- When you take on a listing that has languished on the market, do a SWOT analysis of the marketing.
- It may not necessarily be a case of lowering the price but rather expanding the market.
Concierge Auctions, the property marketplace for upscale buyers and sellers, has launched an annual index that reviews the top 10 properties in 27 of the country’s hottest markets and their time on the market.
The Luxury Homes Days on Market Index and accompanying report were created to shed light on how time spent on the market affects upper-end properties in places such as Atlanta; Scottsdale, Arizona; and Beverly Hills among others.
Concierge Auctions evaluated the sales based on MLS and property record data, from Miami to Vail in 2015 and 2016, and found that 76 percent of the properties took longer than 180 days to sell.
The average days on market for these properties was 774 in 2016 and 927 in 2015.
Source: Concierge Auctions
“Overall, we’ve seen that when luxury properties are brought to market, one of two things happens — either the property sells relatively quickly (within 180 days) or it remains on the market for a significant amount of time,” said Chad Roffers, chairman of Concierge Auctions.
The 2016 data revealed a mixed national market. The average sales price of the top 10 deals was down year over year in 18 of the 27 markets, while nine of 27 markets showed an increase.
Source: Concierge Auctions
In today’s market, buyers can research the full history of a property, said the accompanying report. This includes total days on market, price reductions and whether or not a property had been de-listed and re-listed. And all of these factors impact the perception of value.
“Days On Market are the enemy, and they are dangerous,” the report noted. “The longer a home stays on market, the greater the risk of depreciation due to a perception of loss in value.”
Takeaways for all agents
Roffers, who founded one of the fastest growing Sotheby’s International Realty Affiliates in the U.S in his career, said all agents can use the findings from the annual index to help unlucky sellers.
“Some of the old tricks no longer work,” he said. “Taking it off the market for a period of time or messing with the address — the consumer is too smart for this. The information is transparent. You have to go at it really differently.
“Lowering the price, unless you know it will be the silver bullet, can be the wrong move because the consumer will think something is wrong with the property,” he added.
In the middle to lower end of the market, he acknowledges a price drop can work, but in the luxury market a price reduction “screams weakness,” he said.
Meanwhile, when taking on a listing of any price that has not sold, agents are left with some choices. How do they expand the market for potential buyers, and how do they re-position the asset that, for whatever reason, didn’t sell?
“You have to dig deeper and think harder about it, do a SWOT [strengths, weaknesses, opportunities and threats] analysis of the listing,” Roffers said. “What are the strengths and weaknesses of the property? What was done right, what could be changed and what could they be more strategic about?”
It’s about coming up with a better game plan and not rushing the home to the MLS, said Roffers.
He suggested taking a bunch of agents from your market out for dinner and getting an hour of their time to think of marketing ideas.
Doing “coming soon” marketing can also be a good route which “minimizes the Zillow clock,” he added.
“‘Coming on the market’ information, not on the MLS yet, that’s the most valuable service the industry can offer.”
Push for longer listing agreements
The Concierge Auctions chairman suggested another takeaway from this research: one-to-two year listing agreements are more practical for luxury agents than the common six-month one.
Looking at the index data, in many cases, agents would have needed to renew their agreements, or the seller would have gone with somebody else.
“Agents should be pushing for one or two year listing agreements. It’s about having a ‘hard but smart conversation,'” Roffers said.
“Our growth at Concierge Auctions continues to be a sign that sellers and forward-thinking real estate professionals are looking to compress the timeline and maximize the price of luxury properties.”
Concierge Auctions is going into its 10th year of business and has worked with brokerages including Hawaii Life, Engel & Volkers Park City, Pacific Sotheby’s International Realty, Premier Estate Properties, Mitchel Prime Properties and Allie Beth Allman & Associates, Berkshire Hathaway.
