Sunday Night Stats

So far it looks like sellers have a 50% chance of selling vs. last year.  I’ll keep tabs on that as we go.  You were twice as likely to sell your house last year as this year, if you put it on market.  For those of you who think it’s a new year and if it didn’t sell last year it’s time to raise the price…I’d rethink that.  Hopefully low interest rates will improve the stats moving forward.  But I wouldn’t count on the improvement being more than a 66.6% chance of selling.  We’re not talking about selling at the price you want.  We’re talking about selling at all.  Not a good time to be stubborn or overly optimistic.  You have until 4/1/08 to get real with your pricing, or possibly be back on market in 2009.  Stop pricing off what other people are asking.  Stick close to the comps this year.  No more than 5% over the comps is a good rule of thumb.  And don’t skimp on condition.  Condition will be the MOST important factor in 2008, second to not pricing more than 5% over the comps.

King County – Residential

For sale – 8,508 – UP 132

In Escrow – 1,906 – UP 97 – 6.5% of those are contingent contracts

Closed month to date – 439 – UP 203


King County – Condo Market

For sale – 2,929 – UP 59

In escrow – 798 – UP 18 – 2.6% of those are contingent contracts

Closed month to date –  144 – UP 75

UP means over last Sunday’s data.  Sales of single family homes kept pretty good pace against homes coming on market this week.  But still running at about half the pace of this time last year.  Let’s assume 1/3 of the buyer pool is gone and that this year’s sales will be 2/3rds of last year in total number of properties sold.  That’s my prediction based on what we’re seeing so far.

“Statistics not compiled or published by NWMLS.

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ARDELL is a Managing Broker with Better Properties METRO King County. ARDELL was named one of the Most Influential Real Estate Bloggers in the U.S. by Inman News and has 33+ years experience in Real Estate up and down both Coasts, representing both buyers and sellers of homes in Seattle and on The Eastside. email: cell: 206-910-1000

88 thoughts on “Sunday Night Stats

  1. Hi Ardell,

    I agree with you. If sellers do not meet market pricing now, it will be too late. Inventory usually creeps up as the year goes on. We already have 1000 more homes in King County for sale than we did two weeks ago! Spring is usually the hot time for sellers to put homes on the market, so it would be better to try to sell now if you are planning to sell this year.

    However, I think pricing should be at or below the competition to stand out. The home that is priced and shows the best will get the buyer. If a home is overpriced in anyway, the buyers will discount it. There is not much incentive in this market for a buyer to go after an overpriced listing.

  2. It must be difficult for sellers to know what reference they should use when setting the price in this market. What do you recommend? Is it most effective to price below the current listings in the area ( The problem here is that only one can be lowest ) or should they instead use closed sales they know of as reference? I guess references could be months old, how to know what appreciation to apply since then? I guess this is where an agents expertise and experience is really valuable.

  3. Always closed sales, tj. ALWAYS closed sales, and then no more than 5% more then the last one sold AFTER you adjust for equal comparison.

    The market can go up 25% with 5 selling each at 5% more. One seller can’t move it in one fell swoop. If there is only one sale in the area, then the market goes up 5%. Market upswings come in a series of 5% each throughout the year, most of it in “high season”.

    Someone just asked me if they should price low looking for a “bid up”. Very dangerous game with a diminished buyer pool. He was surprised he couldn’t turn down a full price offer, if he did that. The mls is not an auction house where you can place an “opening bid”.

    Personally, when I represent a seller, I don’t want to leave any money on the table. Better to overprice than under price. Key is to adjust very quickly when you determine the price is off.

    The day you put the property in the mls is the day you get the most agent hits. 50 hits in a day usually means offer within 72 hours. 100 hits with no offers usually means you need a price adjustment. 100 hits and no showings means your pictures suck. 20 showings and no offers, regardless of number of hits usually means price is off.

    There are little key signals. No one is absolutely positive before the first 10 days on market. But by the end of 10 days on market, the agent should have a good feel for whether or not the price will work.

    Killer pricing is just above tier levels as in $309,000, $459,000, $1,050,000 etc… Even if it is “worth” $302,000 Aaarghhh! I hate when they are worth $302,000 to $306,000. That’s the only time I’m tempted to, and sometimes do, underprice them slightly. Otherwise you have an invisible house, or one that people pass by on their way to the top of the price tier.

  4. Debra mentioned 1000 units coming on within the past couple weeks or so in KC. I understand Sno. Co has had nearly 1200 SFH’s in that same period come on the market, not including condos, land or multi family.

    I would guess, like Debra mentions, that pricing is going to move from “important” to “critical”, especially in outlying suburbs away from Seattle proper.

  5. Thanks Ardell, that do sound like very good advice. Do you think the main problem now is that most sellers and agents do not know about a strategy that is likely to produce a sell in this market or that they have not yet acknowledged that the market has changed?

  6. The market hasn’t changed, tj. January is always like this. The market is not down. People are simply valuing their properties incorrectly and refusing to listen to the market’s response. Prices are not down where I am looking. Number of sales down, prices up, is still the order of the day for Eastside close in and Seattle close in.

    I noticed Zillow showing an upswing in January this morning. Interesting. Just because a seller needs to reduce their price does not mean prices are down. It just means they priced it too high in the first place.

  7. Just to check that I understand correctly, according to you the market is the same as the last couple of years when it comes to appreciation, competition, buyer funding etc,etc what has changed is that sellers this year are counting on more appreciation than what they have in the past?

  8. Ardell, don’t get me wrong I’m not argueing if you are right or wrong. As with the data you so kindly provide I’m just curious of the dynamics in the market. How agents and sellers currently think is a big piece of that puzzle.

  9. Let’s break that down:

    “market is the same as the last couple of years”

    no…number of units is running at half-mast

    “when it comes to appreciation”

    No owner should be ASKING more than 5% of the last comp, adjusted for condition and location. Where it will sell could be anywhere from same to 5% more. Distressed sellers will be going for less, particularly if the condition of the property has degenerated vs. appreciated.

    “when it comes to competition”

    The competition for has been on market, will be new on market…same as every January. Will be hard to beat that new kid on the block, so if you are stale on market because your price was always overstated…you will get staler and staler.

    “when it comes to buyer funding”

    I’m still hearing zero down and stacked costs from people. Surprises me, but seems it’s still doable. We’ll see how that plays out. I don’t have any clients like that, but there are some in escrow like that. Let’s see what closes zero down in early 2008. So far it seems to be a HUGE misperception that the lending industry has shook itself loose of loose lending.

    “Sellers counting on more appreciation than in the past”

    Not really. They have until April 1 to get real…same as every year.

    What has changed is the number of units sold, but lower rates could change that quickly. We only have 20 days of “facts” we’re going on here for 2008, so stay tuned.

  10. Thanks Ardell, I think that gives me a prety good picture of the current sentiment of agents and sellers. It was a bit confusing at first with the statements that it was twice as difficult to sell as last year and the prices needed adjustment followed by a statement that the market has not changed and sellers are not counting on more appreciation. The interpretation I do is that you think it’s business as usual as long as a sellers price within 5% appreciation from the last comparable sale in your area.

  11. Ardell –

    How many sales have you closed recently at comps + 5%? It seems to me in a declining market it would be better to do comps – 5% and sell quicker, unless you are not very serious about selling your house and paying for carrying costs.

  12. b,

    The Edmonds Bowl listing took 90 days, but the seller was fine with that. Not everyone wants to trade price for quick, some don’t even want quick. Never had to change the price…just had to wait a little longer.

    I don’t sell down South, and I’m pretty sure the market is different in Federal Way, Auburn, Maple Valley, etc… But clearly properties in many areas are not down at all. 5% over the last one is not that difficult to accomplish in almost any market.

    I’ve looked at prices from one complex to another and each unit seems to keep selling higher and higher. So while “medians” may suggest otherwise, reality isn’t showing property selling for less without a good reason.

    Good reasons:

    Property trashed
    Short Sale and trashed
    Huge special assessments

    Where are you seeing prices down, b?

  13. What would justify comps MINUS 5%? Someone seeing prices down somewhere in Microsoft Zone? Where are prices down? Are you suggesting a greedy agent should just price it under value to get paid faster? Sorry, not following you.

    The only people who need to worry are the 35% to 50% that won’t sell at all due to being overpriced and poor conditon both.

  14. ARDELL –

    A declining overall market justifies comps MINUS 5%. If prices in general are decreasing then logically you would want to head off this decrease by selling now for a slight discount then selling later for an even greater discount. You said yourself you believe that nearly half of houses out there are overpriced, do you think those people pulled prices out of their a$$? I am willing to bet most of them took comps and added 5%. The fact you have only one property sold recently at this comps +5%, and it took 3 months to sell that one, tells me your pricing strategy is wrong for this market. Good luck trying to pump prices up as the recession gets even deeper. I would expect sales, already down considerably, are going to nosedive by the end of the summer.

  15. I can understand your logic Ardell that 5% above last comparable sell is a good starting point. Understanding that the last sell is not connected in any way to yearly or monthly general appreciation data. The last sell could just as well be below last years pricing as above. The fact that it did sell points to that the price it sold for was ok, at least at that time. Together with the rest of the strategy you mentioned to be quick to adjust according to recevied offers etc it makes sense. The discussion if prices are falling or not is somewhat separate and one that I’m not going to comment on.

  16. tj,

    Except that you must figure out what kind of market you are in to price appropriate according to comps. If you are basing your house price on comps from July, 2007 + 5%, then its not going to sell. I think that is what a lot of people are doing right now and is a big reason why sales have dropped 50%. The fact that sales are so low and going low, and time on the market is increasing rapid, points out that this is a declining market. Meaning, things are not selling at the prices they currently have (which normally is comps + x%), and the reason is that their price is too high. This would indicate that to properly price you house you should be adding negative appreciation to earlier comps to arrive at the current salable price.

  17. I agree with you b if the comp is old it would make sense to also look at comparable active listings that are not selling. If they are at or below 5% appreciation from the “old comp” and linger on the market it can’t be a good plan to add another comparable listing at that price.

  18. b,

    I just can’t condone it. I saw agents doing that in L.A., pricing 5% lower than the last sale as the norm. They dragged the market down due to their greed to make a commission. Where else could the market go but down if they kept pricing down and twisting seller’s arms to do that?

    It is not our job to drag prices down when we represent the seller. It’s our job to try to keep prices UP when we represent the seller, and beat them down when we represent the buyer 🙂 Just how it is.

    No agent for the seller should be jumping ahead of the pack to sell quickly at the expense of the seller’s net proceeds. Trust me. Not every seller needs to sell that quickly.

    Staging alone could get you a 5% jump over the last sale. Getting 5% more is not an impossible feat. It took me and the owner 4 months to get that Edmonds house ready for market to get top dollar. That’s our job. Not say “Hey let’s just price it low and sell it fast”.

  19. Ardell –

    How much money did the Edmonds guy spend having his house sit on the market for 4 months? I am willing to bet it was probably equivalent to the 5% “extra” that you got him. So you make your seller spend a bunch of money carrying a house and doing “staging” upgrades instead of selling for the proper price to begin with? Who is greedy in this scenario?

  20. 5% over the last comp makes sense from an auction perspective. In a standard English auction you get an effect called “buyer’s remourse”. The winner of an auction paid more than he had to by the difference between the winning bid and the 2nd highest bid. That margin is why you see sniping on ebay and other strategically motivated behavior.

    However, a house is not auctioned. Instead, it operates more like a Dutch auction. The sellers sets a high price and gradually lowers the price until there is a buyer. Sometimes that lower price is set by a lower offer and sometimes the price changed in the listing. In that sort of auction you get “seller’s remourse”. In theory any sale could have been made for slightly more than it actually was made.

    In short, if a house sells it probably could have been sold for more. So the next one gets listed 5% higher to capture that lost income. And then buyers negotiate the price back down.

    But that 5% increase is going to be an average price and it is going to result in an average amount of time to sell. As the inventory:sales ratio grows the average time to sell will increase. People who want to sell more quickly than average should price at lower than average.

  21. I would think and hope that agents ability to control the pricing of the full housing market is limited at best. Meaning that market forces will prevail and if you price to low you will get a bidding war and if you price to high the home will linger on the market.

  22. The best values have been the short sales where the seller was willing to walk off with the unsecured debt package. Not necessarily screaming deals, but the most motivated of sellers are those hoping to prevent foreclosure.

  23. b,

    She (not he) didn’t spend anything “extra”. She had lived there for 16 years. A few more months was no biggee and cost her much less than their new home costs them. So in essence, they saved lots of money by waiting for someone with the right price.

  24. b,
    Missed part of your comment. I staged the house myself…no staging up front costs or furniture rental fees AND I charged a flat fee, so I made no more by working extra months to get the higher price for the seller.

  25. Ardell, with Los Angeles down nearly 20% from peak prices, pricing 5% below comps would have been a smart move in 2006 & 2007, and it’s arguably still a good move today.

  26. “Just an aside, the original REALTOR Pledge was to uphold the value of the land and all that comes with it. It was changed in the mid 90s.”

    Probably because the NAR was worried about the antitrust laws. Oddly enough, engaging in collusion to keep the price of real estate up happens to be illegal – triple damages time!

  27. Hi Ardell, I have no idea but I would guess most are sold with an agent. I’m just saying that I don’t think agents can achieve price fixing in a market with so many suppliers as the housing market. Supply and demand will eventually determine the direction of prices. It doesn’t mean that you shouldn’t try to price your house right though. Agents can certainly contribute to stalling or accelerating the pace of sales but I think and hope it’s wrong to think that they can control price trends to any larger extent or for any extended period.

  28. In the downslide of 1990 in Jersey where I started real estate, pricing appropriately was all that was needed. But sellers didn’t, as they aren’t now. And yes, those who didn’t sell took a beating down the road.

    All I’m saying is try the 5% over comps for 10 days and see where it’s leading you. Still, some sellers will price very high and some homes have no true “comps”, and we as agents really can’t force them to do something they don’t want to do.

    You really can’t prevent them from trying what they want to try. You can warn them of what may happen, but at the end of the day, it’s their show, their gain, their loss.

  29. tj,

    Lots of agents walk in and out and say NO, not a good deal, as my client pointed out. Sellers may get mad and say who the heck are you to…but the buyer depends on us to do that. Same on the seller side. If the agent truly feels the price is right on, and feedback and showings support that, an early low offer from a buyer will likely be rejected. So there is some control. Not ultimate or long term, but in the moment there are advices that are often heeded by the clients.

  30. ABR,

    Not at the time, as we all represented sellers for 85 years or so. The theory was that by keeping prices up we helped everyone at some time or another, under the theory that everyone someday was a seller.

    It is not against any law to keep housing prices up and collude to that purpose. It is against the law to keep real estate commissions up and collude to that purpose.

    The reason the Pledge was changed was because Buyer Agency came into being, and so we could no longer Pledge to hold prices up for our buyer clients. Prior to that time there were only seller clients. So it is still our duty to get a high price when we represent a seller, but the opposite when we represent a buyer.

  31. “It is not against any law to keep housing prices up and collude to that purpose.”

    I wouldn’t be too sure about that – if the head of the NAR stated that RE agents should price at 5% above the comps, and suggested that any RE agent undercutting that standard was motivated by greed, and was “jumping ahead of the pack to sell quickly at the expense of the seller’s net proceeds”, I think that the Department Of Justice would take immediate, intense interest.

  32. Well, the head of the NAR can’t do that since agents may be representing either buyers or sellers. But clearly all agents who represent sellers are focusing on getting the highest price for their seller client and often ask other agents for feedback with regard to price.

    Agents often get together to determine price of home. What they can’t do is get together to determine price of services.

    But something tells me if I say Everyone Undercut the Prices by 20%, you’d be the first one leading the Hooray Parade.

    Many agents hand out sheets asking agents from all of the offices in town to put down their opinion of value on a home. We get emails everyday saying “what did you think of the price of this home”. So I’m pretty sure it’s only cost of service that cannot be discussed from office to office.

  33. “But something tells me if I say Everyone Undercut the Prices by 20%, you’d be the first one leading the Hooray Parade.”

    No – it is a bad idea for people involved in buying or selling a product to collude to set prices in either direction.

    Interesting description of current real estate practices.

  34. Ardell,

    What if comparable houses were on the market for less than the last sale but they weren’t selling? Where would you price a new listing in that scenario?

  35. Alan,

    You don’t have to be first, but you have to make the cut. When a buyer goes out to see all of the homes, you have to be in the top three to be sold before more come on market. Often I try something more as to conditon before resorting to price. I guess we can say it would have sold for less had that not been done. No one really knows though. We do the best we can to do the best for our clients.

    The harder decision comes when nothing is selling. If others keep selling and not your house, then you take action. When no one is buying anything…you wait. Today there are many more buyers, than people actually buying anything. It will be an interesting year and agents will clearly earn their money once again.

  36. Alan,

    Depends if I am the buyer’s agent or the seller’s agent. If I’m the buyer’s agent I do, if I’m the seller’s agent I don’t. If there is more than one offer, it doesn’t matter.

  37. It depends on price tier positioning. If it takes you to $499,999 it’s not too high, if it takes you to $505,000 it’s too high. You have to watch your price tiers and many other factors, like your competition on market. Why the seller is selling and the seller’s financial situation also comes into play, of course. Vacant properties have carrying costs. If people live there, the pressure is often not as great. If they don’t know where the will go when it sells, that’s different than if they have a property in escrow contingent on the sale of their house. Many factors, but whether or not the comps included closing costs is not usually one of the factors. If all the comps had closing costs included, yours likely will too. If none of them had closing costs, yours likely won’t either. That’s normally the assumption made.

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