We’re going to talk about two different sets of circumstances that I see all the time. I see certain people who are selling their homes right away with multiple offers, and others who are sitting for upwards of a year or more, and not getting any activity.
Let’s talk about the worst-case examples. I’ve got some examples from the Eastside, Westside, and Ladner. I’m going to be talking about the detached market today, so for those of you in the condo markets the same principles apply here, but I don’t want to inundate people with a lot of statistics and put them to sleep.
On the Eastside I have picked up six of the worst examples. These people were on the market for an average of 220 days and don’t forget, a lot of those are re-listed. So, if they’re showing 220 days on the market on their current listing, they might have cancelled and re-listed several times, so that’s the least number of days they were on the market. These homes were probably on the market a lot longer than this. These homes sold an average of 9% below their final asking price, and a lot of them had been reducing their prices along the way. So, they probably lost 20% of what their original asking prices were.
Let’s examine that. Let’s say the market on the Eastside was depreciating, going down at, call it a percentage a month. So for the average of seven months, so they lost 7% of their value at that time. Meaning if their house was worth a $1.3 to start, and they had it over-priced to begin with, then by the time they did sell it was probably only worth a $1.2. By over-pricing your home you are costing yourself big money. In a rising market, if you over price your home, it’s probably not the end of the world because eventually the market will catch up to you. But if you over-price your home in a declining market, you’re costing yourself money every single day, so it makes no sense to do it.
On the Westside I have half a dozen examples here. And these are the extreme worst examples I could find. The average of these homes was being on the market for 246 days. Don’t forget, there’s re-lists in there, so they say for eight months, but a lot of times they cancelled and re-listed them each time. They all sold for an average of 10% below their final asking price. So a home that was originally listed for $2.7 million eventually sold for $2.4 million. They lost $300,000 while their house was on the market for eight months. It’s big money when you’re up into those big numbers. Those people lost an average of $350,000. I shouldn’t say ‘lost , but they did not capture as much of their investment as they should have.
Now I have an example out in Ladner of six homes on the market for an average of 110 days. Average loss of $55,000 and they sold 6% below the asking price. The reason this is happening is because they over-priced their homes. It makes no sense to over-price your home in this type of market.
So now I want to tell you about some people who had the exact opposite experience. These are people that sold their houses right away with multiple offers. On the Eastside there have been six houses so far to date (March 1st) that sold on average at seven days, at an average selling price of $103,000 above asking. So, who would you rather be? They don’t have any depreciation down. These people are using the same tactics that they did in a hot market. There was one house on Main Street in January that got 43 offers on it. That’s on a busy street – 43 offers!! It was listed below a million dollars and got $300,000 above asking. So, these things are still happening, albeit you can’t do this on the higher side of the market because there just aren’t as many buyers out there. But on the lower end of the detached market these things are still happening.
On the Westside there were six homes that have sold over asking price as well. On the Westside multiple offers are still happening as well! So, the moral to the story is, if you’re going to over-price your home in this market and you need to sell, you’re going to cost yourself money. And I get it. it’s difficult. Our homes are our biggest investment in life and we’re worried about it. But there are things you can do. If you price your home, and you think it’s under priced and you still don’t get any offers, or you get an offer that’s right at your asking price or a little over and it wasn’t what you were expecting, you don’t have to sell it. It’s your home and you can change your mind. That’s how you find the true market value of your home. You assemble the crowd of buyers who want to view it at one time andshow them the property, and don’t let them present their offers for a few days later and see what the market brings you.
So, I hope all of this is helpful. If you’re selling your home in this market, don’t over-price it.
If you have any other questions, please give us a call.