Tree Section Ask/Close Spreads So Far in 2017

There was a time last year (2016) when the Tree Section got slow.

People began to get up in arms, wondering, "what's wrong in the Trees?" Average DOM was growing, along with inventory. Prices were beginning to be challenged.

It's better this year so far. Inventory in the Tree Section is at less than half the level of 2016 (14 today). Sales are proceeding well.

Are there more buyers? Better rates? More reasonable listing/selling prices? You might want to see a blog post on each of those topics.

Today we'll look at the ask/close spreads, the difference between sellers' asking prices and closed sales. Perhaps there's a clue in there.

Get ready for a big chart, organized by most recent sale first, and going back to Jan. 1, 2017 (this looks best on a computer rather than mobile):

That's 37 closings in the year 2017 so far in the Trees (per the MLS).

Four were deals arranged off-market but posted to the MLS, so we're really looking at 33 listings that were marketed publicly and sold.

First thing you notice: A lot of negative numbers. On 27 out of 33 listings, the sale price was lower than the start price.

Say that another way: 82% of Tree Section listings this year sold under asking.

Meantime, 3 listings sold for asking price (one was +$1K), while 3 more sold higher.

Looking at the discounts, we noted:

• 2% below asking is the most common (7 instances).

• The average discount across all of these sales so far was 6%.

• After removing the highest and lowest (1% and 23%), the revised average was a 5% discount.

With discounts common and yet averaging somewhat modest numbers, plus few sales over asking, you know we're not in 2013-15 anymore. Bidding wars are not the norm. Buyers are more patient.

Dave had one of the -2% listings in that mix, 1701 Oak (4br/3ba, 3575 sqft.). So we can speak from experience on this one.

We were on the market at $2.275M but did not sell quickly. We took a break from the market in November. Buyers who'd seen the listing in the Fall came in and offered on it.

The $2.230M sale price is the highest-ever resale price on Oak. (New construx have recently hit bigger numbers.)

We always thought it was compelling at or near $2.300M. To sell it, we needed to go a bit lower. That's what the market said.

Much the same surely goes for the typical listing in the mix. You try to price appropriately to market and hope it's all still there. Recently, it hasn't all been there, and sellers have had to take a little less.

Two of the over-asking sales were absolutely designed to be bidding wars. New construx at 2512 Palm came out at $2.995M, at a time when recent, comparable new home sales in the area had been logging $3.2-$3.4M prices.

Multiple offers brought it to exactly $3.200M.

The other bidding war was at 3513 Elm, a very dated and small mid-century house priced like a lot sale.

The $1.195M start price brought lots of people to the table at once. The $1.540M sale price is quite impressive in the end.

The one slightly bid-up sale we noted was 657 19th (4br/4ba, 3025 sqft.).

They listed at $2.599M and got $2.650M.

It's the one and only case on this list where the listing came out right at the market level, minus just a little to make it attractive and got a bit more.

That's the sweetest strategy for pricing a new listing, but obviously it has been difficult to pull off for most sellers recently.

These lessons seem to be influencing new listings and price cuts by active sellers today. 

Oh, there are buyers out there. They just expect to pay a little less.

And mainly, they're right to assume they can.