Dollars and Sense

KrisBerg05 a.jpg Pricing your home is SO important. It seems we can’t say it enough. A couple of days ago while preparing for a listing appointment I decided to compare the performance of homes sold during the last quarter. Specifically, I wanted to see if what I have always found to be true still holds; that is, the longer a home is on the market, the less the sale price will be. Of the 147 active listings in Scripps Ranch that particular day, 73 (50%) had already had to price adjust at least once.  For homes sold during the past quarter, here is what I found:

Homes Sold April 1, 2006 – June 20, 2006

                                 NO Price Reduction        Price Reduction(s) 

# Homes Sold                         59                                20

Avg. BR/BA/Sq. Ft.             4/2.76/2291                  4/2.6/2080

Avg. $/Sq. Ft.                          $361                        $349 (-3%)

Avg. Market Time                    33 DAYS               92 DAYS (+178%)

What this shows is that the homes that were presumably not priced correctly from the outset (had to price-reduce during the listing period) sold on average for 3% less than their properly priced competitors.  As would be expected, the price-reduced homes also had a significantly longer market time. A three percent lower sale price on the average home sold in Scripps would equate to approximately $25,000, which I believe most will agree is more than pocket change.

I should point out that in each of the two categories, homes ultimately sold (again, on average) at 3% less than their last list price. What this tells me is that buyers step in when they see their perceived value within striking distance; until that happens, sellers either need to hope they get really lucky or they need to get enough market time under their belt to suggest to the buyers looking for a “deal” that the time is right to make a low-ball offer.  So, when listing your home for sale, I encourage you to select an agent that understands your marketplace and can advise you on comparable sales and trends, study all of the data carefully, and make a thoughtful and informed decision on pricing. Proper pricing will not only increase your bottom line, but it makes good cents sense.

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