Pricing it Right in Real Estate is No Game in Hyde Park and Oakley!

June 25th, 2008 categories: Cincinnati, Ohio, Real Estate News, Real Estate Selling

Correct pricing for real estate is not as simple as hitting a button in the Multiple Listing Service system and getting the answer!

Recently a fellow blogger wrote and an excellent blog highlighting the need to price properties ”right”.

Since I am always on the pricing soapbox, I was intrigued enough to read the entire article.

The blog quotes numbers from the greater Cincinnati Multiple Listing Service with List to Sale percentages for Hyde Park and Oakley. Unfortunately the Multiple Listing Service (MLS) provides an incomplete picture and this article is a great example why agents and sellers need to dig deeper in order to obtain the real numbers.

Let me explain, the MLS provides a standard report showing the List Price to Sale Price ratio (LP/SP). The number is misleading because it reflects the List Price (LP) prior to the sale. So if a property was listed for $200,000 and the final pricing just prior to selling was to $189,000 and the actual sale price was $179,900- the LP/SP percentage would be $189,000/$179,900 or 95.19%. In reality the real LP/SP $200,000/$179,900 should be 90%.

Detailed review of the Oakley and Hyde Park single family home sales which closed between 05/15/08-06/15/08 indicates a much higher loss on properties with a high number of days on market (DOM): (Data from Greater Cincinnati Multiple Listing Service)

Homes on the market 30 days or less: MLS stats for List Price(LP) to Sale Price (SP) - 96.79%. Actual Opening Price (OP) to Sale Price (SP) -96.71%. (No surprise here- the quicker the sale, the higher the selling price.)

31 - 60 days: MLS stats for LP to SP- 93.94%. Actual OP to SP- 90.19%

61-90 days: MLS stats for LP to SP- 96.60%. Actual OP to SP- 86.12%. (Longer market time- lower sale price)

91- 120 days: MLS stats for LP to SP- 95.14%. Actual OP to SP- 95.14% (only one property closed in this price range)

121+ days: MLS stats for LP to SP- 95.64%. Actual OP to SP - 83.04%

As you can see the Selling Price(SP) to Opening Price (OP) is substantially lower the longer your property sits on the market.

Sellers need to have the whole “picture” before deciding on the correct List Price. Since most Multiple Listing Services do not provide detailed statistics, an agent usually spends hours preparing a comprehensive pricing presentation.

If you are trying to price your property based on reviewing the standard printout from MLS, ask for more detailed information.

My fellow blogger is correct- pricing is critical from day one. Just make sure you have all the facts before deciding on the opening price.

If you would like the work sheet of closings for this blog- let me know by email and I will be glad to forward to you. Or give me a call 513-300-4090.

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