To confirm my suspicions, but also out of curiosity, I recently did an analysis of the 47 homes sold so far this year in I’On. I wanted to identify the relationship between the number of days a house stays on the market to the ratio between the final sales price received to the original asking price of the home. The results are quite revealing and provide an important lesson for us in understanding the dynamics of a buyer’s market.
Take a moment to review the data below. This represents the I’On market in 2008 broken down by the number of days the house was on the market.
0 – 90 Days on Market:
Number of Homes Sold – 11
Ratio of Selling Price to Original List Price – 94.06%
91 – 180 Days on Market:
Number of Homes Sold – 9
Ratio of Selling Price to Original List Price – 87.23%
181 – 360 Days on Market:
Number of Homes Sold – 7
Ratio of Selling Price to Original List Price – 77.16%
Over 360 Days on Market:
Number of Homes Sold – 20
Ratio of Selling Price to Original List Price – 75.29%
So, what is the bottom line to take from this data? First and foremost, houses that are priced competitively from the beginning have a great chance to sell in the first 90 days at a price that is relatively close to the original asking price, even in a buyer’s market!
Buyers have so much inventory to choose from in this market, that it can be overwhelming. So, they “fine tune” their list and view only homes that meet their criteria and are priced in the range they can afford. They typically don’t consider homes that are in higher price ranges or those that aren’t in great condition because they just don’t have to. There are more than enough homes on the market that already meet their needs.
So what happens to homes that are not competitively priced? They generally sit on the market for much longer periods of time than they should, with little or no interest. They eventually sell, but only after multiple price reductions and/or significant improvements that make them competitive. And, they sell for prices well below what they would have sold for if priced correctly at the beginning. One of the reasons for this is that buyers become concerned about homes that have been on the market much longer than others. It creates uncertainty and they begin asking questions like:
Why hasn’t this house sold yet?
What is wrong with this house?
If I buy it, will I have this much trouble selling it later on?
Ultimately, questions like these cost the seller thousands of dollars in the end.
If you have any questions about the above, please don’t hesitate to contact me. Also, remember to check out all homes currently on the market in I’On by going to www.IonHomeInfo.com