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How to achieve a quick sale without leaving money on the table

Excerpt from the book: How to sell your home fast for the highest price. Published by BuySell. Copyright © 2019 - BuySellCyprus.com
Watch the businesses in your area. Are new businesses opening or are they closing? An increase in new businesses is a sign that the household income and population of the area are growing. Increased population and new jobs affect demand for property. If more businesses open in your area, this is a sign that you are in a sellers’ market, meaning there are will be buyers in the market than available properties for sale. 

But, if you see businesses shutting down, then the reverse is happening. The population is decreasing, and fewer jobs are available. As a result, the number of people who want to sell will outnumber the people who want to buy. This information can show you whether the market is heading toward a buyers’ or a sellers’ market. If you want to achieve the highest possible price, you should always price your home ahead of the market. 

If you are in a slow market, in other words a buyers’ market, you should price your home lower than the average asking price for similar homes in the market. You will immediately get a competitive advantage. As soon as your home hits the market, it will be more attractive than any other comparable home. You will have the chance to benefit from your golden window of opportunity, which only lasts four to six weeks from the time your home is put up for sale. If you don’t price your home ahead of the market and you insist on pricing higher or the same as similar homes, you will end up chasing the market. In a buyers’ market, prices will continue decreasing, and if you lose this valuable time when your listing is fresh, you may have to make a sharp decrease in the price to regenerate interest. 

If you are in a sellers’ market, you can expect that prices will increase. Again, you should price ahead of the market. Ahead of the market means pricing your home so that you are competitive with other similar homes in the market. Don’t overprice and expect that the market will reach you at some point. Your aim is to sell. If you fail to sell within a short period of time, the probability of selling your home will be diminishing day by day. New listings enter the market every day in competition with your listing. Of course, in a sellers’ market, there are cases of sellers who overprice their homes, and at some point, as a result of pure luck, they may find a buyer. That strategy may make them look smart but it comes with high risks.  

Overpricing in a sellers’ market has certain risks. The first risk is that you may not know how quickly prices are increasing and therefore you won’t know when the market will reach your price. The second risk is that you don’t know when the market will shift, in which case your home will probably have minimal chances of selling. Pricing ahead in a sellers’ market is like playing musical chairs; you don’t know when the music will stop. And if you don’t find a buyer when the music stops, you will be left without a chair. If you are looking to use the proceeds of the sale to buy another property in a sellers’ market you risk paying higher prices for your new property. The more you wait to achieve a higher sale price, the more other properties are also increasing in price. How sure are you that the rate that your property price is increasing is higher than the rate of increase of the property you wish to purchase?


How to estimate your likely selling time

You should use the facts when you want to assess the market value for your property. Accurate pricing will help you to develop an effective pricing strategy to maximise the selling price.

Start by doing online research. Meet with your agent and analyse recent sales of properties similar to yours. Comparable properties that are still on the market are indicative of the going market rates, and your agent should be able to distinguish which ones are priced correctly and which ones are overpriced and thus just sitting on the market.

The next step is to determine the absorption rate of comparable properties in your area. This will determine how soon you can expect to find a buyer. Asking prices mean nothing if there is no demand for properties like yours in your area. 

The final step is to define your asking price based on the competition. Your competition consists of the comparable properties already on the market. For example, if there are another twenty similar properties like yours in your area and the absorption rate is five properties per month, your average expected time to sell is four months. Bear in mind that buyers will check and compare your property with every other similar property. If your property has a competitive advantage, it will sell faster than the expected period calculated based on the absorption rate and vice versa.

Once you know the current market values of similar properties in the area and how much they were sold for recently, you will be able to assess the probability of selling your home within a definite price range.

For example, you and your agent may agree that you have the highest probability of selling your home when your asking price is somewhere between €300,000 and €330,000. However, the decision as to whether to go for the lowest or highest price in the range is important. It will determine how fast your home will be absorbed in the market. Buyers tend to prefer getting value for their money to targeting the best property on the market.


How to avoid a place in the pile of unsold listings

There are two places your home can sit in the market. The display and the pile. That terminology derives from the old real estate tradition of displaying new listings on their window display. If the listing isn’t sold after a period of few weeks, it is removed from the display and thrown on the pile. Anglin, et al. (2003) did a scientific analysis on data for single-family houses listed with the Arlington, Texas, Multiple Listing Service and confirmed that increases in the initial list price increase time on the market (TOM) and that a seller imposes extra penalties on himself for choosing a high list price.  

Once your home is thrown from the display to the pile you have already become a second-class listing. Both buyers and agents get the impression that listings on the pile are discards. And once you are in the pile, it is difficult to return to the display.

Of course, nowadays with the Internet, there is no division between display and pile. But still, the division exists mentally among buyers and agents. The market is active with the listings priced to sell. The rest of the listings are just a pile of homes for sale which are attracting minimal interest. 

It is estimated that in periods of slow market activity, almost 80% of the listings in the market will sit in the pile for months or years. The astonishing thing is that even in a sellers’ market when the demand is high, the percentage of the pile of overpriced and unsold listings is always more than half of the homes in the market. Buyers are always competing for the new and competitively priced listings.

The display market is active and the one in which sales occur. In the pile market things are stale, and very little sells. You should be aware when pricing your home that you should not base your pricing on the asking price from listings in the pile because your home will suffer the same fate. If in doubt, ask your agent how long listings for other homes like yours have been on the market.  


The golden window 

Timing is essential when you decide to list your home for sale. I am sure you have seen many faded and worn “For Sale” signs in your area. Or you have seen sellers changing “For Sale” signs of one agent for another then another for months without a sale. What impression do you get? The house says: “Nobody wants to buy me.”

 I always feel sorry for sellers who can’t sell their homes. It is disappointing sitting and waiting for a buyer who will come and pay your asking price. Both physically and psychologically, you will be exhausted keeping your home always ready for viewing. It is heartbreaking when you are waiting for your agent to call you and bring a buyer, but your phone never rings. Months or years pass, and on those rare occasions when you do get a viewing, there is no feedback from your agent because the buyer didn’t like your home.

But it can get worse than that. When a buyer views your home, they will ask the agent: “How long has this home been on the market?” Every buyer wants to know why a home is sitting on the market and no one has bought it yet. Naturally, they will tend to think, “if nobody wants to buy this house, why should I consider it ‒ there must be something wrong with it.” 

When a home has been sitting on the market for too long, buyers are sceptical ‒ they usually tend to skip over such houses without even considering making an offer. Or if they do decide to make an offer, the more time the house has been on the market the lower the offer will be.

Buyers are usually very well prepared before they start viewing properties. They start their research online months or years before starting to talk to an agent. They know recent sales and recent listings in your area as well as most agents do. Buyers will be aware of what properties have recently sold and at what prices. 

When a home stays on the market for a very long period, sellers tend to accept low offers just to get rid of it. They are so fed up with preparing their home and waiting for a buyer that they are wide open to accepting any offer just to get rid of the property and save themselves from the stressful situation they are in. 

As we’ve seen the crucial period in which homes have the best chance of selling is the golden window. This is the initial period when the property hits the market for the first time. Usually, it is a maximum period of eight weeks. This is the period when your property will generate the highest buyer interest. If you want to achieve the highest selling price, it is critical to sell within this golden window.

Price your property right from day one. Speak with an agent who has enough experience and the tools and knowledge to provide you with a report of the average days on the market of properties like yours. If the agent has many years of experience and an extensive database, he or she will be able to provide you with highly accurate market data. 

Let’s assume that in your area the average days on the market for properties like yours is 70. In that case, you need to catch the final buyer’s attention during the first 35 days. After that, your property will be converted to old news. Buyers will view it as a leftover. It will be seen as the one that others didn’t want to buy because they found better options. 

Don’t succumb to the false impression that your turn will come. New properties for sale come onto the market on a daily basis. Those properties will dominate inboxes, and no one will see your property any more. You can still rely on the buyers who may actively search and find your property in the pile. But once they discover how long it has been on the market, they will start wondering why it hasn’t sold and will look for reasons to make you a low offer.

We just need to find that right buyer, really?

There is a common saying among sellers: “There is a buyer for every home. I just need to find the right buyer who will be amazed by my home and offer me my dream asking price.” But let’s face it, there are many similar and better homes on the market than yours.

As I explained earlier, we all think that our home is the best and has unique features that no other house has. This is rarely true: most probably you don’t own the best home in your area. If you are a seller who thinks that eventually, the day will come when the stars align and send you that perfect buyer who will pay your dream asking price, you will almost certainly be disappointed. Unfortunately, an overpriced listing rarely sells, and when it happens it is just pure luck. If you don’t price your home right and you miss the golden window, the chances of getting the money you wish for are the same as winning on a lottery ticket. Theoretically, you might win the lottery but based on probability it is almost certain that you will lose the price of your ticket. 

Buyers are well informed about what properties are available on the market and at what prices. If your price isn’t competitive, that right buyer will never reach you. Buyers are busy people, and most probably they won’t even add your property to their viewing short list when they see your high price during their research. After all, why would they waste their time viewing a property that doesn’t fit their budget

Andy K.
BuySellCyprus.com

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