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How did that house down the street sell so fast?

January 5, 2011

Even in a market like we are in now, there are homes, specific homes, a very particular subset of homes that fly off the market, seeming to go under contract before the sign is even in the yard.   It is not a phenomenon particular to any one price range, location, school district, or any other of the many factors people consider when looking for a home.  The reason is that those sellers price their homes to be IN the market, not  just on the market.  This closely relates to my post on November 1st discussing how pricing a home too high initially then following it with price reduction after price reduction can be relative to chasing a ball down a hill- Look at the following graphic and consider the points below:

• The vertical axis represents price. At the top are houses priced above the current market value. The most competitively priced homes appear closest to the center of the chart.

• The horizontal axis represents condition and staging relative to the competition. Homes that are staged the best and in the best condition appear on the left. The more work a home needs, the further to the right it appears.

• The key factor that separates a seller’s market from a buyer’s market is the percentage of inventory that falls within either category.  In the current buyer’s market, there is actually a relatively small percentage of homes that are “in the market” based on both a competitive price and condition relative to comps.

• Houses out of this zone are effectively out of the market. They are either priced too high or the condition doesn’t warrant the list price.

• In a seller’s market, the percentage of housing inventory that is “in the market” is considerably larger. Prices are appreciating, so even those listings that appear to be overpriced today may get pulled back into the market with a little time.

• In the current market, buyers hold the cards. With a lot of sellers competing for their business, they can be choosy.  Buyers are hunting for deals and steals and won’t give much consideration to listings that are pushing the value envelope.

Keep in mind that in today’s real estate market, buyers access listings online. They can quickly narrow their search to a geographic area and price range. Once they have identified that subset of houses, they go through a quick process of elimination, knocking out homes priced at the top of the market and those that are in least competitive condition.  All things being equal, buyers will always narrow their focus to the lowest-priced homes in the best conditionA buyer may look at seven houses, but they will only make an offer on one. Your house may have earned a showing, but if you didn’t get the offer, all you’ve accomplished is that you provided the buyer with a means of comparison – effectively helping to sell the house down the street.

If you want to know if you are able to price your home IN the market and achieve your goals, shoot us an email and we will be glad to chat and provide our expert opinion on what it will take to get your home SOLD.

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