What is really happening in the market? Consumers may not be getting a true picture of what is really happening.
People believe the market is HOT and properties are selling with multiple offers, over asking price and getting offers in just hours of being on the market. The reality is, we are in a very unstable, yet strong market.
I sell an average of 100 homes each year and just last month sold 13 properties! Not because the market is crazy... because that is a normal month. The reason many people think the market is crazy is because most real estate agents (about 80-90% of the them) sell 1-2 properties each month. So, think about your own job. If you only did what you do best 1-2 times per month vs 10-20 times every day, how great would you be? I talk to sellers every day, and I am surprised the common conversation other agents have with Sellers is "how much do you want to get? GREAT! this is a crazy market....and we can always come down if we need to". Selling a home every few days has given me and my clients a more realistic view of what is really happening.
There is a very specific strategy behind every property that goes up for sale. You want to position properly so you get the most equity possible. You want to price high enough that you don't leave money on the table, but you don't want to price so high, you miss the buyers that would look at your property.
Top real estate agents, like myself, that successfully get our clients top dollar understand the good 'ol Econ 101 rules of "Supply & Demand". When you understand where your particular style of home, amenities and neighborhood activity is, then and only then, can you come up with a strategy to beat the current market conditions.
Understanding the market does not come from a computer generated value... or an appraiser's opinion on the value you they give your home. Those do not show what the buyers are willing to do in your area and how they are buying in the current market conditions. In this day an age of technology and the so called "big boy" websites, Sellers are getting mixed information. Unfortunately all too many of them are underpricing or overpricing their property when they try to sell.
I am using this property as an example because it really helps understand how even a few thousand dollars off in value can mean a lot to someone. Real estate should not be a guessing game. There is enough hard data to make sure you price a property correctly for the market.
In the following examples it is amazing how the property values can be so different from each other. They are all big sites, yet prices are all across the board. There is a $17,457 difference between the lowest bid and the highest bid. that is 24% of the value of the property! Would you really trust any sources that were different by 1/4th of the total value of the property?
That difference is a LOT of money for someone that owns a $60-70k price. I will show the true "supply and demand" after you review the so called "best sites to see what my house is worth". The reality is this owner paid $72,600 in 2005. The reality after selling over 1,000 homes in the past 10 years in this down market, and selling over 1,500 homes prior to that since 1991, is that in the KC area, our values did not really drop (for this price range of home) from 2006 to today. That may vary in some areas and price ranges, but for the most part my extensive experience in selling and closing that many homes is that most properties will sell close to what they were bought for if a seller bought from 2006 to 2016. Now, today, the supply and demand is a little off for some areas, and seller's can capitalize and maybe sell for more. Also keep in mind if someone bought a short sale or foreclosure, they gained their equity the day they bought the property. I just helped a young home owner sell his first property and it was a foreclosure he bought for the $70k range, and we sold it in this competitive market for the $130k range with multiple offers... because there is absolutely NOTHING under $130k for sale in that area.
So what might this home really sell for in this market? If we look at the supply and demand, we can determine what the current competition is, and what the current buyers are really paying for properties like this.
Neighborhood activity for the past 6 months ranges from $24k to $103k. There are only 2 properties for sale, and 14 that have sold in the past 6 months. The lowest sale price was $35,000 yet, an agent has listed a property for $24,950. That is $10k lower than the lowest price in the past 6 months. That seller may have been able to make several thousand more with a better strategy. In fact, a few thousand dollars on a property in this price range is a BIG deal! Maybe they could have put $5k in this property and made $10k more... those are the things computers can't tell you.
Similar properties to this particular property have really been selling between $52k-$56k. This shows what 4 actual buyers have paid and closed on in the neighborhood in the past 18 months. If you look at the entire area (city limits and school district), it tells a very different story. The 2 cheapest homes you can even buy in the entire area are $52k and $59,900 and the other 14 properties that are still for sale right now are mostly in the 70k-80k price range... so there is no way I would suggest pricing this property under $60k. If we do the right things to the property and it is an average home, we should be able to price this property at about $75,000 and we will get the same amount of showings if we priced in the $55k range. Part of our success strategy is showing our sellers where the buyers are actually looking at properties.
In this particular report, there are as many showings at 75k as there are at 55k. There are quite a few less showings in the other price ranges, AND there are only 2 homes even priced in the 55k range right now, so those properties are selling as fast as they hit the market, and their real estate agent may have been able to push the price a little to get more.
What many sellers do not understand is the value is not set by you (or your real estate agent). The value of your home is already determined by the active buyers that are currently looking for homes like yours. In fact, if they don't come look at your home, then you are not priced correctly. They drove by, or saw your home on a list either on their computer or from printouts they had. If you positioned your property incorrectly and overpriced it, what you really have done is help sell one of your competitors properties. You may not even think of the other houses as "competition" because you know your property is better. Right? Wrong! Once a buyer makes an offer on another property, you don't get them back. In fact, they probably only move once every 5-7 years, so that buyer is gone forever! You don't get a second chance. If you really want to get top dollar, you need a strategy that makes you more competitive than your current competition. That doesn't mean you have to sell for less, it just means you have to evaluate the current supply and see what the demand has been and come up with a strategy to get the most money possible.
The old real estate saying says there are 3 things that sell property. 1) Price 2) Condition and 3)Location
You can't change your location. Your value on that is already set. You can change the condition however many sellers are being advised to do massive upgrades to get their property sold. In most cases, they may spend $10k, $40k or more updating, and even though they may get more for their property before the upgrade, it is very seldom the amount they spent to do the upgrade. For example, someone spends $20k updating to granite in kitchen and other things. They may actually get $5k more for the house... maybe even get lucky and get $10k.. but they did not get $20k or $40k in most cases. So in essence, they left equity, real dollars on the table. In that same example, if they had priced their house $10k less than the price before they did the upgrades, they would have actually netted $10k more than spending $20k to get $10k higher sale price.
This is why we say, the agent you chose matters.
Look at some real numbers you may not have heard.
In the first six months of 2017 (which is supposed to be some crazy hot sellers market) look at these statistics.
EXPIRED: There were 244 properties that Expired, or did not sell in the first 6 months of the year. In fact, Looking at the full year of 2016, there were over 3,500 properties that tried to sell, and did not sell during their first 6 months on the market.
CANCELLED: There were 1,209 sellers that cancelled their listing agreement with the real estate agent they hired. That is over 100 sellers each month in the Greater KC area that did not get their property sold, and missed buyer opportunities and left equity on the table.
WITHDRAWN: There were 200 sellers that just took their house off the market in the first 6 months of 2017. Most probably took their house off the market because they were not getting showings, or they think they need to do more upgrades because they positioned themselves incorrectly in the market or got bad feedback for the condition of their property.
Selling your home and capitalizing on the current market conditions to maximize your equity and/or profit from the sale of your home is no easy task. It takes experience of selling thousands of homes to know how to truly "read the market" and interpret the market conditions to help our clients take advantage of the current supply and demand.
Contact me if you would like more information about how to interpret current market conditions for your property. firstname.lastname@example.org or 816-224-KORN (5676).