Here’s why low- and mid-value homes take longer to sell
Sellers of low- and mid-value properties spend a longer time on the market compared with high, luxury and super-luxury homes, regardless if they list 0% and above their properties’ market value. Interestingly, luxury-value properties spend the least amount of time on the market, regardless if their listing price is 0% or higher than 15% above market value.
This is according to research by property data company, Lightstone, which reports that if a mid-value property is listed between 0% and 6% above market value, the average time it will take for the property to sell will be between 5.2 and 5.3 months. If the listing price increases to between 6% and 15%, the average time on market increases to between 5.9 and 6.5 months.
“Above-market listing prices for properties in the high, luxury and super-luxury segment does not have a drastic increase in the time on market for the relative properties,” reports Lightstone. “For example, increasing the listing price of a luxury property between 3% and 6% above market value, to 9% and 12% above market value, will only see the time on market increase by 10 days.”
Even though there is a sensitivity around the listing price and the time on market of the property, the time between the listing date and transaction date will most likely only be affected if the price is very high relative to the market value of the property.
In essence, this analysis has established that listing a property at prices significantly higher than the fair value may lead to higher waiting periods from the listing date to transaction date. Even though more expensive properties tend to be less sensitive to higher listing prices, it should be cautioned not to list low- and mid-value properties for much higher than fair value since it could significantly increase the time needed to sell the property.
It is greatly important to know your property’s fair market value before listing, especially due to many homes in the low- to mid-value segments being in sectional title developments where potential buyers can easily compare like-for-like homes and pit them against each other based on listing price.