I often see homes listed at a price that I will call "Unusual." When the Northwest Arkansas housing market exploded about 18 months ago, we as agents began to see a change in market expectations that one only sees during a boom. Bentonville is my primary market, so I'll use it as a reference.
At the beginning of the boom, prices began to climb gradually and as more downtown activities (restaurants, the museum, pubs, First Friday, etc...) became available that were of interest to the public, more and more folks wanted to be within walking distance of the square. So downtown prices began to rise above the market value of the rest of the city. Every week we saw sellers asking an "unusual" price and then within days it would be sold. An influx of cash buyers or buyers with above average means caused many downtown homes to be sold at two to three times market value. Many of these were listed in "as is, no appraisal" because they were marketing to these specific people who had the means to buy the house no matter the cost, either for remodel or demo for the lot.
The next week, the next door neighbor to the seller above decides they will sell too but they raise the price above what their neighbor got just to check the waters, so to speak. And their house sold also. And so on.
This trend continued for about a year with downtown prices finally plateauing at about 1 1/2 to 2 times market value.
Here's where the frustration comes in: Now that the market is at a plateau position, anything above that point is a unrealistic expectation. So now when I see one of these properties, I think of the price as "unusual." And in the current market, if you are incorrectly overpriced, you are looking for an "unusual" buyer. Because the standard buyer knows what to expect to pay. This holds true in the majority of cases; of course, there are some special circumstances that indeed do sell at unusual pricing.
So, what do we as agents try to do for you in order to not cause unrealistic expectations? We know the market. Do you know how many times I have heard, "My house is worth '$ X' because the guy down the street has his listed for that. I know it's true cause I saw it on Zillow (or whatever)" Listing isn't selling my friends. You can ask anything for your property, from a penny to a billion dollars. This figure has no bearing on real life unless you do your homework or you have a relationship with a trusted agent who can do that work for you.
The real estate agent who is looking out for your best interest will be able to tell you what your property is worth within a few percentage points by examining the trends in the listings but especially in the selling prices over the last 6 months. Recent history is nearly always a predictor of current conditions. That's why real estate appraisers use sold comparisons. They are getting paid to tell the bank what the market conditions are for any given area so that the bank knows how much they can lend the prospective buyer. Real Estate agents do the same thing with the knowledge we gain from market study and trends. Appraisers are of course licensed to appraise and real estate agents aren't, so we are acting within the best of our ability to give a seller or a buyer the best pricing information we can give.
So how does pricing affect you, as a seller, overall? Let's take a look:
For 2017 in ALL of Northwest Arkansas, there were 17 homes sold over a million dollars. (not including large acreages).
Currently there are 58 listed. That divides out to 3.4 YEARS worth of inventory
For the same time period and place, there were 65 homes sold over $750,000. There are currently 123 active listings in that range, or nearly 2 YEARS worth of inventory.
Want to know about Bentonville?
Last year there were 11 homes sold over 750,000 and there are currently 26 on the market, for a 2 year inventory.
Last year there were 64 homes sold between 500,000 and 750,000. There are currently 51 active, or about a year's worth.
Last year there were, between 300,000 and 500,000, 366 homes sold and there are 200 active, or about 6 months inventory.
Last year there, between 100,000 and 300,000, 953 sold and there are 170 on the market, or TWO MONTHS INVENTORY!
That's almost 3 homes sold PER DAY!
So there you are. Homes between 100 and 300k are the most desirable and fastest selling, and for obvious reasons. There are about 35 to 40 people PER DAY moving into the NW Arkansas Metro area. And most people can afford or are interested in a more modest home, under $300,000. There are others in the higher brackets as shown above, but remember - for every time a seller lists above market, there will be potential buyers who pass because of the pricing.
I know this has been long-winded, but I hope it has also been helpful to those buyers and sellers who want to know more about market trends and pricing.
If I can help you further, please email, call me at 479-903-0328, message me on Facebook, whatever is easiest for you. I'm just here to help you make the right decision, one of the largest you'll make in your life, for you and your family.
Also as a favor to me, if you like this article and more like it, please like my Bentonville Real Estate - Larry Horton page!