With all the hype about the Raleigh housing market many sellers have the expectation that they won’t need to negotiate on price when selling their home. But not all homes incite a bidding war and not all offers are full priced and above.
I looked at data from West Cary, zip code 27519, and analyzed the homes that had received full priced offers or above to determine which factors were most common in those properties. I found the following 5 factors to be the most prevalent in homes that sold for list price or more.
1. Price Point: Of the homes in West Cary that sold at or above list price in the last 3 months, nearly half (46%) were under $300k. The $200k price point is the most desirable in the Triangle, accounting for the highest number of overall sales — 5,979 sold properties were between $200-$299k in 2016 compared with 3,648 in the $300-$399k range and only 2,032 in the $400-$499k range. And it makes sense. A common rule of thumb for home affordability is to purchase a home 3x your annual income. The median annual household income for Raleigh is $65,000. Homes in the $200k range, while pushing that upper limit, are relatively affordable to the majority of buyers in the Triangle.
There were full priced and above offers in properties up to the $900k range, so the following criteria apply even if your home isn’t in the “most popular” price point.
2. Priced Appropriately: Many sellers are tempted by the idea that property values are rising and they might be able to squeak a few thousand extra dollars over the agent recommended sales price for their home. When your agent lists your home, s/he will give you a price range, generally within a $10,000 window, that your home will likely sell for. The number is based on what similar properties have sold for in the past 3-6 months, which is the metric appraisers use to establish home values.
If you attempt to snag a higher price by listing above this range, you will limit early showings (usually the most numerous), buyer competition and consequently the opportunity for a full priced offer. When showings are limited on your home — which they will be if you are overpriced, the end result will be an eventual price drop to the recommended list price, but you will no longer command the potential for a full priced offer. Buyers only make those when they are worried about competition, which is when a property initially hits the market. (This is covered in detail in The Home Seller’s Guidebook #5: The #1 Marketing Strategy to Increase Multiple Offers.)
In our West Cary data sample:
- 69% of homes that sold at a discount off the list price, had initially been priced higher and eventually dropped their price to market value. If they had listed at the recommended price initially, they likely could have received full price. But with time on the market and fewer buyers to compete on an aged listing, they had to settle for a discount on the list price.
- Conversely, of all the properties that were priced appropriately in our sample (with no price drops), 51% (!!!) settled for an offer higher than the list price.
Assuming a property is professionally marketed, it is simply not possible to price a home too low in this market. Homes that are priced low will naturally adjust to an accurate sales price through competitive bidding. But homes that are priced too high, scare away any possibilities for bidding and eventually settle for less than they could have made.
3. Location: The 27519 zip code offers a unique perspective for our analysis because it straddles Wake and Chatham Counties, with some homes in Wake and some in Chatham. Wake County schools are perceived as the more desirable school system and also, Chatham county schools require a longer commute from subdivisions on the county line, such as Amberly. It didn’t surprise me when I saw that properties in 27519-Wake were statistically more likely to receive full priced offers than properties in 27519-Chatham. Again, desirability to the greater number of buyers is what causes competition. When more people want to buy your home, the amount they are willing to pay increases.
A desirable location can mean within a subdivision, like in the above example. But other areas within subdivisions that command higher prices are: streets with less traffic, properties with a view, or that have easy access to neighborhood amenities.
A desirable location can also refer to a geographic location such as Cary or Fuquay-Varina with some locations considered more desirable due to lower commute times and less overall traffic.
4. Condition: Almost all buyers prefer to purchase a move-in ready home. They don’t want to repaint. They don’t want to schedule repair people to come fix things left undone. Making sure your home maintenance is up to date will bring in more and better offers and and in many cases the cost of the maintenance will be less than the discount you would have to take by leaving it undone. Of the properties that negotiated price, the median home price was $402k and the median discount was 2%. That’s an $8000 discount! In many cases the contractor punch list is less than that amount and leaves your home showing well and ready to compete with others in it’s price point.
With the exception of the least expensive price point (under $200k, practically non-existent in this market!) the homes in my sample were in very good condition compared to the homes in the discount group. The most cost-effective projects to do before listing your home will be addressed in The Home Seller’s Guidebook #1: Projects to Get Your Home Ready for the Market.
5. Staging and Professional Photography: According to the Raleigh area staging company Professional Home Staging and Design, staged homes sell in 83% less time and for up to 17% higher prices. And 96% of Realtors who primarily represent buyers say that buyers are influenced by home staging. The properties in our sample that sold for list price were more likely to be staged and have professional photography. However, even preparing your home with staging and showcasing it well with professional photography won’t overcome the most influential factor in reduced sales prices: Overpricing.
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