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Carefully pricing a home allows sellers to walk away with the most money possible and achieve success quickly.
One of the most crucial steps in being able to sell quickly, open escrow, and obtain the highest possible net proceeds from the sale of a home is to carefully arrive at its Fair Market Value. In every price range, homes sit without success, leaving these sellers wondering what in the world they are doing wrong. 37% of all homes in Orange County have been on the market for over two months, and 44% have reduced their asking price at least once. Throwing a price out there just to test the market is not a wise strategy. Instead, carefully, and methodically pricing a home is vital to cashing in on the Golden Opportunity, the first few weeks after coming on the market. It would be better to spend several hours coming up with an extremely accurate price than to waste weeks, or even months of precious market time.
Due to the high interest rate environment, the market is lining up in favor of buyers during the negotiation process. Buyers do not want to overpay; they are unwilling to stretch. Accurate pricing is fundamental regardless of the temperature of housing, especially in a declining market. Throwing a price out there just to test the market is not a wise strategy. Ultimately, when asking prices of homes must be reduced in order to secure offers to purchase, it not only takes longer to sell, but sellers also sell for less. On average, the net proceeds check at the close of escrow is less if a price reduction is required.
Sellers:
→ Price reductions typically occur after 45-60 DOM
→ Nov/Dec price reductions have little impact
→ Sellers will hold the price or take off market
→ Reductions happen January or February
Buyers:
→ Buyers have to make an offer
→ Sellers will entertain offers & negotiate
→ Don't wait for sellers to reduce price
Orange County Housing Market Summary:
- The active listing inventory in the past couple of weeks decreased by 96 homes, down 3%, and now sits at 3,581, its lowest level since June. In October, there were 35% fewer homes that came on the market compared to the 3-year average prior to COVID (2017 to 2019), 1,042 less. Last year, there were 1,793 homes on the market, 1,788 fewer homes, or 50% less. The 3-year average prior to COVID (2017 to 2019) was 5,822, or 63% more.
- Demand, the number of pending sales over the prior month, decreased by 68 pending sales in the past two weeks, down 5%, and now totals 1,202, its lowest reading since April 2020, the initial lockdown of the pandemic. It is the lowest level for November since tracking began in 2004. Last year, there were 2,322 pending sales, 93% more than today. The 3-year average prior to COVID (2017 to 2019) was 2,139, or 78% more.
- With demand dropping a bit faster than the inventory, the Expected Market Time, the number of days to sell all Orange County listings at the current buying pace, increased slightly from 87 to 89 days in the past couple of weeks, its highest level since mid-May 2020. It was 23 days last year, much stronger than today.
- For homes priced below $750,000, the Expected Market Time increased from 64 to 71 days. This range represents 23% of the active inventory and 29% of demand.
- For homes priced between $750,000 and $1 million, the Expected Market Time increased from 65 to 72 days. This range represents 22% of the active inventory and 27% of demand.
- For homes priced between $1 million to $1.25 million, the Expected Market Time decreased from 82 to 77 days. This range represents 12% of the active inventory and 14% of demand.
- For homes priced between $1.25 million to $1.5 million, the Expected Market Time decreased from 97 to 95 days. This range represents 11% of the active inventory and 10% of demand.
- For homes priced between $1.5 million to $2 million, the Expected Market Time decreased from 131 to 110 days. This range represents 11% of the active inventory and 9% of demand.
- For homes priced between $2 million and $4 million, the Expected Market Time in the past two weeks increased from 121 to 137 days. For homes priced between $4 million and $8 million, the Expected Market Time increased from 360 to 364 days. For homes priced above $8 million, the Expected Market Time decreased from 484 to 220 days.
- The luxury end, all homes above $2 million, accounts for 23% of the inventory and 12% of demand.
- Distressed homes, both short sales and foreclosures combined, made up only 0.2% of all listings and 0.2% of demand. There are only 4 foreclosures and 3 short sales available to purchase today in all of Orange County, 7 total distressed homes on the active market, up 1 from two weeks ago. Last year there were 10 total distressed homes on the market, similar to today.