NB: This information is reflective of current market conditions - a strong sellers market. This information should be discussed with your Realtor to see if it's applicable to your situation, as market conditions vary.
Buying and selling real estate costs more than money. You spend emotions, you spend time, you spend parts of yourself. Being informed is paramount – and knowing where to place offers more effectively can reduce your expenditures in time & emotions. Knowledge can decrease the overall “costs”. This isn’t a fun topic, but it’s important.
There is no hiding the fact that buying a first home is incredibly difficult right now in Windsor Essex. I’ve yet to meet a Realtor that doesn’t want to see smiles on their clients faces, and I remember all too well being outbid on my offers for my family home over 13 times before we were successful.
I did a previous post about some reasons why that is – you can find it here – but on this post we will skip the rationale and look at some analytical data.
To be successful at buying takes a few things, and a big budget always is what everyone wants but that’s not the case. So, what can we do? Be as informed as possible. It can help save you time and create accurate assessments.
One reason why I wanted to see this data is to confirm a hypothesis I had: is right now the perfect time for growing families to seek their next home? I believe it is.
The graph below is compiled from data collected from Residential Home Sales in Windsor Essex County this this current calendar year – 2022. What it shows is important: List Price vs. Median Sale Price. Now the word MEDIAN is important, as its not an average (If you would like clarification of the difference between Median and Average – click here.) What we see from the compilation is a stark reminder of two things:
- The over-listing purchase price for homes in the entry level market is still way up, and
- the higher the listing price is – the lower the sale-price-over-asking is.
Listing Over Asking – What Is Going On
$175,000 (95% over Listing Price) -$550,000 (38% over Listing Price)
Before I get too deep on what is happening here, just know that the market is not normal at all. We have many, many more buyers on the market then we do homes – especially for first time buyers. What I’m hoping for is that this information will give you guidance in buying. When you see a listing price, this showcases the median sale price for the approximate listing price (factors not included).
The first question is always “well, why list it so low if you’re hoping to get so much”. The reality is very straight forward: Listing Agents act in the best interest of their clients, as Buyer Agents do theirs. Listing Agents place the home at a competitive price which draws interest, with some offers coming in at asking usually, some of the offers are over asking, and some are much over asking – but we can never be sure, or assume that’s the case because it won’t always be the case (for the time being yes, but I don’t have a crystal ball). However, overpricing a home at listing can have devastating effects on the sale price of the home, even if it’s just a little bit. Much of the effects revolving around the psychology of purchasing practices.
But we’re talking buyers here right now, so how does this information help you? Hopefully, it will allow you to determine you offer more effectively. Please note – what you decide to offer should be discussed with your Realtor, and is case by case, person by person situation. This is simply real-world data I wanted to share with you. But if you are looking to buy and want to tailor a price with better chances of success, this will help but is not the only tool.
Factors that affect price are pretty straight forward: location, fit and finish, competition, personal taste. Homes that are completely renovated and move in ready will receive more offers and will go for higher prices. For my sellers reading this – read this post before you go tearing down walls.
The Higher the Listing Price – The Closer The Sale Price
$650,000 (15% Over Listing Price) – $850,000 (5% over Listing Price) – $950+ (varies)
You will notice that there is correlation of a big decrease in “Percentage Over Listing” at around $650,000. This is straight declination of competition. The more luxurious the home, the lesser in quantity of potential buyers. With less competition, there is less application of price bullying in offers, and more offers come in closer to asking price. Again, this will vary by listing.
Why is this important? Two reasons… For my buyers: a good analysis of the property will be much more effective at delivering an accurate offer price. One that’s rooted in a more traditional scenario.
For my sellers: have the offer price nailed down, sharp.
One reason why I wanted to see this data is to confirm a hypothesis I had: is right now the perfect time for growing families to seek their next home? I believe it is.
The first-time buyer market is in need of homes, and the higher listings have less competition – this means that there are likely buyers who can maximize returns on their investment now, and afford a home for their growing needs using the profits from their first home.
It’s not for everyone, of course. However, this is an excellent time to sell, and for those growing and need something larger for their growing needs, you’re not running into the same levels of competition as entry level homes.
Hope some of this helps. And as always, I’m here if you need me.
