t change the location, let’s assume you’ve taken smart steps to merchandise and stage your property and you have a savvy real estate agent marketing/advertising/promoting like a crazed banshee. What’s left? Adjust the price.
All sellers grapple with the difficult task of pricing. Here’s four factors to help you decide intelligently.
1. Find out what the Average Number Of Days On The Market is for all “active listings” in your general market. You should also narrow it down to your price range and even your specific neighborhood. (A savvy real estate agent can provide you with this information.)
EXAMPLE: The Average Number Of Days On The Market (ADOM)” for all active listing inventory (908), in all price ranges, is 85 Days. (The Woodlands, Texas – 10:25AM, August 4th, 2008)
Let’s say you had your property listed For Sale at $549,000 in The Woodlands, Texas. The ADOM for all actively listed properties between $500,000 – $600,000 is 91 Days. In this example, using your data for your property in your market area, if your property has been on the market longer than the average – Adjust The Price Now! Do it today.
What’s the first question a buyer asks when they walk through your door? Answer: How long has this home been on the market? Don’t let the answer be, “longer that average”.
2. Find out what the Average Number Of Days On The Market is for all Closed Listings in your general market for the last 30 days. These ADOM numbers from closed sales will reflect buyer activity (contracts written) from 30 to 60 days ago. This number will tell you what ADOM were for properties that qualified buyers choose over all the other available homes.
EXAMPLE: In The Woodlands, Texas during the month of July there were 255 Closed Sales, the Average Number Of Days On The Market was only 55 days. Using the same mythical listing price of $549,000 the ADOM is 65. If you’re seriously motivated and you want to move and your property has been on the market for more than 55 days…you would ACT NOW.
3. Take a look at the seasonal pattern for your area. In our area, as you can see from the graph below, New Contracts Written peak in May, June and July. Buyer activity naturally ebbs as school begins and the holiday season kicks off. This means there will be fewer qualified buyers in the market place. If you want to be one of the sales that happens next, consider a price adjustment today, not next month.
4. Consider how showing appointments are trending in your market place. Taking into account the seasonal flow of qualified buyer traffic, is there any reason to believe that more buyers will appear or enter the market place? If the answer is no, adjust you price today.
OK, that’s alot to swallow, it’s bitter too. Experience tells us it’s better to take action today than regret inaction tomorrow. Please keep in mind that this all assumes that you have taken dramatic action to merchandise/stage your property appropriately and you have a savvy real estate agent marketing like a whirlwind.
Any questions, feel free to give me a call, Ken Brand, 832-797-1779 or shoot me an email or leave me a comment.
Thanks.
