The Need for Speed
David Bates / January 17, 2011-8:37 pm
I used to tell my buyers that if you go to the first open house and there are several people cooing about what a fabulous property it is, you should be prepared to pay full price. If, on the other hand, you want to get a deal on the property, you need to wait. A review of the 2009 MLS data for properties selling from $1 million to $1.499 million nicely illustrates this point.
The data show that, on average, properties which sold within the first 60 days they were on the market had accepted offers at 96 percent of the ask price and 95 percent of the original list price. Sellers who needed between 61 and 120 days to find the right buyer garnered acceptable offers on average of 93 percent of the asking price and 88 percent of the original list price. As each percentage point represents around $12,500 in that price range, it means patient buyers who waited the extra two months of market time saved about $87,500 vs. their impulsive peers.
In general, the data continue to confirm that buyers don’t make rich offers for poor market times. The next major change in the sales-to-list ratio in this price range occurs when properties take longer than 300 days of marketing to find a buyer. At that point, regardless of how much a buyer might like the property or how long the buyer may have been looking for a home, their chief concern apparently is “What did I miss? What is wrong with the home that no one else bought this home in all this time?” As a result of the buyer’s fears, the 105 properties that sold in this price range with this market time received just 90 percent of the asking price and a mere 82 percent of the original list price on average.
While patience is the key to savings for buyers, the data also provide a key insight for sellers wanting to get top dollar for their home: Maximize your price by minimizing your market time to appeal to the buyer’s “need for speed.”