October 23, 2020–The focus of today’s article is on one of the most sought-after neighborhoods in all of Louisiana–the coveted golf course community of Beau Chene in Mandeville, Louisiana.
If you have been paying attention to the real estate market at large within the past few months, then you know how red hot it has been. This is due in no small part to historically low interest rates flooding the market with newly qualified buyers. Since May of this year, homes have been snatched off the market quicker than they are put on, making it a seller’s market (lower inventory=greater leverage for sellers=higher home prices).
So, in a seller’s market, how is one of the most popular neighborhoods in one of the fastest growing regions in the state (St. Tammany Parish) fairing? Let’s take a look at the scattergram below.
What this is showing us are all the homes that have been on and off the market in the past six months. The red line indicates the average Fair Market Value based on the price per square foot of properties that have sold. For example, if we start on the X axis at 4,000 square feet and follow the Y axis to the red line, we will find that the fair market value of a 4,000 square foot home is right around $570,000.
An interesting point to note is that a little more than half of the expired listings–those that tragically did not sell while on the market–are above the indicated line, while the majority of homes under contract are right at the line or below it. Furthermore, Beau Chene is a bit of an anomaly in that despite the intensity of the current market, many homes did not sell even when they were priced below market value. How could that be in one of St. Tammany Parish’s most prized neighborhoods?
A home is the most marketable within the first 30 days it is put on the market, especially in this sort of market. If a home does not sell, it is almost always a reflection of buyers’ disinterest based on two key concepts–condition and pricing. That can more easily be said today than it could in the past since the number of listings on the market has decreased by nearly 50% since the its height in March, due to the influx of buyers. Basically, if you list your home, it should sell (and sell quickly, at that), and if it does not, you most likely lacked in either one or both of the categories above. Refer to the chart below:
The odds of selling are based on the number of homes that have come on and off the market in a particular area in the past 12 months. Generally speaking, anything below 30% indicates a poor seller’s market, and anything above 70% indicates a strong seller’s market. So, if you were to list your home in Beau Chene today, you would have a 48% chance of it selling. That is a pretty staggering number considering the number of listings on the market has been cut nearly in half!
But this chart is completely disregarding the two key concepts I mentioned earlier–condition and pricing. Strategically pricing your home at or below fair market value can DRASTICALLY improve its marketability in today’s market, even fetching full priced and/or multiple offers. On the other hand, the margin of forgiveness when it comes to bad pricing is slim to none. I call it “Seller’s Fever,” when a Seller sees the intensity of the market along with the lack of inventory and they shoot for the moon, pricing their home far above what it should fetch. Then, it sits.
As far as pricing goes, your price per square foot is a good baseline, so to speak, with the other key variable being condition. Improvements can go in this category as well. Regardless of how expensive it was to install that hot tub, build that outdoor kitchen/patio space, and dig that saltwater pool, it will certainly fetch your home a higher price. On the other hand, the twenty year old roof, multi-colored bedroom layout, and outdated flooring will all affect your price negatively. So, it is not essential to do so, but it might be worth considering installing those hard-wood floors and marble counters you were thinking of if you plan on selling in the near future. It will almost certainly fetch a higher price than your competitor who did not do so.
A third category might be added also–marketing. As stated before, the initial 30 days a home is on the market are when it is the most marketable. By the time the home hits the market, the job of the Realtor is to get it in front of as many potential buyers as possible, while also making it attractive to them. One of the best and most often used methods is by using professional photography. The difference between using your iphone and hiring a professional photographer is staggering, and the effect it has in the mind of potential buyers cannot be overstated. The modern day buyer searches Realtor.com day in and day out looking at hundreds of listings with great looking photos. If you do not have them for your listing, the property may not even be considered. Furthermore, it is absolutely inexcusable in this day and age to skip out on the photos when they are cheaper than they have ever been, with most local companies charging around $100 per for a full set of photos. Beyond photos, there are more strategies such as social media marketing, professional videography, open houses, staging, and broker tours, the majority of which any certified Realtor should be proficient in.
To summarize, improved condition can have significant impact on your homes market value. If you were to list your home in Beau Chene today, based on the odds of selling at 48%, ensuring proper condition, selecting a strategic pricing position, and choosing a Realtor with an aggressive marketing strategy would be key. Which is why *cough cough* it is always wise to consult your local real estate advisor before entering into the market, just as it would not be wise to dump all your money into a volatile stock market without consulting a certified financial advisor. A good realtor is not just a house lister, he/she is your advisor into an ever changing and complex housing market.
Below is a graph representing the real estate market in St. Tammany Parish, where Beau Chene resides.
As you can see, the number of transactions is WAY up from around the same time last year. Nearly twice as many homes have already sold in October than they did last year. That is a staggering number! In this sort of market, it is inexcusable for your home not to sell, so make sure that when choosing who to list your home with, you choose a certified realtor based on their expertise. It can be the difference between many thousands of dollars on the line, as well as much stress relief. It is important to pick an advisor who you trust to help guide you through the selling process, and one who is up to date with current marketing strategies.