Reminder: Daylight Savings Time - March 9th! We have seen a considerable increase in buyer activity this past two months. Daylight savings time couldn’t come at a better time. This is a real opportunity to conduct extended open houses and connect with those buyers. Also, consider Friday afternoon open houses that go until dark. I am convinced that this is the time each week that your brochures disappear from your brochure boxes!
There is mixed news in the numbers this month . . . but let’s first download and take a look at: February 2008 Resale Market Snapshot.
Listing prices dropped a mere 1.4 percent during February compared to 9.3 percent since September. The good news is that closed sales prices remained flat in February but has dropped 13 percent since September. Inventory dipped while the absorbtion rate rose to 6.3% . . . these best one month rate in months. The average Cumulative Days on Market still hangs around 180 days while listing remain woefully overpriced.
The Cost of Overpriced Listings: Bob Thompson is the author the monthly Market Condition Report for Equity Title. His studies clearly show that half of all homes listed in the Las Vegas market are priced outside the “Selling Zone”! Those homes are not receiving offers . . . they’re not even being shown in many cases! The result is that we are now only closing 40 homes per day on average in the Greater Las Vegas area. This compares to 88 closing per day in 2006 and 125 closings per day in 2004. What is this costing you? More importantly, what it is costing your seller?
What Can We Do? First, the traditional CMA approach to market pricing does NOT work in this market. It may be an indicator of what it might appraise for, but that may a totally different number than what it will sell for. Bob’s research and my own observations support the notion that Las Vegas is a very efficient market. That simply means that each area or subdivision will experience market valuation changes on their own schedule or in their own time. One area may be performing poorly today . . . but will prosper later when other areas are under-performing. The bargains and opportunities in the Las Vegas market is a constantly moving target.
From a practical standpoint this means that just developing a CMA in the subdivision of the prospective listing is not adequate . . . and may be financially fatal to you and your seller. Let’s discuss two very intuitive examples. If a buyer is interested in Anthem Country Club . . . is it possible that they would also check out Red Rock Country Club? Of course, so your market analysis must determine if there are opportunities in the competing subdivision that could cost your seller showing and offer opportunities. How about the age qualified buyer? How many neighborhood choices do they have? Well let’s see: Sun City Summerlin, Sun City Anthem, Solera, Sienna, Sun City Aliente, and quite a few others. If you are preparing a CMA for a Sun City Summerlin property . . . can you afford to ignore the vast competition in all other areas of Las Vegas, North Las Vegas and Henderson?
Let’s Continue to Get Those Critical Price Reductions! If there was ever a time for brutal honesty on listing prices . . . it is now! I would urge each of you to review your listings in the context of this blog and make appointments with your sellers to take a look at their current listing prices with this perspective. Don’t nibble away with insignificant price changes. Boldly price the property to sell!