WHAT DO I MEAN BY MARKET TIME?
If you want to make the most money you can when selling your home, you need to keep a careful eye on Market Time. Market time is simply how long your home has been listed for sale on the market. Generally, homes that sell faster tend to get a better price than homes that sit on the market for too long.
The first few weeks are critical
You will have more showings for your home in the first few weeks and will probably receive your highest offer (if you’re positioned right and getting offers) in the first 30 days. The reason for this is that buyers and their agents are constantly watching the market for new and reduced price listings. When a new property is listed, the serious buyers will want to get in there and see it before it is scooped up by someone else.
When a listing is new it creates a sense of urgency. “There’s a new listing. What if this is the one?” Buyers and their agents know that you are most likely getting a lot of traffic, which gives you a big advantage. The increased competition improves your negotiating power and buyers are not likely to make low offers.
A buyer is more likely to make a good offer if he fears missing out
If you have a lot of showings but no offers, this indicates that you are most likely priced a little too high. A lot of sellers believe that they should set the asking price higher and then adjust a few weeks later if they don’t get any action. That might be a good strategy for selling a car, but not real estate.
Remember, new listings are hot. If a buyer really wants your home they will probably come in with a strong offer. They don’t want to lose the house over $5,000 or $10,000 as this amount would probably have a pretty insignificant affect on the monthly payment and they don’t want to take the chance of coming in lower than someone else.
BUT, let’s say you start out listing too high. Now buyers will come see the house, really like it, but ultimately decide to skip it because they aren’t willing to pay that much for it. Or, feel that they can’t afford to make a strong offer on this one. If you price it at market, you increase your chances of people making strong offers and if you get a lot of them, you can write counter offers. The increased competition means someone will likely accept your counter-offer. But if you don’t get any offers than you will just end up reducing your price down the road, when a lot of the excitement and interest has dissipated.
A couple rules of thumb: If you are priced right, you should get at least 5 showings a week in the beginning. If you don’t have any offers after 15-20 showings, you are probably priced too high.
WHY IS MARKET TIME SO BAD?
If your home accumulates too much market time it creates a sort of stigma, or perception that something is wrong with it. If your home has been on the market for months without any buyers, especially in today’s market, people start to assume that you are priced too high or that the home might have some kind of physical or legal problem.
Excessive market time can be thought of as a red flag, inviting buyers to come make low-ball offers and take advantage of your weaker bargaining position.
Imagine you are a buyer looking at two identical homes on the market. One has been listed for over three months, and the other is a brand new listing. Which one do you think you can get a better deal on?
Here’s how I advise my BUYERS: The seller of the newly listed home has a lot of fresh interest on his property and thus, probably doesn’t feel inclined to entertain low offers. The seller of the home with excessive market time, however, is probably feeling anxious. He might already be paying two mortgages if he didn’t buy and sell at the same time. If you don’t mind paying full price, you are most likely going to go after the new one, but if you’re looking for a deal you’d be better off going after the home that has been sitting on the market.
WHAT SHOULD I DO
In order to minimize market time and maximize offers, the best approach is to price your home as high as you reasonably can, but also be ready to change it if you aren’t getting enough activity. Know when and what to do, a good agent will work with you to create a strong pre-planned pricing strategy from the beginning.
With a proper marketing plan in place your home will sell if it is priced right. We don’t make the market, we only adapt to it by seeking and targeting buyers most likely to make the best offers. The market will always tell us what it is doing, we just need to listen to it.