Is it true that the longer it takes to sell your home, the less you are likely to receive for it? There’s a lot of evidence that indicates this is in fact true. Check out this chart, which illustrates the sales to list price ratio by weeks on market:
Source: National Association of Realtors 2013 Profile of Home Buyers and Sellers
As you can see, homes that sell within the first 1-2 weeks of being listed on the market get, on average, 100% of asking price. As time goes on, you can see that the sales to list price ratio begins to drop: by 3-4 weeks on market, the ratio drops to 98% of asking price, and by 5-16 weeks on market, sellers receive an average of 96% of asking price.
But then look what happens for listings averaging 17+ weeks on market: sellers receive only 92% of asking price on their listings.
Some of this is due to the fact that homes were initially overpriced, and it took a while for sellers to drop their price to a point at which it would sell. If you are in a situation where your house is vacant and you’re looking at paying to keep up that property (taxes, mortgage payments, maintenance, etc.), it can get very expensive to over-price your home. What isn’t shown on this chart, and which is hard to quantify, is what would have happened to these 17+ week sellers if they had priced their homes correctly? Would they have ultimately netted more money if they had priced their homes correctly from the get-go?
The answer to that is almost certainly yes. The importance of pricing your home correctly from the get-go cannot be overstated.
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