Imagine the heartbreak. You’ve been waiting for a home in a particular neighborhood that backs to open space. There are very few of them. Your agent has set up an MLS alert so you’ll be notified the minute such a home goes on the market.
One day you get an MLS alert — your dream house was just listed! Two minutes later, before you can even call your agent to schedule a showing, you get a second alert that it’s under contract. Then, two minutes later, a third alert that it’s sold. What happened?
It’s simple. Listings can only be entered on the MLS as “Active” and then changed to “Under Contract” and “Sold.” Apparently a buyer’s agent had convinced the homeowner to sell their home for $925,000. The seller agreed. After all, the county assessor’s most recent valuation was $924,138, and the seller purchased the home in 1997 for $343,400. A tidy capital gain indeed!
But it’s not that simple. That assessor’s valuation was as of June 2016 — two years ago! Valuation software shows the home is worth up to $150,000 more today. Heck, even Zillow shows it as being worth $10,000 more.
Given the opportunity to see the home and submit competing offers, other buyers could well have driven the price over $1 million.
So it was a lose-lose — or should we say win-lose-lose? That buyer won, getting the home for less than it’s worth, but the seller and the would-be buyer both lost. And, oh yes, the buyer’s agent was rewarded with a big commission for convincing the seller to part with their home for what the county assessor said it was worth two years ago! (This was an actual recent sale.)
Don’t let this happen to you. A savvy seller would treat an unsolicited offer to buy their home as the “opening bid.” Professional agents, like the ones at Golden Real Estate, would analyze the market and help you determine your initial asking price. Our approach is to list homes at a price that attracts the greatest number of qualified prospective buyers. Using this ad space and other media, we expose our listings to the widest possible market. In short, we do exactly what buyer’s agents hope you won’t do – work diligently to give sellers the best opportunity to benefit from the current sellers’ market.
The scenario described above has contributed to the limited inventory of active listings. As I wrote in my March 22 column (download-able at www.JimSmithColumns.com), homes that are on the MLS between one and four days sell for much more than those at zero days. Experience has shown us that 4 days on market is the “sweet spot,” where, with a solid pricing strategy and effective marketing (like that offered by Golden Real Estate), potential buyers are given the best opportunity to find, view and make an offer on your home.
The following chart (source: REcolorado) shows the ratio of sold price to list price for listings sold since Jan. 1, 2018:
1 Day on Market = 102.0%
2 Days on Market = 102.2%
3 Days on Market = 102.2%
4 Days on Market = 102.3%
5 Days on Market = 102.2%
6 Days on Market = 101.5%
7 Days on Market = 100.5%
8 Days on Market = 100.0%
9 Days or longer = Under 100%.
Of course, there can be legitimate reasons for a property to be sold without being put on the market, such as selling to a relative or friend, but any arm’s length transaction really should be put on the market. Otherwise, you could be leaving money on the table.