In a hot or rising market, it is very easy to over value the price of real estate. No one wants to consciously leave money on the table (that is unless they’re working with an iBuyer) but the trend of trying to capture every last dollar can result in selling the home for less than market value.
For this study, I evaluated 4,718 single family home sales in the city of Charlotte from October 25, 2017 until April 23, 2018 (180 total days). Charlotte has experienced a housing shortage for the last few years so there is significant demand across all price points. New construction sales were excluded as many sell at or over the ask price, depending on when the sale was entered in the MLS.
Here’s what I found:
The largest percentage of homes sold in 0-7 days on the market (1,959) and Sellers received 100.36% of their asking price. Translating that into real dollars, the owner of a $300,000 home received $301,080 not including any Seller concessions (if any).
Next, homes that sold after being on market 8-14 days (556) closed at an average of 98.63% of the asking price. Again, put into real dollars, the seller of a $300,000 home received $295,890 or $5,190 less than the seller that contracted the first week the home was listed. Those seven extra days on the market proved to be expensive.
Days 15-30 (571 sales) and days 31-60 (491) saw a continual side, with homes on the market 15-30 days selling for 97.31% of the asking price and homes on the market 31-60 days slipping to 97.01%. Using our real world example again of a home selling at $300,000, the extra time on market discounted the property $7,950 and $8,970 respectively from the original asking price and $9,030 $10,050 less than the homes that sold the first week.
After 30 days, the price drops come in chunks and next two groups were the smallest two sample sizes of the study. Only 269 homes in Charlotte were on the market 61-90 days before receiving an offer and the ones that were closed at an average of 96.5% of the asking price. For our $300,000 homeowner, two months on the market cost them $10,500 or $11,580 as compared with the first week Sellers.
The final selling group has the largest expanse of time but produced the second smallest sample size (369 homes). For homes that were on the market 91-180 days before contracting to sell, they only received 95.85% of their asking price (which at this point could be a reduced asking price and not the original). Our $300,000 Seller took home only $287,550 (a discount of $12,450) before paying commissions, taxes and any additional Seller Concessions to the Buyer. When I factored in the sales with reduced listing prices, the original listing price to final sales price percentage dropped to only 91.35%.
It’s easy to look at the 91.35% result for the group that was on the market the longest and compare it to the group that was on the market for less than 7 days and to draw the conclusion that the extra days on market cost the Seller $25,950 (for our home selling at $300,000) and, for some, that may be true. This group did have a higher average selling price ($448,485 vs $264,144) and the inventory of properties over $400,000 is double what you will find below $400,000 throughout Charlotte. Maybe it was increased competition from builders?
There was one final group, the ones that failed to sell. When I first compiled this group, I was surprised by the sheer volume of properties that failed to sell over the last six months in Charlotte (1,018 in all). Then I realized that my six month window in a portion of the holiday season, a time at which many Sellers decide to withdraw their listings to avoid additional disruption. As a result, I adjusted this figure back to only include withdrawn and expired sales within the last 120 days, which would start the clock just after the New Year. 194 listings expired and 361 were terminated by the Seller. They had been on the market an average of 90 days.