Equity Sellers: Sellers with equity made up 63% of all sales in May.
Everybody is always talking about foreclosure and short sales. It is time to divert the focus and take a much closer look at the “equity seller.” Sellers that have equity in their homes are typically not distressed properties, so they of course receive much less fanfare. This segment of the Orange County housing market represents 63% of sales in May 2012 and 62% of all home sales in 2011. 58% of current demand, new pending sales over the prior month, and 82% of the active inventory are equity sellers. Granted, foreclosures and short sales are hot, with expected market times of less than a month. But, the expected market time for equity sellers is a little over two months. Compared to the distressed market, it sounds a little sluggish. That simply is not the case. Last year in June, the expected market time was just under five months. This is simply the best time since 2005 for homeowners with equity in their home to sell. This is a seller’s market, below five months. The lower the expected market time, the hotter the market. At about two months, homes that are priced right, at or near their fair market values, will fly off the market like popcorn at a movie theatre.
HOWEVER, sellers should not get ahead of themselves. The market has the look and feel of a seller’s market with multiple offers and selling prices near their asking prices, but homes must be priced accurately. As I have discussed before, the market is experiencing slight appreciation. Homes that are priced appropriately and receive multiple offers are often going for a few thousand dollars more than prior closed sales. The trouble is most homeowners overvalue their own home and originally place it at an unrealistic, overpriced level. It is human nature, part of our DNA. Unfortunately, homes that are overpriced tend to sit on the market collecting dust. Thus, most successful closed sales are a result of reducing the asking price prior to obtaining an offer. Many simply try out an initial overzealous price and are willing to reduce after a certain time. This is not a wise approach to the market. When homes first hit the market they garner the most interest and showings. However, after reducing, there is not as much activity compared to the original list date. It is smarter to hit the market realistically priced to take advantage of the absolute best activity. Initially, overpricing means a longer period of time to keep a home spotless and in model home condition. With a little bit less activity down the road after reducing, a homeowner runs the risk of obtaining a little bit less in the ultimate sales values. This is precisely why it is so important to carefully arrive at the initial asking price, pouring over all of the recent pending and closed sales data. Active listings carry much less weight, other than homes that are aggressively priced. The bottom line, the equity seller market is a very strong market, but pricing is crucial.
Everybody is always talking about foreclosure and short sales. It is time to divert the focus and take a much closer look at the “equity seller.” Sellers that have equity in their homes are typically not distressed properties, so they of course receive much less fanfare. This segment of the Orange County housing market represents 63% of sales in May 2012 and 62% of all home sales in 2011. 58% of current demand, new pending sales over the prior month, and 82% of the active inventory are equity sellers. Granted, foreclosures and short sales are hot, with expected market times of less than a month. But, the expected market time for equity sellers is a little over two months. Compared to the distressed market, it sounds a little sluggish. That simply is not the case. Last year in June, the expected market time was just under five months. This is simply the best time since 2005 for homeowners with equity in their home to sell. This is a seller’s market, below five months. The lower the expected market time, the hotter the market. At about two months, homes that are priced right, at or near their fair market values, will fly off the market like popcorn at a movie theatre.
HOWEVER, sellers should not get ahead of themselves. The market has the look and feel of a seller’s market with multiple offers and selling prices near their asking prices, but homes must be priced accurately. As I have discussed before, the market is experiencing slight appreciation. Homes that are priced appropriately and receive multiple offers are often going for a few thousand dollars more than prior closed sales. The trouble is most homeowners overvalue their own home and originally place it at an unrealistic, overpriced level. It is human nature, part of our DNA. Unfortunately, homes that are overpriced tend to sit on the market collecting dust. Thus, most successful closed sales are a result of reducing the asking price prior to obtaining an offer. Many simply try out an initial overzealous price and are willing to reduce after a certain time. This is not a wise approach to the market. When homes first hit the market they garner the most interest and showings. However, after reducing, there is not as much activity compared to the original list date. It is smarter to hit the market realistically priced to take advantage of the absolute best activity. Initially, overpricing means a longer period of time to keep a home spotless and in model home condition. With a little bit less activity down the road after reducing, a homeowner runs the risk of obtaining a little bit less in the ultimate sales values. This is precisely why it is so important to carefully arrive at the initial asking price, pouring over all of the recent pending and closed sales data. Active listings carry much less weight, other than homes that are aggressively priced. The bottom line, the equity seller market is a very strong market, but pricing is crucial.
