What to do when listing times change
Category RealADVICE
Estate agents and property economists often talk about the average "listing time" getting longer or shorter - but what does this actually mean to the individual home buyer or seller?
Gerhard Kotzé, MD of the RealNet estate agency group, says the average listing time is a useful measure of whether the market generally is moving in favour of buyers or of sellers. "The listing time of a property refers to the number of days between the time that it is first listed as being for sale, and the time that an offer to purchase is accepted or the owner decides to take the property off the market again.
"And of course that period tends to be shorter when there is high demand and lots of buyers keen to snap up any well-priced properties that become available - and longer when there is low demand and an oversupply of properties for sale relative to the number of potential buyers.
"In short, when the national average listing time gets longer, it is an indication that a "buyers' market" is developing and that sellers may need to become increasingly accommodating with regard to both price and terms in order get their properties sold.
"On the other hand, when the national average listing time becomes shorter, it indicates an overall market shift in favour of sellers - and also the likelihood of home prices becoming less negotiable and possibly even starting to rise if the supply of homes for sale continues to shrink in the face of high buyer demand. The average home loan size will also tend to rise and it will become even more advantageous to be pre-qualified for a home loan, especially if you are one of a number of buyers making competing offers for the same property."
He says that this is where the market appears to be currently, according to the latest statistics from First National Bank, which show that the national average listing time fell to around 11 weeks in the third quarter of this year, from almost 14 weeks at the start of the year. In addition, the figures show that the average differential between asking prices and actual selling prices has declined this year from 13% to 11%.
"However, it is important to remember that the property market is never homogenous, and that national averages can mask very big differences between various segments of the market. At the moment, for example, we are seeing much shorter listing times and greater price growth in the lower price categories than in the higher categories.
"There are also always variations between different suburbs, and this is where the knowledge and expertise of a reputable local agent can be of enormous help to the individual buyer or seller. As an owner that wants to sell your property within the current average listing time in your specific area, you will need your agent's help to fine tune your asking price and get it as close as possible to the what buyers in that area are currently paying for similar homes - and then to market the property as soon as possible to the biggest possible audience of potential buyers.
"Without such help, the chances are that your property will languish on the market for much longer than the average listing time, that potential buyers will start to think that there is something wrong with it, and that you will end up either selling for much less than you hoped or withdrawing the property from the market."
Alternatively if you are a buyer, says Kotzé, this situation means it is going to become increasingly challenging to find "bargain" purchases and /or sellers who are prepared to consider offers that are not close to their asking prices.
"But asking an agent to help you identify properties that have been listed for a long time is a good move - especially if the owners have already relocated to their new homes. If they are still paying off a bond and carrying the running costs of an empty property, they will probably be more motivated to accept a lower offer."
Author: RealNet
