If you’ve ever had the distinct pleasure of sitting through any kind of listing presentation or property-pricing analysis, I’m sure you got an earful about how important it is to PRICE YOUR PROPERTY RIGHT!!! There are probably as many ways to say it as there are agents saying it, but here’s the thing: it’s true.
Getting it right the first time is really, really important.
Unless, that is, you enjoy having your property on the market.
Just sitting there.
When I say, “the first time,” I mean from the moment the property is put onto the market. When it’s first made available, it needs to be ready, and priced properly. The more ready it is to sell, the faster it will do just that. Remember that whole product / price / packaging thing I keep yammering on about?
I talked about having an epiphany some time ago, but a few days back, I actually went and looked at the numbers to see if there was any validity to my ideas.
Frankly, the numbers surprised me. Let’s take a look.
Take a look at the numbers
For purposes of this analysis, I started with all the sales within my market area for the first eight months of 2014. There were 524 sales. I eliminated all the corporate, government, builder and institutional sales, and still had 485 sales to work with.
Next, I did a simple calculation to determine how long it took for each of the properties to go under contract, and then sorted the results. Of the 485 properties that “made the cut,” 377 went under contract in fewer than 30 days. In fact, those 377 properties were on the market for, on average, less than eight days.
Now here’s the thing: for the properties that were on the market longer than 30 days — and that means anywhere from 31 to 481(!) days — the average was 81 days, or almost three months, even in this crazy market.
Next, I did a bit more statistical analysis, and eliminated everything outside of two standard deviations, based on sold price. My thinking was that I would eliminate the data that might be skewing my results. I wanted to take out the properties that — because of their high price points — had very few potential buyers. Having a severely limited pool of buyers obviously means that each property would take much longer to sell. On the other end of the spectrum, I also eliminated the properties with the very lowest price points, which would be very easy to sell because just about every buyer would qualify for them.* Because of the way statistics works, I was still looking at about 95% of the sales, or 462 properties.
With this revised group, we ended up with an average days-on-market of 22, and a median of six days. That means that within six days of being placed on the market, half of them were under contract. When I looked at those properties that were on the market for longer than 30 days, the average time to go under contract was 76 days, and it took 54 days for half of them to go under contract. In other words, it took nine times longer to get half the properties under contract.
Now, the thing I remember most about my college statistics class was the professor, on Day One, saying, “The thing I want you to remember most about statistics, is that you can make numbers say anything you want them to say.” Maybe a good bit of that is happening here. On the whole, though, no matter how you slice-and-dice it, you want your property to be ready to sell the day it hits the market. You don’t want to be doing anything that will delay you getting it under contract . . . and that includes overpricing it.
We’ll talk more about how to do that in future posts, so stay tuned. In the meantime, I’m only a call or click away, and I look forward to helping. You just need to let me know what you need.
Randall Brennan, REALTOR
EQUITY COLORADO REAL ESTATE
Certified Negotiation Expert
Certified Investor Agent Specialist
Certified Distressed Property Expert
Certified Military Housing Specialist
So what’s next? Take your pick.
*In reality, I didn’t eliminate any properties from the low-price end of the spectrum because everything less than average fell within two standard deviations. Only the most expensive properties were eliminated. I just thought I’d tell you that in case the rest of this article wasn’t quite geeky enough for you.