Every real estate transaction is different, for obvious reasons. And yet, every real estate transaction is also kinda the same… There’s a lot of emotion involved. And there’s a lot of money involved.
So it’s not always easy to understand when it’s the right time to push hard or when it’s best to ease off the pedal.
When to Push Back
One thing that can help you get closer to an answer: information. That’s the only way to know how your situation stands relative to the local market, which is key to maximizing your economics.
The chart below is one of our favorites, because we think it really provides some great guidelines in analyzing your personal market. What you see below is the percentage of the asking price that sellers got in a variety of zip codes/markets over a period of time. You can see that these are not straight lines, reflecting the changes in real estate demand. The Days on Market numbers correlates to the movement on those graphs as well, which makes sense: Buyers are going to be more aggressive in their bids if homes are staying on the market for shorter periods of time.
You can toggle on or off the individual zip codes (click the dots below the chart) to see how one area is moving versus the other.
Numbers Never Lie, Right?
“So the above chart is all we need to navigate a market, right?” I’m afraid not.
Even the best statistics include what we call “noise,” which in simple terms is something that can skew results. Every MLS customizes their data packages, and that’s fine. But all MLS’s should offer agents, as well as buyers and sellers, some tools to help them sort through all the data.
A few things to think about when you’re considering the charts above:
You’re more likely to find statistical packages using zip codes, as opposed to MLS zones. And a zip code does not represent one consistent real estate market. There can be some serious changes in the quality of inventory within a zip code, especially in the city.
In a zip code where there’s a lot of building, you’re going to find higher percentages against the ask because new homes are usually entered into the MLS at 100% or more of the asking price. On the flip side, resale homes in new home neighborhoods are likely to be at lower percentages because they are a little less competitive against all the new stock.
23220/23221/23226 have a smaller data size so the percentages will bounce around more. And when you have a small data size, it’s much easier for the averages to be skewed by an aberration.
Dig in, Move On, or Accept?
So what do you do when push comes to shove? Do you dig your feet in and fight for those last few thousand bucks? There’s no easy answer. The biggest takeaway we can give you though, is to make sure you utilize data, and be smart in how you interpret it.
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