The Importance of Pricing- Recent Home Sales in Carmel by the Sea California

A Poorly Priced Carmel by the Sea or Pebble Beach Home Can Cost You Money and Time

The table below shows all of the homes that have closed escrow between May 6th and July 3rd 2010 in Carmel, California. I have deleted the addresses from the table so we can focus on pricing as it relates to Days on Market and percentage of Original Price and List Price. I want to avoid a debate about a specific home and whether it was or wasn’t priced right based on location, square footage, etc.  The market spoke on the pricing of each of these homes.

Most Days On Market

If you look at the table and highlight the five homes with the greatest time on market (Days on Market, DOM) they are as follows: 681 days, 518 days, 454 days, 328 days, 228 days. If you then look at the five homes that sold for the greatest percentage below their original list price they match up with one exception.

Days On Market               Sold Price as Percentage of Original List Price

681                                                                  57%

518                                                                  58%

454                                                                 71%

328                                                                 68%

228                                                                 78%

The anomaly:

77                                                                   77%

Regarding the anomaly: this was a bank owned property that was initially incorrectly priced. The bank began adjusting their list price down within 20 days of going on the market and were continuing to drop it when they received an acceptable offer. [I will discuss how banks price their homes in a future post.]

If you exclude the anomaly, these properties sold for an average of 66% of purchase price in 442 days.

Least Days on Market

Now we will identify the properties with the shortest time on the market and see how they fared in terms of percent of original list price.

Days On Market               Sold Price as Percentage of Original List Price

2                                                                    88%

6                                                                  100%

10                                                                100%

11                                                                  93%

14                                                                  98%

These homes sold for an average of 96% of their original list price. And, they sold in an average of 9 days.

The Danger of Across the Market Averages

The ten homes we just discussed (excluding the anomaly) sold for an average of 81% of their list price after 225 days on the market. This statistic is valuable in tracking the trends in a market but is useless in trying to understand how to price a home and establish a strategy for selling it. It doesn’t have much value for buyers either.

As a seller, would you rather sell your home in 9 days and be in a position to negotiate towards 96 of your asking price, or struggle to find a buyer after a year and two months on the market and secure 66% of your original list price?