The best home sale price usually comes with the fastest sale

Speed of home sale and sp to lp ratio in LG with CUHSDSilicon Valley home sellers often have trouble believing that their best price will happen if they sell in just 2-3 weeks (assuming open market, professional representation, multiple listing service exposure, etc.) rather than 2-3 months.  What I hear sometimes is “I’m in no hurry, I can wait for my price”.  Normally, a slower home sale means a lower price. (An exception can be when prices are rising really fast and the home goes off the market for awhile before returning, in which case it can be viewed as a new listing again.)

I thought it might be helpful to look at some numbers to see what really happens with the real estate market statistically, that is, what we can see from the data.  Yesterday I spent a little time looking at the MLS and crunching numbers.  Here’s what I see.

Los Gatos-Monte Sereno area (“area 16”) with Campbell Union High School District (Westmont, Leigh), sold in the last 30 days (so not just March, but also going into April):

  1. All: For all houses sold in the last 30 days, the average sale price to list price ratio was less than 1%off (almost 100%)  and the average price per SF was $626.53
  2. Fast: For homes which sold after just 21 or fewer days on the market and closed in the last 30 days, the average sale price to list price ratio was 102% and the average price per SF was $627.29
  3. Slower: For homes which sold after more than 21 days and closed in the last 30 days, homes sold at an average of 3% under list price and at an average price per sf of $625.43

So there’s a gap of about 5% between the sale price to list price ratio of the fast selling to slower selling homes.  (Yes, that is an amount similar to what is spent on commissions in many cases, so NOT a small figure!)  OK, so in that segment of the realty market, it does appear to make a difference.  What if we look at it from another angle?

All of Santa Clara County for March 2014

What if we look at a bigger area?  Will the trend be different?  Let’s have a look at Santa Clara County, again single family homes, sale price to list price ratio only, but this time for closings in the month of March.

  1. All sales in March 2014 105.6%
  2. Homes sold in 21 days or less 107.6%
  3. Homes sold in 21 days or more 99.6%

For the whole city of San Jose in March, the “gap” in the sale price to list price ratio between selling faster and slower is 6%.  OK then, what if we look at just part of San Jose, will it be any different? (more…)