I have a theory that is relatively complicated to prove. In that theory, the best time to sell a home in Arlington (or anywhere for that matter) in order to get the highest possible value is within the first 10-14 days on the market. With the data tools I have access to I cannot concisely prove this theory. I can infer it, but once you bring in varying data sets for “days on market” the overall picture becomes muddied. Higher value homes tend to sit on the market longer, thus driving up the average price for any given longer range data set. Point is, unpacking that theory and proving it would be a thesis, not a blog post.
Regardless, I believe it to be true, and I believe so not only because of the data, but because of behavioral realities in the market as well. In general, when an owner first lists a property they gain an audience of everyone looking within the price range they have chosen. If that crowd of buyers (of which there is currently a back log) agrees that the owner’s home is priced correctly, the owner is likely to garner a quick response, and quite possibly from more than one of those waiting buyers. There is a sense of urgency, and potentially a sense of competition.
If that same crowd of buyers disagrees with your price, they are likely to baulk. And right now (March 2012) buyers are still very hesitant to feel they may be over-paying, and even the most slim of margins between perception and an owners price can leave that owner in the cold. After that initial offering produces no response from buyers the owner is left with two options; wait for a new buyer to come along who may feel that the home is worth the price, OR lower the price. Or put it this way: wait for serendipity, or price to the readily available, willing and able buyers who are out there swarming.
Often what happens is a home’s price is adjusted too slowly. Eventually a buyer comes forth, but they see the home has been on the market for a while, so they don’t offer full price. Essentially the home becomes, in the mind of the buyer, an opportunity for a deal. “I’ll take it if I can get it for ‘x’.”
In many cases home owners are uncomfortable with this theory because there is the sense that if they sell the home in the first week they must have been priced too low, and thus they would leave money on the table. There are certainly grey areas in this theory as we go up the pricing ranks, but even in the high value real estate market there is a clear correlation between days on market, and percentage of asking price obtained. See the charts below… and notice the corresponding peaks and dips between the two.
My personal take away is that, as with anything in real estate, there are no absolutes. I am confident that my theory stands strong in Arlington for the $500 – $700k price ranges. Get from $700k – $900k and it is still notable. Over $900k and we just need to be conscious of where an acceptable number of days on market lies. For instance, as we can see in the charts above, for the $1,000,000 – $2,500,000 price range in Arlington 40-80 days on market seems to be the sweet spot.