August 28, 2010

Location? Forget it — Price is All You Need

You’ve all heard the real estate joke that if you ask an agent what the key point is in selling real estate, she’ll answer, “Location, location, location.”  Of course if you ask her what kind of car she drives, she’ll also say, “Location, location, location.”  Well, stop the presses.  Redfin says they’ve found the real answer.

Redfin: For Real Estate Listings, the First Week Is Crucial

By Emily Peck

Trying to sell your house? Many sellers put their home on the market at a wishful-thinking price, figuring that they could just lower it later.

That strategy could be a misfire. According to a new analysis by Redfin Corp., a Seattle-based brokerage that operates in nine states, a listing gets the most attention online when it’s new to the market. The week that a listing hits the market, Redfin estimates that it gets nearly four times more visits on real estate websites than it does a month later, likely the earliest time that a seller will consider cutting the price.

Redfin looked at traffic to listings in Seattle, San Francisco, Los Angeles, Irvine, Calif., Washington, D.C., Boston and Chicago. They considered listings that debuted in the first three months of 2010, sat on the market for at least 60 days and had undergone at least one update. The site used its own traffic data to estimate what traffic would be like to other real-estate sites.

If a picture is worth a thousand words, a graph is probably worth a teal deerRedfin’s numbers indeed tell the story:

image

Okay, red line is web visits to new listings, green line is visits to updated listings.  Clearly new homes, never before listed, get the serious traffic, and soon.  Price it wrong, and you’ve lost your chance, because most of your potential buyers won’t be back.  The little spikes at 30 and 60 days are no doubt the bottom-feeding bargain hunters using the filters.  Is that where you want your home to be?

Redfin also notes that half of all listings don’t sell within a yearSo, if you want to sell your house, even if you live in the Real Bay Area, it’s time to do away with your wishing price.  Unless you don’t believe in useless aggregate data.

Comments (6) -- Posted by: madhaus @ 5:05 am

6 Responses to “Location? Forget it — Price is All You Need”

  1. maryjane Says:

    I wonder how much of that red peak is made up of realtors who make it a practice to look at every new listing vs. potential homebuyers who are looking a little more selectively. If I were in the market I would expect my highly paid real estate expert to do the filtering for me.

  2. SEA Says:

    Wonder what the graph would look like if only Real buyers were included.

    But beyond that, what they need to show is that a lower initial price results in a higher final sale price. This is something that Real Estater has hinted toward, but he’s done it with the so-called “over-bidding.”

    In a falling market, it’s better to sell sooner. In a rising market, it might be better to sell later, depending on how fast the market is going up.

  3. Petsmart groomer Says:

    How about showing the velocity of buyable inventory on the graph too?

  4. maryjane Says:

    ‘Buyable Inventory’ is an important phrase. I think the first peak represents people checking out whatever is new on the market. But of all the houses you check on line very few are considered ‘buyable’. The vast majority won’t fit your needs or taste and you wouldn’t want them no matter how much the price gets reduced. In some cases – even to zero.

    I’m not certain what this graph thinks it’s telling us. The listing price is really just a place to start negotiating if you’ve found a house that interests you. If it’s vastly overpriced the market will quickly let the seller know and if he’s really interested in selling he’ll adjust his price. If he doesn’t the house will sit. Didn’t we already know this?

  5. Mole Man Says:

    Not sure if this is snarky enough, but it seems like there are two different kinds of bidding process differentiated by price. When the asking price is high people bid against the seller and do everything to drag the price down. When the asking price is low sellers bid against each other and bringing the price up.

  6. SEA Says:

    Mole man- What? You mean a house is worth so much, no matter what price the seller puts on it? Shocking.

    I must remind you, this is very unlike the RBA. In the RBA, homes are always worth more than the seller’s asking price, no matter how high the seller’s asking price. In the RBA, all the seller has to do is mention that he has an above-asking-price offer, and other buyers will immediately attempt to offer much more, which of course leads to more “over-bidding.” See also: Winner’s curse.


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