In many markets, it goes without saying, foreclosures and distress sales are a prominent source of competition. However, for other markets the true impact is less obvious. This can be somewhat misleading when assessing the competition to list a property for sale. Furthermore, it’s often difficult for sellers to appreciate the true impact of this competition to reaching their ultimate goal.
First, I’ll address the Wholesale, Retail, New thought process.
Wholesale = Properties with pricing advantages such as Foreclosures, Short Sales, REO, Bank Owned, Corporate Owned, etc… Properties in these categories are often discounted either due to condition, lender or financial institution discretion or other business driven motivation. These transactions are typically treated more as a business transaction from the viewpoint of the seller.
Retail = Properties usually in good to excellent condition, the seller is usually the home owner, these usually require few if any updates and are ready for move in.
New = Properties designated as “New” in the MLS system. These listings have usually, never been occupied.
For this post, I’m using our Seller Type Summary report to show the true impact of Wholesale properties in the North Fulton (MLS areas 13 & 14) market. Now, looking only at the active listings, one would believe that foreclosures and distress sales have a small impact on the market representing only 17% of available active listings. It appears that Retail is thriving in this market with 76% of active listings falling into that category. However, a deeper look into the closed transactions shares a somewhat different view. While wholesale listings account for only 17% of active listings, they make up 38% of actual closed sales. Meanwhile, the Retail market which has provided a whopping 76% of active listings has produced only 55% of closed sales.
This doesn’t necessarily mean that Wholesale properties are dominating the market. It DOES mean that they should be considered when forming a pricing and marketing strategy. It is important for your sellers to know and understand that the odds of selling are currently in favor of Wholesale listings. You’ll see in the bar graph at the bottom of the Seller Type Summary, that average months of inventory (AMOI) give a much better picture of actual performance. AMOI for the area is 13.2, with Retail the highest at 18.1 and Wholesale knocking it out at 5.9.
So, don’t just tell them… let REDataCenter help you show them the importance of price and condition, in today’s market! Help your client “beat the odds” with superior market knowledge!