It is time to look at the status of the market so that sellers can make informed decisions on how to price their homes to insure the highest price in the least amount of time.
One of the major reasons for buying a home is the increase in equity. Homeowners have long expected that they could sell their homes for more than they paid. It has been very hard the last few years to watch that equity be washed away. But, not accepting present conditions and incorporating them into the listing price will not bring a higher price. It may be the exact opposite.
According to a report compiled by Windermere from statistics from the Northwest Multiple Listing Service, the total number of distressed properties has steadily increased since the third quarter of 2009 (Distressed properties include short sales, foreclosures and bank owned properties).
The first quarter of 2011 puts the Eastside’s closed residential and condominium distressed sales at 31 percent, up from 24 percent last quarter. King County has moved up to 36 percent. We may be feeling the pain, but, Pierce County is in much worse shape at 51 percent. Nationwide, banks are holding back many distressed properties simply because if they release them all at once, the market would be severely impacted.
Distressed properties are a major concern and are partly responsible for bringing prices down. How they affect the value of a particular home will depend on the number of distressed properties in the general area. Sellers have to look at homes that sold that are distressed and those that were not distressed to establish a listing price.
Pricing a property above the market will produce less than the best results. According to the MLS, 489 homes were sold in March in Areas 500-600. This includes homes east of Lake Washington, from Kennydale to the King-Snohomish County line. Of that number, 38 percent had no price change, were on the market for 15 days and sold at 99 percent of original list price. On the other hand, 62 percent had one or more price changes, were on the market an average of 170 days and sold for 87 percent of the original list price.
These numbers reflect two problems. The first, pricing a home in today’s market is extremely difficult. It takes not only looking at what has sold in a particular neighborhood and how long they have been on the market, but also the condition, amenities of the home and the neighborhood, short sales and foreclosures and how quickly the seller needs to sell.
The second problem is the expectation of the seller. Sellers always believe that their home is better than the competition. Years of updating and maintaining can create a false sense of value.
After reviewing the statistics and market conditions, list price should be set with realistic expectations. The chart uses the same MLS statistics cited earlier and shows clearly that the longer a home is on the market the less the selling price is as a percentage of the list price. Homes priced correctly sell faster at a higher price. Price changes should be considered every 30 days to stay competitive in today’s market.Total Days on Market # of Days Sold Price to Original List Price 0-30 99% 31-60 95% 61-90 91% 91-180 89% 180+ 84% Sources: Northwest Multiple Listing Service and Windermere