Recent home sales prices tell small part of success story. The tale of a home sale can be one with adversity. The challenge is often finding the correct marketing price. Sometimes the story includes marketing, sometimes staging or perhaps condition. For the purpose of this article we will focus on pricing. List price or “asking price” is a large part of a good Realtor’s job. Like the experts on Antiques Roadshow a good real estate agent knows the latest “sold” prices, and has seen a good bit of competition. Unlike the Roadshow, your agent most likely has a relationship with you. This is good but it also can cloud judgement a bit.
I was surprised when I looked at 12 sold listings that recently sold in an upscale neighborhood for Chattanooga, TN. What I found was that 50% of the sold homes had been listed with at least 2 different companies at consecutive time periods. My focus is most always on the final sales price and the days on market for that listing period. I had never considered the marketing period prior to the one that was successful. Many of the “first time” efforts lasted longer than the second time.
This finding does play a part in the article I wrote about many homes not selling. So that means that some of the homes that scored in the did not sell category eventually do.
What is interesting is what this means for traditional reported numbers. Realtor organizations like to promote all the good things about the housing market. One statistic mentioned is the List Price to Sales Price ratio. Generally this is calculated on the list price last quoted and the sales price as a percentage. So if a house is originally listed for $120,000 and reduced to $100,000 and sells for $97,000 then the List Price to Sales Price ratio is 97%.
In my study what I found was that the last listing price to sales price ratio was 95%. The original list price to sales price ratio was 91%. But the surprising fact was that HALF of all the sold listings started out with a previous listing and a marketing price of 82% of the final sales price!
That is a story you will not hear published in Realtor trade publications. Of course you do have to dig a bit because Realtors will leave the second listing off the market until the Days on Market counter resets.
The moral of this story depends on if you are a buyer or seller.
If you are a buyer, make an offer on that home that seems priced too high! Especially if the listing has some time on it. There are investors that make a good living on this strategy with bank foreclosures.
If you are a seller. Then consider market feedback. If you are getting showings consistently but no offers, your price is most likely too high. (Perhaps condition, staging, etc will make a difference). If you are not getting any showings at all then your price may be really high and also you need to check the marketing.
Happy Home Selling and Buying! and remember that Recent Home Sales Prices Tell Small Part Of Success Story.