It’s that time of year again. Thousands of real estate listing contracts are ending or “expiring” across Massachusetts. Using 9/26/11 as a starting point, we estimate that 20,000 listings will expired or be canceled by the end of the year. Between 09/26 and 12/05 this year, about 6,000 listings went under agreement or about one for every three homes that has come OFF the market. Why?
Looking down from a 20,000 foot perspective, there are three broad ways to look at this annual waiting game:
- Sellers who overpriced their homes are waiting for buyers to meet their unrealistic price expectations;
- Sellers who are at risk to selling at a loss refuse to drop prices because cannot afford to so;
- Home buyers who watching prices fall hope that will translate to reduced asking prices in 2012 or the ability to negotiate price concessions.
Over the past two weeks, we’ve downloaded thousands of MLS listing to try to make sense of expired and canceled listings. Here are some quick findings based on listings which expired between a ten day period, December 6 to 15, 2011:
Our research shows that many sellers would rather let their listing expire than reduce price expectations. That strategy appears to be self-defeating because reducing prices, in some cases BELOW assessed value, hasn’t been enough to thousands of other expired listings. (That raises questions about location, condition, falling demand, and shrinking purchasing power despite record low interest rates, but those are beyond the scope of this blog post.)
Our research also shows many sellers who priced their homes well OVER their assessed value refused to drop their prices (as shown in the working graph above). If local tax assessments have been reduced that may hide the fact that some sellers might be unable or unwilling to sell at a loss; rather than pricing their home too aggressively or being greedy.
Finally, our PREVIOUS research showed that 1 in 5 homes sold for more than 10% off the original asking price during the holidays. In contrast during the ten day period analyzed in the graph above, price reductions of 10% were not enough to sell hundreds of expired listings, many of which were already priced 10% below their assessed value. What implications does that have for pricing strategies when sellers relist their homes with a traditional, full-fee agent in 2012 or try to sell on their own?
Normally sellers relist with traditional, full-commission real estate agents who are already courting their business. However, if sellers are willing to think “outside the box,” here are three possible win-win scenarios for “do-it-yourself” (DIY) home buyers and homeowners who want to sell for-sale-by-owner (FSBO) to save money by avoiding full-fee, traditional listing agents:
1st: FSBOs can accept a lower offer NOW, as much as 5-6% off their last asking price and still net as much profit as a full price offer with an traditional agent;
2nd: Relist in Spring 2012 without traditional agent, selling either FSBO or discount MLS listing service at your last asking price. Then reduce your list price 1.25-1.5% every 25 days over 100 days so you net as much profit or more than your last asking price with your full fee agent; or
3rd: Think about creative ways to reduce market risk for buyers who do not want to “catch a falling knife” — buy while housing prices are still falling. We’re eager to help buyes and sellers experiment with some ideas we’ve to add to our “FSBOs on Steroids” presentation.
To learn more, whether you are a buyer or seller, sign up for a FREE 15 minute consultation, in person or by phone. Click on the call to action below for more details.