pinpoint-the-pricingSometimes the list price on a Silicon Valley home for sale isn’t at all what the listing agent or the seller is expecting in terms of a sales price.

Sometimes it’s closer to a lost leader – that is, it’s really only intended to get home buyers into the door. Lots of them. The idea is to create excitement, and hopefully a feeding frenzy with multiple offers.

Other times, of course, a house or condo in the San Jose area may be an overpriced listing. In those cases, it’s more like a “fishing expedition”. More like, “let’s see if anyone bites”. There are always a percentage of these on the market. When you see homes listed for 60, 90 or more days on the valley floor, most often the culprit is an inappropriately high price – and most buyers aren’t biting at that bait.

Right now, it’s a mixed market in Santa Clara County real estate. If you find a home you like, the next question is this: what’s it worth? And finally, what’s it worth to you? Many times, the best advice is to ignore the list price, if it’s a new home, and just do your homework on what the current competition is and what’s been selling.

You may find that the home you love is priced high, on the mark, a little low, or crazy low.

While it’s helpful to know what the average ratio is between list prices and sales price, that information can never substitute for market knowledge.  The most powerful figure to understand is the absorption rate or months of inventory (or days or weeks of inventory).  Six months of inventory is considered a balanced market.  The smaller the months of inventory is, the quicker the pace of the market, and the bigger a frenzy there is over good inventory. 

The other day I did a post on the micro markets of the Willow Glen real estate market and I specifically called out the absorption rate in varioius price points and school districts within the Willow Glen area of San Jose.  I have one client couple in Willow Glen who are thinking of selling their home.  In their case, they’re in The Willows area.  Most of those homes are worth more than the “jumbo conforming” rate of about $729,000, which puts it higher than where most of the buyer activity is happening right now.  Absorption rates for that part of WG, with San Jose Schools, is about 3 1/2 months. Not bad – it’s well under the 6 month marker for it turning to a “buyer’s market”.  But homes priced between $500,000 and $600,000 which have Campbell/Cambrian schools are selling about 3 times faster! The absorption rate for that segment of WG is only about 1 month.

When deciding how to price your home to sell or the offer price to make on a home bid, it is imperative to understand the market nuances.  Your real estate agent can run you the comps, and in fact can download them to a spread sheet so you can tweak the numbers by sale type and other factors.  If prices are rising or falling, you must factor that in, too.  Homes all getting 10 offers and each price selling higher than the last? You may want to consider jumping ahead in the trajectory.  Same if you’re selling and prices in your part of the market are falling.  Prices going down 10k per month? Then put your price under that limit to get your home sold.

There are no “easy answers” on pricing.  To pinpoint what it takes to buy or sell a home in Silicon Valley today, there’s no substitute for market knowledge, which means finding out how many offers homes are getting and if possible, the sales price, and for simply doing the math.  If prices are moving against you, it will cost you dearly to misjudge the market, so it is well worth the effort to get it right – hopefully the first time.

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Mary Pope-Handy
Realtor
ABR, CIPS, CRS, SRES
Sereno Group Real Estate
214 Los Gatos-Saratoga Rd
Los Gatos, CA 95030
408 204-7673
Mary (at) PopeHandy.com
License# 01153805


Selling homes in
Silicon Valley:
Santa Clara County,
San Mateo County, and
Santa Cruz County.
:
Special focus on:
San Jose, Los Gatos,
Saratoga, Campbell,
Almaden Valley,
Cambrian Park.
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Valley Of Hearts Delight
Santa Clara County Real Estate,
with an interest in history

Move2SiliconValley.com
Silicon Valley relocation info

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Silicon Valley real estate,
focus on home selling

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Silicon Valley real estate
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Mary’s Blog Awards
Top 25 real estate blogs of 2018 by RentPrep2018 RentPrep.com's list of top 25 real estate blogs to follow


Top 25 real estate blogs 2016
2016: Personal Income's list of top 25 real estate blogs.


Best Realtor blog award
2016: Coastal Group OC's list of best Realtor blogs


The 2009 Sellsius list of top 12 women real estate bloggers
2009: Sellsius list of top
12 women real estate bloggers


Mary Pope-Handy's Live in Los Gatos blog won the 2007 Project Blogger contest, sponsored by Inman News and Active Rain

2007: Mary Pope-Handy and Frances Flynn Thorsen win the Project Blogger Contest for Mary's Live in Los Gatos blog. The contest was sponsored by
Active Rain and Inman News.


Non blog award


Best real estate agent in Silicon Valley from the San Jose Mercury News poll of readers in 2011
"Best real estate agent
in Silicon Valley"

2011 readers' poll,
San Jose Mercury News

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