Want to know where the market is, TODAY?

I like to do these market updates every once in a while. When I do, I do them in real time. What do I mean by that? I meant that the info is right now. Most of the time when you are hearing about the real estate market, it is from sources that are a month or more behind, or it is from a national source that is giving you a dated snapshot of the market for the entire country. My data is taken from the MLS in the past 20 minutes and is specifically for the Bluegrass area.

I won’t geek out and break down all this data into price range, which town, or property type, but there were 24 existing home sales that went pending in the past 24 hours. Do you want to guess how many of them sold within 2 days of being listed? You would think it would be all of them based on what your realtor friends post online, or what you read in the news. But, of those 24 houses, only 4 of them sold in less than 2 days. There were 8 that sold between 2 and 10 days. 4 sold between 11 and 30 days. 4 sold between 31 and 60 days. And 4 sold between 61 and 90 days on the market.

Let’s look at the houses that closed in the past 24 hours. While pending sales give us a snapshot of what the market is doing right now, freshly closed sales give us a snapshot of where the market was a month ago since it usually takes 30 days or so to close.

How many of the closed sales do you think got full price, or over full price offers when these sales went pending last month? Again, you would assume all of them, right? Of the 23 closed sales posted today, only 8 of them sold for the full list price. 5 sold for over the asking price. One sold for $10k over the list price in a neighborhood where I have seen this happen frequently. That means 10 of the closed sales went for LESS than the full asking price.

I could go a lot of ways with this blog post, but I think I will take this chance to say that you really need an agent that knows when you need to offer the full price, when you need to go over the list price, and when you can make an offer for less than the list price. The market is so fast right now that I think a lot of buyer’s realtors are not looking at comparable sales in the neighborhood. They are just so focused on getting an offer in fast that they don’t really take the time to figure out what the house is really worth. To me, that is the most important bit of info we have to offer a client. I have had many listings in the past year where I had a ton of showings and didn’t get an offer on the first day on the market. Then the next day a realtor is frantically trying to reach me saying they are about to send a full price offer and are so glad the house is still available. Well, if I had 12 buyers look at the listing and didn’t get an offer, truth be told the house probably wasn’t worth the list price……but I am not going to tell the buyer’s realtor that, I just tell them where to send the offer.

That’s the data. I am by no means saying the market is slowing down. It is after all the middle of winter which is usually the slowest time of the year. I do think the market will stay strong for quite some time. I just wanted you all to know that not every house sells the first day on the market for full price or more. I want to help separate the perception of what the market is like compared to the reality.

Kicking a buyer to the curb made my seller $10k

My seller was impressed that I sold his house so fast.

Big whoop.

Just about every house sells fast these days. back in 2008-2011 was when selling a house fast was something to brag about.

Today, I think the most valuable thing a realtor can do for a seller is helping them pick which offer to accept and taking some strategic steps to keep the deal glued together…..or strategic steps to easily get into an equally good contract should the one you have fall apart.

So, the house I am talking about was priced at the tippy top of the market. It got a ton of showings and the only offer we got was from somebody who had a house to sell. People with a contingency have to come in stronger than a buyer without one, so getting no other offers and a full price one from this buyer is a sure sign we got 100% the full market value.

The offer was contingent on the buyers selling their old house. I never like those, but I don’t mind them if I can get the buyer to accept an immediate kickout clause. A kickout clause is when you can keep the house on the market, but if some other buyer makes an offer the seller wants to accept, the first buyer has to be given the change to get the house if they can buy it without having to sell their old house. Usually the time period for the first buyer to either put up or shut up is 24-48 hours. Naturally, a lot of buyers and their realtors don’t like to show houses with kickout clauses. It can be heartbreaking if the first buyer actually can remove their contingency and buy the house. BUUUUUUUT, with an immediate kickout clause, the seller can enter into a contract with the new buyer and all they have to do is tell the first buyer they just lost the house. It is the best of both worlds for the seller. You get to keep the buyer who is paying top dollar for your house and you get to keep looking for a better buyer. There is nothing to lose.

There is a third great thing about having a contingency contract with an immediate kickout. It is called leverage. One reason I advised the seller to accept the offer if the buyer would do an immediate kickout clause was because I wanted to be able to tell future buyers that we already had a full price contract with the immediate kickout.

Well, a few days later, we did get an offer that was about 95% of the list price. I told the other agent that we had a full price offer on the table with an immediate kickout, and her buyer would need to go full price in order to make the seller kick the first buyer to the curb. They agreed to it. Without the presence of that first buyer’s contract, I would have had no leverage to get the new buyers to come up $10,000.

I more than paid for my own commission by strategically positioning my seller to get the most money.

How many days on the market are best?

One.

One day on the market is best.

A lot of sellers feel like if their house sells immediately that their realtor under priced the house.  Some of them feel like realtors shouldn’t make that much money when a house sells fast.

Here is the truth from 14 years experience:  1)  A house will always sell for market value.  If it was under priced, buyers will bid over the list price.  2)  The effort between selling a house the first day on the market or it taking 6 months is not that different.  Being the listing realtor is a lot like fishing.  You bait a hook with your marketing and cast it in the pool of buyers.  Then you wait for one to bite.

Enough about the realtor perspective, how about why this is somehow great for the seller?

Statistics tell the story.

A seller is much much much more likely to get their full asking price when it is a new listing.

When a house hits the market, every buyer in that price range comes out to see it.   They often see other buyers leaving the house before they see it and/or have other buyers waiting to see it when they leave.  Buyers know that they need to act fast if they want the house.  They know that other buyers may want it too so they better put out their best offer first.  There is a sense of urgency.

If it sells, it will most likely sell for the full list price.

Once all the buyers currently in the market have seen it, a seller will only get showings as new buyers emerge into the market.   There is no frenzy.  No buyer is afraid of losing the house so they want to see how low they can get the seller to go.

A phenomenon that has been happening since buyers have been able to set up their own saved searches on Zillow is that buyers seem to look at a house online only once when it is a new listing.  Few buyers these days will comb through rejected listings.  They opt to just wait for new listings to come on the market…..which means a house that did not sell quickly is unlikely to ever have a buyer reconsider viewing the house.  It is like it doesn’t even exist to them.

So, how many days on the market are best for the seller?

One.

One day on the market is best.