A home in the country is well within the reach of Dane County home buyers again. Six years ago developer land grabs pushed the cost of dirt sky high and builder prices were at a premium. The new economy has forced developers to release their grip on land, builders have left the industry, material prices have come down, and building contract prices have adjusted to demand. On top of that, the existing homes built in the last dozen years are coming on the market and their prices are favorable.
Seven homes, priced between $599,900 and a million dollars, in rural Dane County NW, have closed in the Middleton High School district according to the RASCW MLS. Every neighborhood I look at shows just about the same results: Owners are accepting offers in about 50 days after getting the price close to where buyer's appear to be waiting. The patience of the owners is also about the same everywhere. Six, seven, eight months pass before owners make that last necessary price change. Are owners letting go, or just losing their grip?
Maybe the reasons owners start at a price that doesn't get the attention of the buyers are diverse, but the results are consistent: When you count time on the market in terms of months, statistics are showing you may be likely to end up accepting an offer below 90% of your initial asking price. The seven homes closed this year sold at 82% of their initial asking price. 94% of their last price means the owners are down an average of over a $100,000 from their initial price.
OK, these are averages and some locations are just better than others. It's not accurate to say "You home is worth X% of this price because it has been on the market X months." Of course that's silly. Here's my suggestion as to what might make sense: If you started the process of selling 60 days ago, with a price which was supported by recent sales at that time, and you are still on the market, a price change could be in order. How much? It depends. Look at the recent sales...don't hung up on the differences in your home. Agree that the homes are different and try to focus on what people are getting in the price range. If you thought your home was worth $650,000 and other homes between $550,000 and $750,000 are selling for an average of $25,000 less than the last asking price, but $75,000 less than the first, you probably will have more activity by t moving aggressively toward that $75,000 number than you will by creeping nearer the $25,000 drop.
My point is this: The best we can do is price according to sales at a given time. Then the buyers who are out there look at homes and judge them based on their criteria. While we are on the market, other homes are selling. If the new sales are lower than the old sales, and we are not getting an offer, it is reasonable to expect that we will not get an offer at the price we are at and we should move accordingly. The model of pricing I believe in works this way: If we are targeting the right buyer and the right buyer is not making an offer, we have to change the price to appeal to the buyer. If we are targeting the wrong, buyer we can change the marketing. Does that make sense? If not, we should talk. If yes, we should definitely talk.
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