Much of Los Angeles is experiencing a sellers’ market right now.
How do you define a sellers’ market? It is based on low inventory. Loosely you would take the number of homes sold over the past six months compared with the number of homes for sale; that will give you the number of months it will take to sell the current inventory. Less than five months signifies a sellers’ market.
The temptation for a seller in this kind of market is to “overprice” their home, and we are seeing this happening frequently. Of course “overpriced” is a relative term since a home is worth what a buyer is willing to pay for it, and there are no restrictions on a cash buyer. If a buyer is taking out a loan, then the price is all-important as an appraisal will be required, and it is going to have to meet the price of similar homes recently sold. If there are no comparable sales in the immediate area then the appraiser is going to have to widen the parameters. One way or another that home is going to have to warrant the price being asked.
A condo recently sold for $225,000 more than it was purchased for less than three months earlier, with barely any improvements made. Another condo is on the market presently at $190,000 more than the previous sale of a practically identical unit six months earlier. The only difference is the view. It will be interesting to see how much it eventually sells for. These are exceptions to the rule.
Your average buyer and their agent will know how your home is priced compared to previous sales, and if you arbitrarily price your home high because you think buyers are desperate you may find your home will sit on the market until you either drop your price or take it off the market.
If we use Santa Monica as an example, 113 single family homes sold over the past six months, with an average of 47 days on the market. The sales price was 101% of the asking price. 63 homes listed either expired or were canceled or withdrawn from the market with an average of 72 days on the market. The average price of the sold homes was $2,270,768 and the average price of the expired, canceled, withdrawn was $$4,969,095, $3,411,340 and $4,182,000 respectively. Yes, the luxury market is not as active as the median market, but inventory is still low.
Homes that are well priced often go into multiple offer situations and sell over asking.
If you are thinking of putting your Los Angeles home on the market are really, really want to sell it, then talk with your Realtor® to price it right.
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