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01 Feb

Did my listing really expire because of price?

Posted February 1st, 2007 | View Comments

A few days ago I wrote a post that Jeff Brown liked, wherein I took a brutally honest look at what to do if your home isn’t selling. Jeff Brown is a very nice guy and always has a kind word for me, and he writes about real estate investment.

Anyway, when I was finished with that post, and as I was looking at this month’s market numbers, it ocurred to me that I hadn’t proved “It’s the Price, Sweetheart” to anyone’s satisfaction. So I thought it would be fun to show the average list price of homes that sold versus the average list price of homes that expired for some period — oh, I don’t know, six months or so. As I’m writing this post, I haven’t yet looked the numbers up, but let me guess that in each and every month in the last six, the first number will be substantially lower than the second.

Those of you who are saying to yourself, “well DUH!” have never gone on a real estate listing appointment. Trust me on this.

So stand by while I prepare the numbers….

Well, I decided to go for broke and check out the last 13 months instead of the last six. So I’ve included all of 2006 plus January of 2007. The following table shows the numbers, and, on average over the whole period, homes that expired were listed at 6.4% higher than homes that sold, at the time they expired. I emphasize this because there may have already been a list price reduction before the listing expired, and we’re also not showing final sold price, here, which typically runs about 2-4% underneath list in this market. Between those two elements, it’s probably a fair guess to say that when a listing expires it probably started out about 10% higher than where it should have been.

Here are the numbers for homes sold in Sacramento County during this period, according to Metrolist MLS, barring any typos on my part. In each case, we show the percent difference as how much higher the expired price average was than the sold price.

Month Average Sold
List Price		 Average Expired
List Price		 Difference
Jan $399,139 $433,077 8.5%
Feb $402,884 $428,611 6.4%
March $404,311 $449,111 11.1%
April $393,621 $428,471 8.9%
May $408,180 $433,492 6.2%
June $417,549 $421,254 0.9%
July $407,615 $414,178 1.6%
August $402,403 $428,268 6.4%
Sept $397,342 $433,682 9.1%
Oct $392,615 $417,361 6.3%
Nov $390,308 $425,337 9.0%
Dec $394,280 $417,832 6.0%
Jan $388,105 $398,169 2.6%
  • http://bawldguy.com/ Jeff Brown

    John – The investment version of this is when they want to get out of San Diego to get growing again, but don’t want to bite the bullet on price. I just remind them in my own BawldGuy subtle way, that since I advised them LAST YEAR to sell and move their equity to a growth region, they’ve lost over $75K in equity growth.

    When the quiet gets too intense I smile, and say “wanna go for $100K this time around?” It’s amazing how many times their wives are the ones who tell me to shut up, send the listing with the price I advise, and get them going. :)

    Maybe you should be subtle too?

  • http://therealestateguide.blogspot.com Athol Kay

    Quoting from the dusty halls of memory here….

    I read a Canadian study done by some ecomonist who came up with the figure of houses not selling being just 4.3% higher average price than ones that sell.

    Now I have to find that study… :-/

  • http://www.sacramento-home.com/real-estate-agents/ John Lockwood

    I’ve seen different numbers depending on which market I’ve looked at. In El Dorado County in January, the difference was much higher than that or the numbers I posted for Sacramento.

    Thanks for chiming in.

  • http://realopinionated.blogspot.com Jonathan Greene

    The problem is that, with inventory at such historic highs, there are 400 homes listed within one percent of the optimum price of any given home. When I go on listing appointments I like to print out a list from the MLS that shows every similar home within 5 miles. In Tampa, you might get 200 homes on the list. Then, I tell them to price it in the top 10 or else.

    In this market, if you overprice by 2% you won’t even get any lookers, much less a qualified buyer.

  • http://www.sacramento-home.com/real-estate-agents/ John Lockwood

    Good point. You really do have to be at the low end of the price curve to get things moved these days.

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