August 2016

What happens when you don’t sell the first week?

There are many different philosophies on how to price a home but the result of not getting a contract in the first week is clear: a lower sales price and missed opportunity.

To see what happens to offer prices during and after the first week on the market, I graphed data for both detached and attached homes in multiple price ranges in the city of Denver.

• Under contract in the first week? Homes averaged 2.3% over the list price.

• Under contract in the second week? The sale price dropped 0.24% below asking price.

• Under contract in week 3 and later? See the graph below.

The 2.5% swing from week 1 to week 2 means $10,000-$12,000 less for the seller (based on the average home in Denver.)

I wanted to see how each Denver neighborhood broke down in agent transactions. Do a few agents have most of the sales or are the sales spread out over multiple agents?

As defined below, there are two types of agents: ones that focus and ones that diversify. Is one better? I think that will depend on the client and the situation. Is one more common? Let’s see from the data below.

Neighborhood Expert  There is value to being a neighborhood expert—to knowing a lot about one specific area and all the ins and outs of the neighborhood (i.e., schools, restaurants, home prices, trending, home types, events, etc.)
==>  On average, only 13% of agents perform two or more transactions in a single neighborhood. (YTD 2016)

Area Expert  Having a good general

After showing a bunch of condos over the past few weeks, I wanted to see how HOA dues affect the price per square foot and if I could find a correlation between the two. Because a buyer that can afford a $400,000 condo would have a hard time justifying HOA dues of $800 per month, but would have no problem paying $200 per month.

I exported data for 2015 in the city of Denver. Then I created and calculated an “HOA Factor”. This factor would represent how the HOA dues relate to a sale price and therefore the price per square foot.

The HOA factor is basically the relationship of sale price to HOA dues:

Price = $400,000, Dues = $200
HOA Factor = 0.5

Price = $400,000, Dues = $400
HOA Factor = 1.0

Price = $400,000, Dues = $800
HOA Factor = 2.0

I started with