[credit provider=”Zillow.com” url=”http://www.zillow.com/blog/2011-10-06/october-is-the-month-for-celebrity-price-cuts/”]
One of the most common questions someone selling their home asks us is “how long will it take?”Though unsatisfying, the answer is “it depends”. While you can look to data to show average time on the market, we find that averages are only useful for market trend spotting, not for predicting how long it will take to sell a specific home.
If you want to really estimate how long it will take, assume that you’re not going to get an offer until roughly 20 buyers have been through your home. And then assume that it will take 2-3 offers before a deal is done. Of course this is not perfect, but here’s how we estimate how long it will take for that to occur.
Price is the single most important factor when determining time on the market.
Any home will sell quickly if the price is low enough, and it will sit on the market if it is too high. Of course, sellers want the highest possible price the market will bear, and since sale price is market based, it is a moving target. We suggest a pricing formula that looks at comps first to determine where the home is expected to trade. This is a bit tricky since the price a property trades at is typically stale by the time it hits public records. It takes 2-3 months from when an offer is accepted to when the deal actually closes – and it can take several weeks or months before the “comp” is published. So at best, your comp is a quarter behind.
Also, when looking at comps in NYC, anything other than a “building comp” is going to be less than 100% accurate. Each building is a “micro neighbourhood” with a specific set of amenities, services, views, aesthetics, etc. And then there is the condition of your home vs. the condition of the comp – and an adjustment may need to be made accordingly. Once you’ve identified comparable properties, look at cost per foot and multiply against the square footage of your home. Remember that a 2BR is not a good comp for a 1BR since the cost per foot is often higher in today’s market for larger apartments than smaller ones. When you have completed this step, you will have your target price.
However, your target price is not where you should price your home. You should look at the average spread between list price and recorded price to arrive at an asking price. Again, averages can be tricky, but the average here is more useful than the “days on market” statistic. In any given market, there is a point where a listing priced too high will not get any bids – even low ones. By sticking to the average spread, you are more likely to avoid this problem.
The second factor to consider when figuring out how long your home will take to sell is the overall number of qualified buyers you can get into your home. This assumes that your property has been priced appropriately for the market and now we’re just dealing with the law of numbers at work. Our experience tells us that it will take approximately 20 QUALIFIED buyers through the door before you receive an offer, and two to three offers before a deal is done.
If your home is priced right, and has all the features, space, layout, renovations, condition, light, views, amenities and location that most people want, you will have dozens of buyers to your listing within the first month of being on the market.
Sheer volume through the door in a well-priced home should lead to a quick sale, generally a month or less depending on how heavy your buyer traffic is. However, with each of these items that your listing falls below average, you reduce your buyer pool, thus increasing the amount of time it’s going to take to sell, even at the “right” price for the market.
Sellers need to understand that it will take time to sell these “imperfect” apartments, and that if buyers are not coming, it could be a function of the limited attributes and not the price. A critical mistake often made with these types of apartment is to reduce the price too soon, or to take the apartment off the market prematurely, when the best step would be to wait for the right buyer.
To illustrate this point, let’s take a low floor apartment on the upper east side as an example. This apartment generated 5 showings in the first week on the market, and then traffic dropped to about a showing a week. At this rate, it would take 15 weeks before we could reasonably expect an offer. Also, since sellers usually test the market at the higher range of what their home is worth, there is often a price adjustment during that time if the demand for showings is low. However, this apartment is likely to sell in 15-20 weeks if traffic remains steady.
Keep in mind that even the least desirable apartment will sell quickly at a bargain basement price, and perfect apartments can sell quickly even if the price is high. But for the average homeowner to get an acceptable deal it takes the right combination of price, desirable attributes and time on the market to get enough qualified buyers through the door and get a deal done.