News
May 6, 2018

Strategic Pricing Results In A Quicker Home Sale

By AARON TAYLOR

Anyone watching real estate issues on Facebook has seen one of the posts heralding a home sale in less than a week. Behind the post is a Realtor® doing a happy dance. But the truth of the matter is those type deals are the exception - not the rule.


Aaron Taylor
2018 NTAR President

The Northeast Tennessee Assocaition of Realtors® (NETAR) Trends Report shows the average home sold in March was on the market for 135 days. It's an accurate representation of the distribution of all sales across 11-counties from the local Multiple Listing Service.  But a drill down to the county level paints a different picture.

Realtor® Property Resource (RPR) data show the median time on market in Washington County, Tenn. was 67 days in March. In Sullivan County, it was 76 days. It was a little longer in  Greene County – 73 days - and Carter County - 88 days. But when you look at days on the market in Hawkins and Johnson counties in Northeast Tennessee and the three Southwest Virginia counties, it drives the the regional average into triple digits.

Home owners preparing to market their home during the prime selling season face some big decisions that affect how long it will be on the market. Inventory is a definite challenge – especially in some price ranges. But a tight inventory doesn't necessarily mean there's a critical shortage of homes.

While there are fewer listings in the $200,000 and below price range than last year our overall six months of inventory is the rule of thumb for normal market conditions. And for now, it looks like it's our "new normal." I say new normal because we used to have 10 to 11 months of inventory much of the time.

This inventory challenge has put more pressure on pricing. A lot of homes are initially passed over because buyers balked at the asking price. Most of the home sold in the past year were discounted 4% to 5%.  Still, talk about high sales volumes, and a tight inventory temps some sellers to overprice.

Here's a typical timeline for an overpriced listing:

  • Initial interest and maybe some showing followed by a lull.
  • Frustration at why buyers are walking away even though the market's hot.
  • Meeting with agent to review a new price and deciding to discount.
  • New marketing effort at a reduced price.

The bottom line is the home spends extra time on the market while those initially listed in the strategic sweet spot somewhere between the average listing and selling price of comparable properties were snapped in a week or so.  

Another thing savvy sellers are pragmatic about is their return on investment for the upgrades.

Most homes for sale in our market have some age on them. That means owners have made upgrades, and some have a hard time getting past the reality that they won't get full value for those improvements.

Here're a couple of examples from a cost/value analysis by costvalue.com:

  • You can expect to get back a little better than 80-cents on the dollar for what you spent insulating the attic, but a little less than 50-cents on the dollar for a bathroom upgrade. 
  • Those who went high-end for a garage door or front door replacement will get back almost all of it at resale. But the kitchen upgrade is only going to return about 65-cents on the dollar.

The most important thing sellers can do is listen to what the market is saying, which is not the same thing as you read about in mass media or see on HGTV. And above all don't put much stock in the popular online home value estimates. Granted, they are sometimes in the ball park, but most of the time they miss the mark.

 The best way to really hear what the local market is saying is to select and partner with and confide in a professional Realtor®, then listen to their advice. They are focused on and have the tools to monitor what is working and what's not working in the local market.

Aaron Taylor is the 2018 president of the Northeast Tennessee Association of Realtors. The real estate education and trade group is the voice for real estate in the Tri-Cities and has over 1,200 local Realtor® members and almost 100 affiliates

 

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