Sunday, April 17, 2011

Days NOT on Market

I'm reviving a series on how NOT to select a rep. The intro was posted previously. You can find it here. There was also a chat about the not-validity of evaluating an agent by the ratio of sale price to listing price (You know the drill: "SOLD OVER ASKING!!") ... That piece is here.

Another common suggested criteria is "Average days-on-market".  A low number is deemed an indicator that the agent prices and markets well, allowing properties to sell high and quickly.

We agree that a properly priced home will generally attract the right buyers and receive the best offers.  And, as a result, it will typically mean a prompt sale.  But list price is ultimately the seller's decision and there can be reasons to "test" higher prices.  We can (and will) decline the listing if we have major problems with the plan, but sometimes the logic is there.

For example, a common reason for "testing" a higher-than-likely price is an estate sale.  An executor may feel pressure to demonstrate to the heirs that every attempt was made to attract the highest price.

All that said, the ultimate "days-on-market" stat is often deceptively low for much the same basic reason that sale:listing price ratios are meaningless. 
In most cases, a property that has been on the market for several weeks and is due for a price reduction (or some other attempt to generate market interest) will be cancelled and re-listed.  The statistic is only for a sold listing.  So, a cancelled or expired listing doesn't count.

Agents will actually persuade sellers to re-list purely to manage the statistic. that doesn't necessarily mean they are trying to deceive.  They just know they will be asked about the stat at some point.

When you first hear such statistics, they sound pretty attractive as an "objective" way to compare agents.  Unfortunately they are without meaning.  Some clients don't like that answer, especially when their banker, lawyer, etc have suggested they ask about these statistics in their selection process.  We famously (famous to us) lost a listing on exactly these grounds, when we chose to explain rather than boast.  But we aren't bitter!

The graphic is an example of a property that sold quickly and well.  They tried a high-ish price for less than a week.  Presumably the market was giving clear signals they were too high.  Within a week, before the listing became "stale", the price was reduced and the home sold almost immediately. The "real" statistics are fine under the circumstances: sold in 8 days for 93% of list.  The "official" statistics: sold in 2 days for over 100% of list.  Betcha I could find a current similar example, probably on your street!

It can be hard to explain the problem without looking like we are trying to hide our own performance.  We aren't hiding anything ... our stats will compare favourably with any good agent, but the performance we "tout" is honesty, professionalism and full support and dedication to our clients' goals and needs. Wow, that was quite a sales pitch, wasn't it?

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