[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
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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
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