West Hollywood Area - Homes Priced Right Sell Fast and Strong
Ah, the dreaded words seller's don't want to hear - PRICE REDUCTION!!!Â Among the public, many people think a home should be priced to allow for negotiation room when buyers submit offers.Â In theory, this does sound like a good idea but there is one problem.Â Buyers don't (or rarely) write offers on overpriced homes in our real estate market.Â
Why don't the buyers write offers?Â Most likely, the buyers who should be seeing a home are not finding it because it is priced too high.Â For example, if someones home has a true market value of $850,000 but it is priced at $1,000,000, then the buyers who are looking for homes at the $850,000 range never find the home.Â Buyers set their price criteria and will miss homes that should be seen because it is out of the appropriate price range.Â
Where's the proof?Â In the West Hollywood market, I analyzed single family homes that sold in West Hollywood over the past year.Â Homes that sold WITHOUT any price reductions ended up selling for an average of 96% of the asking price in about 28 days.Â In other words, these homes had traffic from the right pool of buyers and the result was a strong selling price in a short amount of time.Â
What about the flip side of the coin?Â I looked at sold homes that took price reductions and learned that the average time on the market before selling was 173 days.Â Taking this one step further, I learned that after the final price reduction, the average number of days it took to procure an accepted offer was 59 days.Â The selling price to list price (after reduction) ratio was also 96%.Â It probably took a little longer to sell after the price reduction because buyer traffic was less than it would have been if this were a new listing.Â Nonetheless, buyers eventually rediscover the home and eventually make offers to buy.
The above analysis discusses the averages.Â There are ALWAYS exceptions to what we find.Â If a home is truly priced aggressively, it is common to see multiple offers and a final selling price over the initial asking price.Â Assuming the home's price is near the true market value, buyers will consider making offers because it is 'within shooting range.'Â If the home's price is much higher than true market value, the home will sit on the market without offers.Â It is so important to listen to the response of the market and make adjustments if or when necessary.Â
To the sellers reading this blog and having 'price reduction remorse,' I want to remind you that your price reduction is probably going to save you.Â Assuming you have adjusted your asking price to true market value (or close), then you will start to see activity and offers coming in.Â If your reduciton is aggressive enough, you will end up selling your home close to or possibly over the asking price.Â On the other hand, if this reduction doesn't solicit more activity, then it may be time to make another difficult decision and re-evaluate how your home compares to others that are priced similarly.