[Music] Hello everyone and Welcome to the post Thanksgiving episode of Selling Greenville I am your host as always Stan McCune realtor right here in Greenville South Carolina and just a reminder as always you can find all of my contact information in the show notes I'm a buyer agent I'm a listing agent I do all those agent things I work with investors with owner occupants and everything in between so if you need me for any real estate needs or you just want to shoot the breeze about the podcast feel free to reach out to to me at any time using that contact information in the show notes and as well if you love the podcast please go ahead and subscribe to make sure you don't miss any episodes give us a rating give us a review that helps us and all the algorithms helps us to get this podcast out to more people and we appreciate it every time someone gives us a good rating good review a new subscriber someone that downloads episodes all of those things I noticed that when it happens so I appreciate it and I appreciate you guys are loyal listeners that we have out there today I'm very excited for the topic that we're going to be discussing because it's something that I was able to really dig into a lot of data on and we're going to be talking about overpricing your home that you're selling or over overpricing your property what happens when you overprice a property and there is a lot of different ideas on how to price a property there are those that believe that you should underprice your property you should try to put it below the market and then have people swarming like vultures with multiple offer situations and Jack the price up and then there are others that believe that you should overprice your your home in other words just say hey we know it's probably not going to be worth this but you know what it's a crazy Market why don't we just go ahead and just list the price for way above what we think it's worth and just see what happens what's the worst that can happen we can just lower the price and in this market it's really important to actually see what the what the data actually tells you because from my experience as a realtor anecdotally if you underprice or overprice a home here in the Greenville Market you tend to not do well in in both instances you really want to determine in in my experience again what the range is that a property is worth and that's what I like to do I like to set the range this is what I think the property is worth and then basically try to list the price within that range you might have the lower range you have the higher range whether you you go on the lower end of the range or the higher end of the range kind of depends on different things it might depend on how quickly you're looking to sell the home it might depend on what the economic environment is or you know how much competition you have with other homes on the market at that time there's a lot of things to consider but just anecdotally from my experience I've seen homes that are underpriced that end up selling for less than what I believe the home is worth that I believe that the home would have sold for more if it had been listed for more and I see anecdotally again that homes that are overpriced tend to not do well also so I decided to look into the data on this specifically at overpricing homes I haven't really run the data on underpriced Homes at this point that's something I'll probably do at another time to see what the data tells me on that but I looked at overpricing homes and here's how I ran that data here's how I approached it so I took all the homes sold in the past 3 months for less than 500,000 500,000 or less and that was just kind of an arbitrary number you know our median in in the Greenville MLS right now median sold price point is around 240 or so I went with 500,000 because once you start getting above that you start getting some real anomalies in the data and I and I wanted the data not to be skewed so I took the past 3 months homes that have been sold for less than 500,000 in the Greenville MLS and that are in subdivisions I chose homes that are in subdivisions because this is where we're going to find the most comparable comps obviously because homes within subdivisions tend to be very similar versus you know just taking a bunch of homes in quote unquote Downtown Greenville which is not a subdivision where you might have some homes that sell for 30,000 that are falling apart other homes that sell for 3 million and try to compare apples to apples it's really hard you get a subdivision typically you're going to have pretty comparable properties the subdivision had to have had at least three or more sales during that 3month time period so this again is to make sure that we have a good data set I felt like three homes in a 3-month time period that means that subdivision is selling roughly 12 homes a year that's a a pretty good data set to work with and then what I did was I took those subdivisions and separated out the houses that had at least at some point during the listing process a $115,000 price drop prior to it going under contract and that was again that's somewhat arbitrary but if you have a $115,000 price drop I think it's safe to say and and this isn't let me clarify this isn't a home that sold for these aren't homes that just sold for $155,000 less than what they were listed for these were homes that were listed and then at some point the seller decided or the listing agent decided it was overpriced they dropped it by $115,000 at least and then somewhere down the road after that drop they ended up going under contract and then selling so I looked at I I I backed out those houses that had at least a $115,000 price drop at some point prior to selling and then compared those homes to the average homes to to the averages within the neighborhoods within the subdivisions that those homes were in in order to determine how did those hom hes do compared to the average homes in those neighborhoods these homes that were clearly overpriced they had at least a $115,000 price drop at some point during the listing process how did those homes actually do compared to the rest of the homes in the neighborhood and the data is extremely interesting so what I did was I I looked at the I looked at that price drop I looked at the adjusted sold price per square foot and by adjusted I mean in the Greenville MLS it doesn't factor in if the seller pays any of the buyer closing costs when it takes the price per square foot so I had to I had to take that put that back in and I adjusted the price per square foot to account for the closing cost because that can make a big difference as well I looked at that I looked at the the difference between the two then I looked at the days on Market as well because that's a really big indicator of how a listing is doing how a home is doing when it's on the market how the market is responding and for a lot of people the days on the market can be just as important or at least a of similar importance to the price that a home is sold for because if your home is on the market for a very long time you have hold in costs you know you're still having to pay your utilities you're still having to pay your property taxes you're still having to do all these different things so there are holding costs associated with having a home on the market for a long time there's a lot of stress people a lot of people don't realize just how much stress there is or they forget you know they they go for several years without selling a home they forget just how stressful it is and this is one of the reasons why Realtors have a job is because we can BR work kind of like your opportunity for a lot of people that will never have an executive assistant someone to take care of all the the details behind the scenes this is their one opportunity a realtor can kind of act function like an executive assistant over the transaction and take all of that stressful stuff off the plate of the seller or at least the good realtor does anyway I digress I looked at all of these different metrics in order to figure out how Ms that are overpriced are doing and I took the averages and I also looked at the medians as well we we've talked about this in other podcasts but you want to make sure that your average and your median are somewhat close and the reason for that is if the median is a lot different than the average and that might mean that your average is being skewed by either something a number that's really low or a number that's really high the median is simply the little number in a sequence of numbers and to give an example here all of these results that I produced using the the formula that I I outlined before for these homes under 500,000 in subdivisions etc etc that produced me a data set of 101 homes so to to exemplify what the median would be the median was basically 50 51 essentially is what the number was was it's the middle number in the sequence of numbers so if I'm looking at these sold price per square foot I sort it by sold price per square foot and then look at home number 51 that shows up in that list or if I'm looking at the days on the market I sort it by days on the market the median would be home number 51 by days on the market all right that's all the nerdy stuff what are the actual results the results were to me intuitive but also very telling because again I know what I know anecdotally but when you actually see the data it really makes a big difference so here's what I found out the adjusted price per square foot for the homes that were overpriced for the homes that had that $155,000 price drop at some point during the listing process they sold for an average of $124.6 cents per square foot which is good that that's great that's a great price but what about the homes with in their their neighborhoods right because this is what I compared to I compared those homes to the homes within their neighborhoods well the average for the homes within the same neighborhoods sold for $136 70 per square foot the homes that did not well that's the that's the average for those neighborhoods which includes by the way the homes that that sold for that were overpriced as well so so there's actually probably a an even bigger Gap in here but that's a difference in average of $12 per square foot for the averages in the neighborhoods versus the homes that were overpriced so if you again we're talking in in metadata terms we're talking in very Broad terms here but if you overprice your home by $155,000 or more you can expect on average to lose $112 per square foot based on this data that I'm looking at from the past three months I I should say it this way the past three months if you sold your home and it was overpriced by $115,000 or more you lost on average at least well I shouldn't say at least just on average $12 a square foot now that really adds up right if you're talking about a home that is 2,000 square ft take 2,000 time $12 a square foot you've just lost $24,000 so because you tried to be I don't want to say you were greedy I mean in some cases people are being greedy and in some cases people just they don't know what their home is worth and maybe their realtor doesn't know there's a lot of Realtors out there that will overprice a home just to get the listing just because they know hey well I I'll tell this seller you know your home is worth 300,000 when I really know it's worth it's probably worth 250 but I'll just tell them you know hey we'll just list it for 300,000 and just see what happens and the seller likes that none of the other Realtors told them that the other Realtors were saying it was worth 250 or so so they have someone that comes in says this is worth 300,000 they're like yeah I like that well that's that is a strategy that's perhaps unethical by the realtor and certainly not a strategy that I believe should be used but a lot of Realtors will do that knowing that a either the home either they get really lucky and somehow a buyer comes along and buys the home for 300,000 or they still have the listing they convince the seller to drop the price as they drop the price maybe it comes down to 250 at some point and then they still end up selling it for 250 but they got the listing versus the other people that told them at the on the front end that they would sell it for 250 so there there's a lot of different reasons why a home could be could be overpriced it could it could be devious it could be greed greediness it could be just simply lack of understanding of the market by both the seller and the agent whatever the case may be if you have a $2,000 home I sorry a 2,000 square foot home and you lose $12 per square foot you're losing a lot of money that that's a lot of money and you don't want to do that you you can there is a better strategy of just pricing the home correctly and not having it languish on the market cuz this is what happens when the homes are overpriced then they language on the market when it's a hot Market that causes buyers to start being concerned Why is this home languishing on the market why hasn't it sold everything else is selling right away why hasn't this sold it looks overpriced maybe that's an unreasonable seller we talked about this in previous episodes how people will assume the worst they'll assume the worst about you as a buyer or as a seller and people will start making all of these judgments in their mind and then what happens is once you start lowering the price if if you have to start doing this multiple times in particular then the low balls start coming in you start getting the buyers that are like ooh look at this these these people they're starting to lower the price they've done it a few times I I wonder if they'll accept an offer that's $20,000 below what they have it listed at yeah they're they've already dropped the price 30,000 what's another 20 you know and they'll look at the look at public records and see what the what the sellers bought the house for and see oh yeah they they bought this house for way you know 10 years ago for $100,000 less than what they're selling it for now they have tons of equity we can totally lowball them I mean what's the worst that could happen and so this is this is how the homes that are overpriced end up selling for $112 per square foot less than other homes in their neighborhood and so you don't end up winning when you overprice your home you don't want to just give into a realtor just have a realtor list the home for a price that it's not worth you need to see the data it needs to be justified in the data what a home's value is and that needs to be you need to list it pretty close to whatever the data tells you the home is worth now what about oh and again the median we we talked about this so the the average was $12 a square foot and the median was 13 30 a square foot less so that's that's pretty close we had you know numbers on here that you know went you all the way up into the $40 you know a square foot less but looking at the average and the median they're very close so I I would consider that to be pretty accurate data you can expect around that $12 a square foot that's going to be pretty close to what you end up selling your house less for if you overprice it by the way this isn't I I should mention one more thing for why I believe this data is accurate and that's that obviously there were some homes that were anomalies that did end up selling for more I I I have to admit that but I knew that was going to happen when I when I pulled this data there were some homes that overperformed their neighborhood that even though they were overpriced they ended up selling for more than their neighborhood average but those homes were vastly in the minority over 75% of the homes here that were overpriced sold for less than the average price per square foot for their neighborhoods it was 76.7% of the homes that were overpriced sold for less than the average price per square foot so if if you're you know if that number was closer to 50% then it might be like okay maybe you gamble with it and and see what happens depending on on some of the other data but at 76.7% you're you're holding out for something that honestly there's a a lot of other factors probably well I I ran some other data I'm not going to get in too much into the weeds here but those homes that did tend to overperform their Market tended to not be they're not not be as dramatic of a price decrease as some of the other homes so they were closer to a $155,000 price decrease during the listing process as opposed to some other homes etc etc there there's a lot of different things to consider there the bottom line is all the data points to you don't want to overpress your home it's not it's not going to work out well almost all the time what about days on the market this is even more dramatic so 78.6% of the homes that were overpriced you know had a $15,000 price drop at some point during the listing process the past three months 78.6% of them sold slower than the average for their neighborhoods so we're close to 80% took longer to sell than the average and these numbers are really dramatic so the average days on market for the neighborhood and and these days on Market the way it's calculated in Greenville MLS it it's from the time it's listed in until the time it goes under contract obviously you have a a contract period then that takes place that's you know might be 30 45 days or more but for our purposes here the days on the market is the full period of time from the time it's listed until the time it actually goes under contract the average for this data set which is a little bit high for for Greenville but again we had a very specific niche market here that we were looking at subdivision homes 78 78 days was the average days on Market so how did that compared to the homes that were overpriced their average was 1 34.6 days that is a difference of 57 days that's almost two months longer and and close to double it's about 40% longer than the averages for those neighborhoods so so you're talking about a full two months longer it took for those homes to sell versus the average in those neighborhoods that is insane that is absolutely insane the you know in the Greenville MLS right now the average in general is actually less than than 2 months so we're talking about two months on top of what is normally the the average it's just crazy it's crazy and again you have so you have holding costs on on top of the fact that you're losing money as well so you're losing money at closing 75% of the time by overpricing your home and then you're losing money and time on the on the back end as well by virtue of the fact that it's having to languish on the market for an additional two months because of the fact that you overpriced it and again here the median is exactly the same as the average the median days on the market is also 57 so I feel like that is a a really good number that you can expect a home that is overpriced or you could expect the past three months for a home that sold that was overpriced by $115,000 or more to take an additional two months to sell versus the average in those neighborhoods and just if you're curious the average sold price and this is part of why the days on the market that average 78 days on the market was a a tick higher than what we have as as the norm in Greenville it's because our average sold price was actually a lot higher for this data set than than the norm in Greenville it was 305 300 5,000 was our average sold price so that helps to put some perspective in here but regardless of how you slice and dice this data and I looked at it a lot of different ways to try to make sure that I wasn't inserting my bias into this to make sure that you know I wasn't just having a drawing a conclusion that I had already made and just making the data fit my conclusion I literally ran the data let the data I ran it in the most honest way I could think of and the most accurate way I could think of if I could have done this without doing subdivision homes if I could have included homes that aren't within subdivisions I would have unfortunately that would have taken weeks of number crunching that I don't have weeks that I don't have to do that and so I couldn't do that but I'll tell you this again this is anecdotal but in my experience the the data that you can pull from subdivisions when you're talking about metadata it's comparable to homes that are not in subdivisions now there are some anomalies when you get to Unique homes like equestrian homes and Lake Properties and whatnot and and I'm not dealing with any of that we're just talking on average and so here at the end of the day here's what you can expect if you list your home for dramatically more than it's worth you're going to lose money in the end almost certainly and almost certainly you're going to take a lot longer to to sell the home that two months let me tell you that is an excruciating two months of waiting for the property to sell it's awful you don't you don't want to have to experience that and I I will say this occasionally there are situations where I let me back up for a second I'm very strict with with my clients that sell with me I tell them right up front here's what I believe your property is worth after I've looked at the property I have to look at the property first I can't ever just run quick numbers and figure out what a property is worth without looking at it I I can give some ideas here's general price per square foot in your area blah blah blah but at the end of the day you have to see the property in order to be able to to actually determine its value and that's that's why appraisers have to go into a property this is this is just common sense I am very upfront with my sellers on what I believe a property is worth and I'll give them the range and I have zero interest in taking the listing if my sellers want me to try to list it above what the data says says the home is worth and and that is there there's a lot of reasons for that one it's damaging for my reputation I take pride in the fact that I sell my houses quickly that's something that I tell other people when I'm marketing myself as a listing agent hey I sell homes much quicker than the average and that's not because I underpriced them there are some realtors that they sell homes really quickly because they underpriced them I I I am very proud that I show the data for what a home is worth I price it correctly and I still sell it quickly and I've traditionally sold it much quicker and for more money than the average realtor in the area and that's data that we've kind of glossed over in passing in the past but that's that's the truth but there are some times when it's really hard to determine what a home is worth it might have some really unique features and those would be the only times that I would be okay with kind of pricing a home for a little bit more than what I believe that it's worth but that's only if the home has features that are unique to the area and that might add value to the area so recently I had a list listing it sold a few weeks ago but the listing was kind of on the west side of Greenville kind of near the Judson is area near the hospitals and all of that and it had a really unique double lot well that you don't have any comparables for a double lot I knew what the home would be worth without the double lot but how much value does the double lot add well there were some other factors as well the I think the double lot would have been worth a a decent bit except that Greenville city wouldn't allow certain subdividing of it to happen and easements had to be in place and and a lot of different things like that that diminish the value of the double op but I was willing to list the home for a little bit more than I thought it was worth because I felt like that double lot may have added value in the end it did not add that much value because of the of the restrictions that the City of Greenville imposed on it among other things I mean that it was a unique property in in multiple ways but that's a very rare example that is the exception not the rule almost all the time I would say probably 90% of the time it's pretty straightforward the range of what what a a property is worth regardless of whether it's in a subdivision or not and I do a lot of research on the front end before listing a house to determine what I believe it is worth and I'm very honest with my clients about that you know I show them the data and you look at the comps you look at what's currently available and you go from there but I will not overprice the home once once I determine from the data what the home most likely is worth I'm not going to overprice the home because that it doesn't help me as a realtor but more importantly it doesn't help my clients I don't want them to be the ones that are losing $112 per square foot I don't want them to be the ones that are just waiting around for an extra two months having to keep their house clean for an extra two months having to be prepared for on any day a random pop-up showing might happen and they're going to have to vacate their animals vacate their kids and all that and and have to to take a day to go to the mall or whatever the case may be and and have to be on edge like that for an extra two months nobody likes that it nobody wins from that and so I won't do it and so I hope that as you're listening to this it helps you to better understand my thought process and but also that it helps you to better understand how the process here in Greenville Works how why it is that so many Realtors talk about how damaging it can be to overpricing your home it's not just realtor speak it's not just us wanting to sell homes quickly and move on to the next one you actually will put money on the table you actually will lose money if you overprice your home don't listen to a smooth realtor that wants to do that he he or she is either misinformed or doesn't have your best interests in mind and so obviously I always try to keep my client's best interest in mind so if you are looking to sell your home if you want to me to assess what your home is worth hey I'm happy to do that even if you don't list your home with me I have listing appointments sometimes that don't work out clients that decide that they don't want to sell their home or whatever the case may be that is totally fine that's a part of this business I'm happy to go and give a home assessment to anyone that wants it please feel free to reach out to me my contact information is in the show notes again give us a rating give us a review subscribe to the show love you guys I hope everyone stays safe as we enter into the holiday season coming into Christmas and Hanukkah and all of that it's going to be a wild ride here the next few weeks to get through the holiday season but I hope everyone stays safe stay warm and let's buy and sell some homes together [Music]