When pricing a property, comparables and appraisals are a good start, but supply and demand conditions are crucial. A price that is too low might be a mistake. (By Raul Elizalde, 9/06)
Readers of my newsletter may have noticed that I place a great deal of importance to supply and demand conditions in the Sarasota Real Estate market. Indeed, I have focused quite a bit on how long a property might take to sell, when is the right time to buy, or what segments of the market are moving better than others. In comparison, I have not spent too much time on whether or how much Sarasota property prices have moved up or down.
Liquidity, or the ability to sell or buy at a reasonable price within a reasonable amount of time, is a key component of the market. At present, one may argue that liquidity has become the most important issue as sellers face a major slump in buying activity. While a year or more ago price dominated the conversation, today the question is how long a property will stay on the market before it sells.
For a property to sell today, it has to offer something special. Finding out how a property should be properly positioned in the marketplace so its special nature is made clear is a marketing task that a good real estate agent must perform.
A property may be special because of its location, for example, or its view, or its condition. But a very powerful element of a home for sale is its price. And pricing has to be precise, and it has to account for several factors. One very important factor is the competition that the home faces in its price segment.
In general, the lower the price, the faster a property will sell. This is simply a matter of numbers – there are more buyers for lower price homes than for more expensive ones. This graph shows the total number of home sold in Sarasota County at different price segments during the last six months.
Does this mean that one should follow a “price it as low as you can” strategy? It depends. This graph shows the number of months that it will take to sell the current inventory of single-family homes in Sarasota County at different price segments.
One very interesting fact is that for properties above $1mm, those priced in the “lower” ranges – i.e. “lower $1mm” (1-1.25mm), “lower $2mm” (2-2.25mm), are likely to sell faster than those in the “higher” ranges immediately below (“higher 900,000s”, “high $1mm”). This is simply because there are many more properties listed in Sarasota at those “higher” ranges in relation to the number of sales.
For instance, in the $900,000-$1,000,000 range, there were 104 homes listed at the end of July with 17 sales for the previous 6 months. But in the $1,000,000-$1,250,000, sales were significantly higher (25) while the number of listings was roughly the same (107).
In the $1,750,000-$2,000,000 category, 11 homes sold in the previous six months versus 9 in the $2,000,000-$2,250,000 segment, but the competition was ferocious in the lower price segment – 85 homes were offered versus only 20 in the higher one!
What this means is that a homeowner with a property appraised at $2.1 million, for example, might make the wrong decision if he or she decides to price it “to sell fast” at $1.8mm. The homeowner will have to compete against another 84 homes in that price category instead of 19.
When it comes to knowing the Sarasota real estate market, Alison and Raul Elizalde have the expertise and knowledge to help you see where you stand when negotiating your real estate transaction, whether you are buying or selling a property. Our track record, added to the unsurpassed reputation of Michael Saunders & Company as the premier real estate company in Florida’s Gulf Coast, give you the peace of mind you deserve. Alison and Raul have been named Best in Customer Satisfaction by an independent research company.
Call us today at 941-350-7904 for a consultation, and visit our website, www.SarasotaProperty.info, for monthly updates on the Sarasota real estate market.
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