A Shelf Life.
There is a conversation that I have with every one of my home sellers that revolves around what I refer to as the “Honeymoon Period” of their listing. Just like the institution of marriage that the term originates from, it’s the period of time when everything is fresh, new and exciting about the house. It’s a brand new listing that buyers are excited to see, and (hopefully) will be anxiously anticipating writing an offer on.
But unlike that period of bliss in a marriage, which hopefully lasts for months or even years, the honeymoon period for a listing in San Carlos is not nearly that long. How long would you guess that period is? 3 weeks? A month? Well, the reality is that the “best sold by” label on listings in San Carlos is exactly 14 days. When I tell this to people who live out of the area where homes commonly take 30-60 days (or more) to get into contract, they simply cannot believe this figure. But after years of battling in a white-hot housing market on the mid-Peninsula where houses commonly sell very quickly with multiple offers, home buyers have simply become accustomed to homes selling in the first two weeks on the market — and coincidentally, quite wary of homes that have not.
Why 14 days? That’s two full weeks, which is ample time to list the property, conduct the normal Tuesday broker’s tour, and have two full open house weekends. The conventional wisdom with buyers in this market is that if a home has not sold in this period of time after that much exposure, then something is amiss.
The numbers back up this thinking, too. I took the data for all single family homes that have sold in San Carlos since the beginning of 2015 (and were listed on the MLS) and created a dividing line at 14 days from when the home was first listed until an offer was accepted on the house. The results are very telling:
|Days on Market
||Average Sales Price
|Avg $/Sq Foot
|# of Homes Sold
In a nutshell, the homes that sold either pre-emptively or by the 14th day on the market fetched a higher price, a greater premium over the list price (17% vs 5%), and a higher price per square foot than those that took longer than two weeks.
The size of the home certainly doesn’t play much of a factor — the average size of a home in the 0-13 day group is 1,894 square feet, while the slower group was only slightly larger at 2,154 square feet, or only 12% larger.
Every Home Has Its Price.
One can look at this data in a variety of ways, and can draw an equal number of conclusions. For example, one may wonder which factor is the cause, and which is the effect? In other words, did a home fetch a lower price because it was on the market for too long? Or was it on the market so long because it wasn’t priced right to begin with?
My belief is the latter. There’s an old saying that goes something like “every home will sell for a certain price”, and that certainly holds true with our hyperactive local real estate market. Even homes that are borderline uninhabitable will sell in this market for the “right” price. And therein lies the answer — pricing the home “right” to begin with.
That’s not to say that buyers don’t look at homes that have been on the market for longer than 14 days with somewhat of a wary eye. The first question I always hear from buyers when they ask about one of these homes is “Is there something wrong with the house? Why hasn’t it sold already?” It’s almost as if everyone jumps to the unwarranted conclusion that the house is sliding down the hill, or has a 6-figure foundation problem!
No — while the length of time on the market may be a factor that scares away a buyer or two, in the end the house always sells, but sometimes after chasing the market downward.
Get it Right – Price it Right.
This data proves a critical element of the listing strategy that everyone already knew intuitively, but until now not quantitatively: If you want to get top dollar for your house, you have to price it in such a way that it will sell in less than 14 days on the market, ideally with multiple offers.
This may mean pricing the house somewhat below what you think the market value may be for your home, which is a concept that understandably makes many sellers uneasy. But that’s often a necessary step to garner those extra offers that will ultimately help drive the price upward. Of course, there are homes that will be an exception to this strategy because they are unique in feature or location in such a way that will make multiple offers unlikely, so a different approach is required. This also reminds us that there’s no “one size fits all” strategy for getting the best price for your home.
When I meet with sellers, we always review a number of “go-to-market” strategies that are all slightly different in timing, listing date, open houses, etc.. But they all share a common goal of getting the home sold during the honeymoon period, and not after.
Because the numbers show just how important that dividing line truly is.
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