At this very moment local realtors are working with buyers who have already seen what is currently for sale and are waiting for new homes to come on the market that will fit their search criteria.
Most activity of a newly listed home will take place in the first three to four weeks of a listing. The excitement of a new property on the market will create an urgency for both buyers and agents to see it as quickly as possible. In many instances, the home will receive its highest and best offers during this time.
The buyers that will look at the home during the first few weeks are more experienced because they have been looking longer. They have a better understanding of the process of buying a home and are generally ready to act.
After that initial period, the only people to look will be new buyers in the marketplace. The number of showings will slow down which means there will be less potential buyers looking at the property.
“Listing price is a major factor in the time a house stays on the market. Studies show that a higher listing price results in a longer time on the market, that housing liquidity depends on market participants’ search effort that is partially determined by listing price, and that it is expensive to initially overprice a home.” -- National Association of Realtors (NAR)
Additional characteristics that directly affect a buyer's perception of homes on the market according to a recent housing market study compiled by NAR found that:
Each additional bathroom added value, specifically in the U.S. Northeast and Southwest
A fireplace has a positive effect on the price except in the West
A basement added significant value to the selling price
Perceived school quality has a positive effect
Value of a garage is consistent across the U.S.
Buyers will compare different homes that they see on the market in order to further determine value. For instance:
If two or more homes of the same size are on the market in the same area, for the same price, the one in the best condition will probably sell first.
If two or more homes in the same condition are on the market in the same area, at the same price, the largest one will probably sell first.
If two or more homes of the same size are on the market for the same price, in the same condition, the one with the best location will probably sell first.
If two or more homes of the same size are on the market in the same area, in the same condition, the one with the best price will probably sell first.
If a home is priced at market value, it will likely attract a little over half of the prospective buyers in that market. Not all buyers will be interested of course because it will not be the right style, size, location, or a myriad of other reasons will be at play.
If the price is 10% lower than market value, many buyers will be interested because it is a good value. They will be willing to make concessions in amenities for price. If the price is 15% lower than market value, almost all of the potential buyers will consider it a bargain and a very good investment.
On the other hand, if the home is priced at 10% above market value, fewer buyers will consider it. Buyers know values and more than likely they will not pay a higher premium for a product that they know is clearly overpriced. This principle appies not only to homes, but to any other commodity as well.
Following that same line of reasoning, if the home is priced at 15% above market value, it will eliminate the vast majority of potential buyers. It is not to say that the home will never sell at that price, but it will certainly extend the market time because the perfect buyer must be located.
The question facing sellers every day when they price their home is “What percentage of the potential buyers do I want to appeal to?”
Call me at (760) 382-1082 and let's talk more in-depth about other basic home sale principles that will allow you to receive the greatest return on your money in the least amount of time!