Buyer Enticing Pricing, and Time on the Market

I analyzed the data reported to the MLS by the listing brokers of 126 sales in and around Madison, through mid September 2010.  To be considered in the study, the property had to be listed on or after January 1, 2010.

Conclusion:

The data proves nothing we haven’t known about the fundamentals of pricing:  There is a correlation between “over price” and a longer length of time on the market.  In the economy of pre-2007, which is the one most home seller’s knew when they bought their homes and still relate, the fundamentals were nearly irrelevant.  Testing the market at prices not supported by recent sales could draw interest and offers. Appraisers adjusted and underwriting conceded.  

A home owner who was a buyer five or more years ago probably can’t get revenge today. But, they could accomplish a relatively quick sale and avoid the stress of a protracted effort if they concede the "hopeful price" and price according to recent neighborhood sales. Take time to evaluate your objective. If peace of mind is more important than a bigger than reasonable piece of the pie, price is the solution.

Findings:

·         Thirty seven percent (37%) of the group sold without making a single price change

·         Average time on the market of all the sales in the group is 116 days

·          Average time on the market from last price change to accepted offer is  34 days

·          Average sale price to last asking price (price after one or more price reductions and before a buyer made an offer) is  96%

·         Average sale price to initial asking price is 91%

·         Average days on the market until the price where a buyer made an offer that resulted in a closing is 88 days

A couple of observations:

·         A home not sold in the first 30-40 days is not likely to attract a buyer at the asking price

·         Homes do attract qualified buyers relatively quick (34 days), when the buyer considers the price to be favorable

·         When you properly price on day one, a sale price of 97-98% of your asking price is reasonable to expect

• Using this information to work backward expecting to still get a price above supported value is not going to work.

Deficiencies, and Logical Assumptions in the study:

Distressed sales are an unknown percentage of this study.  Time on the market from last price change to a status change from ACTIVE to a status indicating an offer is in place is not always accurate. Logical judgment was used to come up with a reasonably accurate data. Sales where I could see a continuous effort to market the property beginning prior to January 1 are included.  I excluded properties where the data provided appeared to indicate a non-listed property offered for sale by owner and sold by a buyer agent as those do not give time on the market or pricing history information.