Harmful Effects from Changing the Listing Price?
Are there any negative effects from changing the listing price of a property? This question haunts Brokers/Agents as well as sellers of property every day. At present, there does not seem to be a consensus answer to this question within the professional real estate community. Fortunately, this question was scientifically investigated by John R. Knight. Unfortunately, few know the results of Professor Knight's research.
In Knight, the impact of changing a property's listing price is investigated. Additionally, the types of property that are most likely to experience a price change are also estimated. The findings from this research indicate that, on average, properties which experience a listing price change take longer to sell and suffer a price discount greater than similar properties. Furthermore, bigger price changes are found to experience even longer marketing times and greater price discounts. Finally, as for which properties are most likely to experience a price change, Knight finds that the greater the initial markup; the higher the likelihood that any given property will experience a listing price change.
Implications for Practice
Sellers as well as Brokers/Agents should therefore be aware of the critical necessity of getting the price correct from the start. Sellers wanting to over list will ultimately take longer to sell and will sell their property for less, on average, according to Knight. Brokers/Agents' desire to take a listing and get the price right later will ultimately lead to their working harder according to Knight, and they are not doing their sellers any favors. Thus, an initial and detailed analysis of the proper price is much more critical than many originally thought.
Interestingly, I have found in my own research that the direction (up or down) of the listing price change does not matter. A listing price increase and decrease both lead to similar results found in Knight's work – longer marketing times and lower prices. Therefore, get the price right from the beginning. It is best for all.
 Knight, John, R. (2002). Listing Price, Time on Market, and Ultimate Selling Price: Causes and Effects of Listing Price Changes. Real Estate Economics. 30:2, 213-237.
Source: KCM Blog, Steve Harney
Monday, June 18, 2012
Thursday, June 14, 2012
I must admit, I'm not really a newspaper reader. In fact, I rarely purchase the paper and if you do catch me reading it, I'm probably looking at the sales ads! I was standing in line at the grocery store on Sunday when I noticed that the front page of the Atlanta Journal-Constitution had a real estate related article as the cover story! The title, as you can see from my high quality iPhone photo above, was "Home Sales Up as Prices Plummet!" So naturally, I threw it in my cart and brought it home to read (along with the latest Target sales ad).
There are a gazillion different reports, studies, and opinions as to what the state of the real estate market is. If you get your news from a national source, you may hear that the market has bottomed out and prices are on the rise; however, being that the Metro Atlanta area was one of the hardest hit in the nation, that doesn't quite apply to us just yet. In fact, Melissa and I include graphs in our listing presentations that show just what this article is saying... the inventory level is down, the number of foreclosures is down, pending sales are up, and sold transactions are up which seems like the make up of a wonderful real estate market; however, the catch is that the average sales price is still down. So...the GOOD news: things are moving and selling! The bad news: they're still selling at lower prices.
Here are some interesting facts from the article:
- The number of overall home sales picked up by 11% across the metro Atlanta counties even though the median price dropped by nearly 15%. In most counties, the market was driven by resales, with the number of new-home sales either flat or declining.
- The ZIP codes with the most home sales were in Lawrenceville (30044 and 30043) and Cumming (30040 and 30041). The Lawrenceville ZIP 30046 also saw the greatest increase in home sales, at 125%.
- The biggest declines in number of homes sold could be found in the Cherokee community of Waleska (30183) and the Southwest Atlanta area of 30310.
- The cheapest homes can be found in the West Atlanta area of 30314, where the median home sale was just over $15,000, slightly down from where it was last year.
The Biggest Gain: 30294, Ellenwood: This part of Henry County had the biggest gains in 2011, up 22%; however, the median price was $56,500: that's still a 68.9% drop since the height of the market in 2007.
- The Biggest Loss: 30337, College Park: This city in south Fulton had the biggest price drop: down 45.7% since 2010. The median price was $57,000, a 69.2% fall from 2007
Friday, June 1, 2012
Did you know there's yet another great home to tour right in our own backyard?
The Southern Living Idea House opens tomorrow, Saturday, June 2nd in Senoia, GA!
In case you didn't see our post a couple of weeks ago....we last blogged about the HGTV Green House available to tour at Serenbe (click the following link to read that blog and get the info on how to tour that home- http://stephensandstephens.blogspot.com/2012/05/check-out-hgtv-green-house-at-serenbe.html ). We're crazy about homes, which is why we love our job. Touring homes is like shopping for shoes to us....instant bliss!
You don't want to miss this charming circa 1830's farmhouse renovation. It's a first for Southern Living because it's a "renovation" idea home (instead of a building a new home they took an old home and renovated it). The home was lifted and setteled just a few yards away from its original location and has undergone a beautiful transformation. We're so glad that Southern Living and the builders/developers saw the value in saving a beautiful historic home. Too many of our historic homes in our area are being torn down or sit vacant or are left to deteriorate. We love our historic homes and "squares" here in GA. Congratulations to Senoia as well because this is the first time Southern Living has returned to a town to do a 2nd Southern Living home. There's just something about Senoia!
Here's the details on the Southern Living Idea House:
1. Location - 57 Morgan Street, Senoia, GA 30276
2. Grand Opening is Saturday, June 2nd from 11:00am - 5:00pm. After the grand opening, the home is open through December 23rd. It's closed on Monday & Tuesdays, open Wednesday - Saturday from 11:00am - 5:00pm, and open Sundays from 1:00-5:00.
3. Ticket cost is $12.00 at the door. If you'd like to purchase tickets in advance, visit: https://2012southernlivingideahouse.eventbrite.com/ . If you purchase online, they charge a $1.65 convenience fee. A portion of every ticket sale goes to benefit our local country musician, Zac Brown (of The Zac Brown Band) and his local charity "Camp Southern Ground." It's a wonderful cause!
Below are some links that may interest you:
To plan your visit (where to stay if you're from out of town, what restaurants to eat at, etc. : http://www.southernliving.com/marketplace/plan-your-trip-to-the-2012-idea-house-00417000078186/
To see a time lapsed video of the renovation and more info on the renovation: http://www.southernliving.com/home-garden/idea-houses/idea-house-00417000077170/
It's always nice to have fun and affordable events in our own backyard. Enjoy Senoia, it's so charming! If you decide you want to move there, or if you want to find your own farmhouse to renovate, give us a call or email, we'd love to help! : )