Last week we talked about the efficiency of the real estate market. Simply put, the Southwest Florida real estate market isn’t as efficient as the stock market. No real estate market is, because the information isn’t as readily available and we’re not dealing with apples and apples. So why do some homes sell below market Value?
Let’s elaborate. The stock market has what they call the big board. Everybody can look up and see what a stock is trading at this second. If you’re looking at class A common stock for a company, 100 shares of the same stock are exactly the same. There is no difference. Additionally, everybody has access to the same information on the company at precisely the same time.
The real estate market is different. Even if you have two homes with the exact same floor plan, they are different. They are located on separate lots, making potential differences in location value. The upgrades can be different. Their repair and maintenance may differ, and of course the decorating and appearance can affect the value of the homes as well. One home may have a pool. They may not be built the same year with the same materials.
And this assumes it’s the exact same floor plan. We all know most homes aren’t the exact same floor plan. So how would a consumer, appraiser, bank, property appraiser, seller, or agent fairly compare various homes against each other? It’s a complicated process, because you’re not dealing with apples and apples like a stock.
The other component that affects what a home might sell for is the exposure to the market. If the home is fully exposed, presumably everyone who is looking in that price range for those amenities would be aware of the home. This just isn’t the case.
Have you ever driven by a neighborhood and said to yourself, “Wow, I didn’t even know this subdivision was here?” Or open a newspaper and wonder where that home is located? These are two examples whereby if the customer didn’t stumble upon the area or see an ad for the property, they wouldn’t even know it existed.
The agent you hire to expose your home to the market makes all the difference. If you wanted to sell a widget online in an auction, do you think you’d get more if you had 1,000 bidders than just 1 or 2 bidders? Of course, you would. Full exposure equals full market value. Partial exposure equals less than full market value. This is one reason For Sale By Owners net 16% less on average than using an agent.
Not all agents are the same. Some offer limited market exposure, which is better than sell by yourself. Some offer much more exposure. Of course, all this marketing costs money, so every agent can’t do it because they don’t have the money.
Agents get creative and clever and tell you that the home will be listed on 50-100 Internet sites and that’s all you need. This isn’t full exposure. Sure, it’s better than nothing but it’s not full exposure like we’re talking about. Don’t assume all agents are the same, and don’t assume all marketing is the same. It just isn’t!
Your home isn’t just like every other home. It needs to stand out. It needs someone to stand up for it and say Buy Me, I’m special! The Ellis Team can do that for you.
Why Do Some Homes Sell Below Market Value?
Recently while doing some market research I stumbled upon a property that is undervalued. It’s sad because the home should sell for more than it’s currently listed for. It’s been on the market awhile. It could use a few repairs that would make a big difference, but I presume it just may not have been marketed like it could be. This seller will undoubtedly net less than they should simply because they didn’t do a few repairs and because the market doesn’t realize it’s a good deal.
The real estate market is not as efficient as the stock market. If you’re looking for Top Dollar, Always Call the Ellis Team at Keller Williams! 239-489-4042 or visit www.LeeCountyOnline.com and search the market like a pro.
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