[Music] Hello hello this is Stan McCune realtor here in Greenville South Carolina and thank you for tuning in to another episode of selling Greenville your favorite real estate podcast here in the greater Greenville area of South Carolina again I am your host realtor Stan mun you can contact me with any of my contact information in the show notes I can help you with any of your real estate needs and if you love this podcast if you appreciate if you benefit from it please go ahead and make sure you subscribe so you don't miss future episodes please go ahead and give us a rating leave us a review I ask you guys this every week for a reason because it helps people to see it helps people to see the podcast it helps it to get out to more people which helps to educate more people about Greenville real estate which helps all of us you know it's a tide that rises all boats the more we all know about how Greenville works in the area the better it is for all of us so please go ahead and do that today we have a relatively quick episode it's kind of a second half a a sequel so to speak to an episode that I did really several months ago where I looked at the data for what happens when you overprice a home and really the the data itself I I let the data speak for itself I don't read into the data I simply do the best research I can and then I extrapolate from that research what conclusions I can I can draw well I came to the conclusion and when it comes to pricing your home if you overprice your home you are very consistently losing out big time overpricing your home results in a roughly if I remember correctly roughly two months longer on the market and you lose about $12 a square foot compared to on average compared to the other homes in the area that's a lot of money you know multiply 12 time 2,000 ft you're talking about $24,000 potentially on a 2,000t home you don't want to lose all that money today I want to talk about what happens when you under price your home all right what happens when you underprice your home and this is a a a little bit different and and this the results kind of surprise me a little bit now I am a big fan personally of of generally speaking you should price your home for what it's worth now there is a range in which we you know we can't determine exactly what a home's worth but but we look at the range and the range kind of you know I usually try to keep it within a a 10 to1 15,000 range and then we kind of look at what is on the market to kind of determine okay are we going to list at the bottom part of that range or do you think we can be aggressive we can try to list more at the top part of that range and so I I find very frequently that if you wherever you kind of list it often times that is where the offers come in on unless it's a multiple offer situation people will will kind of get fixated on the list price so typically it makes sense to price it for for what it's worth unless you're you're overpricing you've got to be careful because like I said you overprice it you're killing it you're you're killing your home value you're going to end up getting less than what it's worth well what happens if you really underprice it what I did was I looked at homes that have sold the past six months now I need to hedge this the past six months I I'm going to have to come back to this data at some point because the past six months have been crazy this is a sellers Market with a capital every letter every letter in sellers is capital right now we've been in the low twos low ones sorry low twos High ones in terms of monthly inventory levels which is insane you know it it had been for the previous several years in the three which was squarely a sellers market and the twos and ones we've talked about that in the past I'm not going to get into all that the point is this data might be a little bit skewed towards the seller and we need to revisit this at some point once the market cools off a little bit which I anticipate towards the end of the year we're going to see a little bit of a cool down of the market still sellers Market just not quite as insane of a sellers Market is what I think is going to happen as the year goes on so so I need to hedge it this is the past 6 months and this might change a little bit but I looked at homes that sold in subdivisions so the reason why we do this this is the same methodology that I used when I looked at overpriced homes when you're looking at metadata it it gets the data gets bad really quickly we we just did an episode on the PO Mill Area well if you do like a a half a mile radius around po Mill you'll see homes and you'll get into areas that are dramatically different than pill proper and if you get into some of these downtown closer to Downtown Greenville neighborhoods as well it starts to get really dramatically different if you go on one street there are $400,000 houses you go on another Street there are houses barely breaking $200,000 the only way to and and that's just the way the market is that that you know the more urban an area is the more it's Street dependent versus area dependent for home values so the way I kind of mitigate that when I'm looking at metadata is I I look at subdivisions only because within subdivisions there shouldn't be a great degree of fluctuation and so I look at homes that sold within subdivision then then compare them on a meta level to other homes that sold within those subdivisions we picked subdivisions that had at least four sales the past six months so that we have a good sample size I got rid of homes that sold for over a million dollars because those are anomalies it's not uncommon for homes that are priced at that price point to sell for you know 50,000 75,000 $100,000 less than what they're listed for or or Poss even more in some rare instances and I got rid of a couple of downtown neighborhoods that are also kind of anomalies like Markley place the the downtown quote unquote subdivision which is not a subdivision but is listed as one in the MLS and so I eliminated some of these because again for a variety of reasons those are anomalies and then I looked at the houses that in the end after they sold they sold for at at least $155,000 more than what they listed for that would be that was kind of where I defined the cut off for okay this is an underpriced home you know you could nitpick at that homes all the time sell for up to $5,000 more than what they're listed for in this market and up to like 10,000 isn't super uncommon either because you know you get into these bidding wars often times a house will end up selling for for $5 to $10,000 more than what it's listed for and that's not necessarily indicative of it being underpriced that's just that can be just indicative of just how hot the market is but once you start getting in at least the Greenville area homes that sell for $15,000 or more than what they're listed for we need to start assuming that that they were underpriced that that's a home that was underprice like I said I try to keep my range of what a home is worth between you know a range of up to $155,000 so I might say this home is worth you know 250 I I believe it'll be 250 to 265,000 something like that now if you know I I do that and then it sells for 15 it sells for 280,000 then I underpriced it right I I would just have to own it at that point that I underpriced it now in my career that doesn't happen that that would be a very unusual situation because that has not been my strategy I like to price things where they are and I feel like that that is the best strategy to price a home for what it's worth that gets you when you underprice a home there's a lot of things that happen but one of those things is that you create a ton of more work for the seller the seller has to be prepared for a ton of showings if they're an owner occupant have to be constantly leaving the house as people cycle through it makes the house really dirty then you get a gazillion potentially a gazillion offers most of them are going to be garbage offers it's a lot of work it's stressful and it's just it's not fun if you can do the same thing by simply pricing the home correctly still sell the home but not have all that work and you're still selling the home for as much or more as you would have underpricing it then I think that that's the best the best strategy so as I'm looking at these homes that are underpriced here is what the data tells me now I I'm not a statistician so I can't really determine margins of Errors I know that there are ways to determine a margin of error but here is roughly speaking what the data told me homes that were underpriced by $15,000 or more they sold for $155,000 or more than what they were listed for on average sold for about $3 a square foot more than the competition more than the houses comparable or at least within the same subdivisions as them so $3 three $3 is not nothing but it's also it's also kind of hard to say you know that that's a little bit different than when I looked at the homes that were overpriced and there's a 12 dollar difference and as well we looked at that 75% of if I remember correctly of the homes that were overpriced sold for less than what the average was this is not it's not the case here we we have it as it's about $3 a square foot and and we're at roughly roughly half the homes sold for more roughly half the homes sold for less than than what you would have expected them to based on the metadata for that subdivision and then we also have to compare and and again I did the same thing when we looked at the overpriced houses we also have to compare what is the median we we want to see does the median and the average or the mean are they basically the same because that's really important the median looks at the numbers that are right there in the middle versus just taking the average and the reason why that's important is you could have anomalies on either side you could have a home that you know homes that sold just a couple of homes that skew all the data in one direction or another the median kind of helps us to to determine whether that was the case or not or or whether that's a possibility and and so the median difference was about well the two numbers are 1.25 so one and a quarter or $145 greater for the homes that were underpriced in terms of what they were sold for versus the field so again a125 a do and a half that's not to me I would think that that's within the margin of error I don't think that that is statistically Rel and so here is here are the conclusions that I draw from this I think that right now as it's a seller's market the market is able to identify if a home is is underpriced and the market is going to correct for that I still this was not enough data for me to conclude that it's better to underprice your home I've heard some people make that argument I've already made a little bit of a case for for how it's a lot of work for the seller it's not fun for the sellers but I'm also not convinced that it is actually the best way to go with the with the average at it's really $3.33 was the exact average and then the median between a125 and $145 to me that just tells me that if you underprice a home in this market the market is going to correct for that and you're going to end up selling it for for pretty much what it's worth what I do think is it's probably better what what what this data does tell me is that if you're going to underprice it it's probably better to underprice it by a lot than by a little if you underprice your home you know by $5,000 the market probably isn't going to be as quick to jump on it and you're not going to have quite as many offers and and that person that's willing to make that reach to to to pay over you know 20 or or $30,000 more than what it's listed for because you haven't priced it so so aggressively that you're getting all those eyes on it so probably if you do want to go with the underpricing strategy which in most cases I don't think is a good strategy but if you do then you probably want to underprice it by quite a bit to get as many people looking at it as possible I think as well that we need to be careful as I said before this is a sellers Market I I can only imagine that that number is going to go down I can't really imagine that number going up I can't imagine that as the market cools off that underpricing a house is going to be a you know an increasingly better option I think that as we as the market cools down a little bit Remains the sell's market most likely at least for the immediate future but cools down from the insanity of the past six months I think that we're going to see that number level off a little bit and again it's already really close to zero it's already really close to basically not being any different and so I suspect that that will just get reinforced as the market basically returns back to the norm of what it has been for for the years leading up to 2020 when Co made things go crazy because of mortgage rates being so low etc etc so my conclusion when you're selling a house you do not want to overprice it under any circumstances the data is really clear overpricing it does doesn't help you it hurts you if you want to underprice your home the data is not as clear but if you do I think you want to underprice it by quite a bit and and as well this is supported in the data as well that the that the homes that were you know underpriced that sold for like $115,000 you know closer to that number by and large didn't do as well as the homes that were overpriced even more and so that's just something to consider I'm not going to get too much in the Weeds on that because again this is metadata and metadata is only useful if it gives you a very clear a very obvious okay this is so much so much different that we can't just excuse this as a as within the margin of error I think that in my opinion that we're probably pretty close to the margin of error on this and so I think the simplest practice rather than trying to figure out exactly how to you know okay at what point are we underpricing it the right way just don't just price it correctly find a realtor or use me someone that prices homes for what they're worth you will you don't need to worry about getting traffic through your home if you don't get traffic through your home then you've overpriced it that's not get having traffic through your home is the norm right now you will get people to look at your home the only way you won't get people to look at your home is if you overprice it you don't need to underprice it to correct for something that doesn't need to be corrected price it correctly you'll find that you'll get activity in your home homes are selling on average for over 98% of what they're listed for and that is ultimately in my opinion the way to go the data basically comes to the same conclusion we're we're basically within the margin of error here and if it had been dramatically different then I'd be like okay in this market we need to perhaps adjust how we how we list houses and what prices we do this data that I'm looking at is not making me feel that way I'm I'm feeling pretty pretty confident that we need to continue to use the best practices the best practices are to determine what a home is worth and to list it as such if you accidentally underprice it in the process the good news is that the market right now seems to be correcting for that and that's good for sellers if you're a buyer you're dealing with a lot of multiple offer situations and that is just the way it is right now pretty much every offer I submit for a client is a multiple offers situation and it's frustrating but that's just the way it is at the end of the day press your homes that you're selling correctly and you won't have anything to worry about that is the bottom line and that is the conclusion for today's quick episode if you have any questions for me you can reach out to me with my contact information in the show notes please rate review subscribe download all those things for our show and until next time I hope you guys stay safe [Music]