Data reveals better choices in Timaru
New Zealand homes, with their “quarter acre sections” are a prominent part of kiwi culture. They play a central role in the retirement plans of many as well as being the biggest transaction we are likely to make in a lifetime. It is no wonder that sometimes consumer confusion over the real estate sales process can eventuate, after all, we care a lot about our homes and we want the job done well. This emotional attachment to our homes can lead to Real Estate industry professionals becoming the butt of criticism. Yet ironically the data from a 2015 survey of real estate vendors concluded that 86% of agents generally meet or exceed their client’s expectations. Perhaps the perceived ‘stigma’ of the industry comes from a competitive environment where the industry could have done a better job of the specific way it delivers value to its clients.
In many cases the industry has fallen into the trap of focusing on so called ‘Vanity Metrics’, which tend to be based on how many properties each agent has sold or their market share. These metrics communicate very little about the value of an agent’s service to each individual client and can often be taken as a “look at me” or shallow statement, hence the term ‘vanity metric’. Sometimes it seems as an industry we have forgotten that clients want to know “what’s in it for me?”.
Clients tell us that there are a few important factors they care about when engaging Real Estate services:
Getting the best price for the property
Getting the property sold in the appropriate time frame for the client
Having a hassle-free service along the way including good communication.
The reality is that many agents work very hard to deliver these points in their service. However historically these factors have been rather difficult to quantify and thus have been discounted and labelled as “sales talk” when they are mentioned in listing presentations.
The world of available data and internet turns this thinking on its head and allows us to create a new world, where we can quantify the benefits of different services.
Are the facts guiding your decisions?
So how does the Home owner gain from this new data availability? The use of this information to guide the sales process is critical to achieving great results.
We can learn a number of things from a critical analysis the current market. Our first graph shows us the difference in sale price for a typical $200,000 - $400,000 home in Timaru when left on the market for different periods of time.
A simple summary tells us that on average, the cost of selling too quickly can result in a reduction of average house value of approximately $20,000, sell too late and we can see a steadily worsening effect on average house price.
Question 1: Do houses in Timaru that are on the market for a long time sell for less?
The analysis shows the 8-30-day bracket as the sweet spot for selling your home. We tend to find that the key factors which contribute to selling your property in an ideal time frame are influenced by the real estate agent and the home owner, such as:
Execution of a quality marketing plan which gives high exposure to the market.
The aim is to find multiple purchasers. The old Real Estate saying is
“you can’t sell a secret” so to find the right people, marketing exposure is essential.
The sale method used and ensuring it reflects the current market.
How a property is priced or not priced creates significantly different results for the home seller. Our research has found that Home sellers tend to favour the agent that will market the property for the highest price. The appraisal price often ranks as a second or third factor when choosing an agent. A high price can lead to a low value outcome. (See fig 1)
Motivation levels of the owner to sell the property.
If the homeowner isn’t really serious about selling ie doesn’t have anywhere to go or is in no hurry, this can have a significant effect on the success of the sale. (on the market a long time see fig 1)
Key Points from the analysis:
Homeowners should be a lot more successful in the sale of their home if they consider some general rules of thumb developed from this information.
Don’t sell properties quickly (see figure 1; 0-7 days):
The temptation of a quick sale is costing home owners, there are always exceptions to the rule, but think twice before taking an early offer, if a buyer turns up unexpectedly, ask yourself, could there be more people that are willing to purchase this property? Remembering competition between buyers tends to increase price.
‘Waiting long enough’ does not increase likelihood of getting that high price:
It is not consistent with the data to believe that if we leave the property on the market for long enough, eventually we will get it sold for the price we want. Instead the analysis advises us to take maximum advantage of early buyer interest (8-30 days).
While simple this information has an incredibly profitable upside to the sale of a property and shouldn’t be disregarded. Sure there is always exceptions to the rule but most of us don’t have the pleasure of being an exception.