What should you do if you want to sell your home fast, but there are several other resale homes on the market and over a half dozen new construction homes for sale? You price and prepare it to beat the competition, or you wait a very long time. It’s that simple.
When faced with a set of circumstances like this, you have exactly two choices. List your home for sale and get in the long line of home sellers waiting to be the next one to go under contract, or do something that will move you to the front of the line. These are the two choices that face a new client I met with last night who would like to sell their Apex townhome and move into a community that suits their lifestyle much better.
The first choice is to list their home for sale and wait. I’ve always said that buyers will pay about 5% more for new construction. The neighborhood I analyzed had enough resale and new construction homes that had closed, so we had plenty of good data for our comparison. And sure enough, resale homes that were exactly like their new construction counterparts had sold over the last six months for 4.5% less, on average.
The interesting thing was that when we looked at the competition, the 4 resale homes on the market were priced exactly the same as the 7 new construction homes. If history (and professional experience) tells us clearly that resale goes for about 5% less when in direct competition with new construction, what makes these 4 other sellers think they will sell their homes anytime soon?
Since all of the homes on the market in this townhome community are very similar, except for things like hardwood floors and lot location, we again had plenty of good data to make a comparison. The goal here was not so much to figure out the price based on comparable closed sales as it was to price the home to move to the front of the long line of available homes for sale and be the next one to go under contract.
My advice was to price the home at about 3–4% less than the competition, prepare and stage it to look like a model, and go for the quick sale. This takes the other resale homes out of the picture and allows my clients to compete head-to-head with the builder.
It is amazing when you think about this simple strategy that the 4 other resale home sellers completely overlooked. They had either chosen to ignore the 5% premium that buyers are willing to pay for new construction, or their agents did not bother to point it out to them.
It is kind of like going into a grocery store and seeing a single,very long line to check out. Then another cashier opens a new register and everyone in the long line refuses to move to the new one with no one in it. If my client decides that selling their home and moving to the new community is the right thing for them, all they have to do is walk right up to the line with no one in it and check out!
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Great article Bob. It’s good to see that there are good agents out there who know what they’re doing.