“On” the Market vs. “In” the Market?

Special to the Palisadian-Post

Several months ago I was hired to sell a home near the village, and the owner decided to set the price approximately 12 percent higher than where we suggested the market would respond most favorably to. After months of very active marketing, many ads and open houses, and an eventual price adjustment, we were finally able to negotiate a lease with an option to purchase. That is an example of a home which was merely “on the market”.

Recently, we listed a home on the same block as the home above. In this case, the owner decided to select a price that was intended to receive maximum market energy in a short period of time. As a result, seller received several offers, and ultimately sold it for substantially more than the asking price. This is an example of a home that is actually “in the market”.

As of April 1, 2011, there were 94 homes for sale in Pacific Palisades. Forty-eight homes sold in the first three months of 2011, which is an average of 16 homes per month. That equates to a six-month level of homes available for sale. This may be an indication that the local market is evenly balanced between buyers and sellers.

The average time on the market for the homes which have sold so far this year is lower than last year at this time by 37 percent, which theoretically would indicate that sellers have a favorable climate. Other signs favoring sellers are an 11 percent lower housing inventory in the Palisades and 50 homes now in escrow.

On the other hand, there are clear signs that the local market truly favors buyers. Sales volume is down 18 percent, the average price per square foot is six percent lower, and the average median sales price so far this year is 15 percent lower than last year’s first quarter.

Many buyers are apparently taking quicker action when a suitable home is listed at a price they feel is attractive. Hence, the shorter time on market and lower inventory level. Clearly those properties were perceived as excellent values, and thus were really “in the market”, not just “on the market”.

Not many people notice the other approximately 50 percent of homes “on the market”, that are not really priced to sell. In fact, in looking back over the last year of Palisades home listings and sales, it may be observed that less than half of them actually sold.

Fewer are buying as compared with last year at this time, but those who do buy are doing so quickly and decisively. In fact, many sales today are resulting from multiple offers, and the sellers often get more for their property than they asked for. There are clear and definite benefits from proper pricing and marketing of homes. Indeed, it may well determine whether the home will sell at all.