Silicon 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):
- 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
- 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
- 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.
- All sales in March 2014 105.6%
- Homes sold in 21 days or less 107.6%
- 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?
Cambrian area of San Jose, 95124
Let’s spot check this against another zip code:
95124: all homes closed in March 2013 – average SP to LP ratio = 106.1%
95124: Fast – DOM 21 days or less =106.6%
95124: Slower to sell – DOM 21 days or more = 103.7%
Between the slower and faster selling homes, there’s about a 3% difference in the selling price to list price ratio. That’s not as large a difference, but it’s no trifle!
From 3 different parts of the Santa Clara County real estate market, we can see that the faster sales resulted in a higher sale price to list price ratio. The actual numbers for the slower sales are probably even worse, because many will have price reductions before going under contract, and in some cases, multiple reductions.
Realtors often advise home owners that “you only get one chance to make a first impression”. For that reason, to maximize your sale price, and to get the best terms, the house needs to be “show ready” when it goes on the market, and ideally you’ll also have the disclosures, inspections etc. completed so you can hit the ground running. As real estate professionals, our success is tied to yours! We want your home to sell for as much as possible, and that usually means a quick sale too. Don’t be fooled into thinking that if you “take your time” you’ll make more. That seldom happens.
Note to real estate professionals: you can run these stats and slice by many factors (pool, no pool, school district, price point and so on) on MLSListings.com. Log in, go to Matrix dashboard, then stats. From there, choose Avg DOM & Sale to List Price Ratio, and then click on the “Search” tab to refine.