In a declining Real Estate Market, pricing a home ahead of the downward trend is so critical when trying to achieve a sale, otherwise sellers find themselves caught in the neverending chase to the right price.
Our policy here at Carolina Realty Group is to always do our homework prior to meeting with a potential seller. Our homework includes a thorough analysis of the market trends as well as a review of the current Absorption Rate (# of properties currently listed on the market divided by # of sales in the past 12 months = Absorption Rate). The Absorption Rate helps us to project where the market is heading. ie flat, depreciate or appreciate? After all, pricing is solely determine by Supply and Demand. Understanding the market trends is the first step to valuing a property. Now we can look more specifically at the property in question (subject property) and complete a Comparative Market Analysis (CMA). The CMA will include the areas most recent sales comparables and adjustments will be made to the selected comparables in an effort to make the comparable's features similar to the subject property. For example, if a comparable sale has a 2 car garage and the subject has a 3 car garage, then a postive adjustment should be made to the comparable for the value of a 1 car garage that exists in the subject property). Additionally, if the market is declining and a comparbale sale that is being used sold 3 months ago then there should also be a percentage loss in value or "Date of Sale Adjustment" that is based on the factual loss in value in that given market. Too many times we hear agents referencing sales that took place in a time frame when property values were higher.
Here are some real world examples of sellers "chasing" the market down during their listing term. About 6 months ago I met with three different homeowners in Hampton Hall. All three homeowner's decided to list their properties with other agents offering different advice than what I had given them. The first was a homeowner that I had recommended a list price of $725,000 to and they listed their home for $870,000. This home has now been on the market for over 190 days and is now listed at $750,000. Factor in the carrying costs of the home during that time as well as the continued market decline and they are now behind the 8 ball. The second seller that I met with I suggested a list price of $499,000. They listed the home for $559,000. The home has now been on the market for over 200 days and they are now listed at $479,000. The last example is a home that I suggested a list price of $439,000 and the home was subsequently listed for $549,000. Current list price? $499,000 and the property has now been on the market for over 150 days. The unfortunate thing is that many other homes have sold during this period at prices that these sellers would have more than likely accepted given their current list prices. Meanwhile, their property and others lanquish on the market and now face even lower numbers.
Since I've used these three properties from Hampton Hall as examples I thought it might be interesting to share some statistics (for homes only) in the community.
# of Home Sales YTD 15
Average Original List Price (price the property was first listed at): $516,025
Average Final List Price (final asking price for the property prior to procuring a contract of sale): $430,369
Average Selling Price (price that the property actually sells for): $394,933
Consider this, the percentage difference between the original asking price and the actual selling price is 23%, but the average percentage difference between the final list price and the actual selling price is only 8%.
The fact of the matter is that the numbers just don't lie. If you price your home properly at the very beginning you'll secure a higher price and avoid a lot of aggravation. Put your trust in an agent that has done their homework and is telling you not what you want to hear, but rather what you need to hear.
