Reduce And Net Less

For professional track sprinters to be the fastest off the blocks, they put in a lot of time and effort in preparation and training. Likewise, it's crucial to carefully and accurately price a home when it first comes on the market in order to secure the highest possible net proceeds from the sale.

Price Reduction

The data shows a home's sales price to original list price ratio in Orange County for October 2022. This is the initial price of a home when it goes on the market prior to any price reductions. For homes that reduced their asking prices between 1% to 4%, this ratio was 94.7%. Homes that reduced the asking price by at least 5% had a sales-to-original list price ratio of 86.7%.

A home's initial price is crucial to its long-term value. The first few weeks after coming on the market is absolutely the most crucial time period with the greatest exposure and heightened buyer activity. This arises because there are many buyers who have not yet obtained a home and are eagerly waiting on the sidelines for something to come on the market that meets their criteria. Every time a home enters the fray, there is a rush of initial activity as potential buyers clamor to be one of the first to see it. There is more activity in this period than any other time during the marketing process. Sellers should be aware that overpricing a home risks wasting valuable market time, obtaining a smaller net proceeds check at the close of escrow, and could result in chasing a declining market. To avoid these outcomes, they should carefully and methodically isolate the Fair Market Value and achieve the best outcome with the most amount of money.

Demand and Supply

Demand, the number of pending sales over the prior month, decreased by 68 pending sales in the past two weeks, down 5%, and now totals 1,202, its lowest reading since April 2020, the initial lockdown of the pandemic. It is the lowest level for November since tracking began in 2004. Last year, there were 2,322 pending sales, 93% more than today. The active listing inventory in the past couple of weeks decreased by 96 homes, down 3%, and now sits at 3,581, its lowest level since June. Last year, there were 1,793 homes on the market, 1,788 fewer homes, or 50% less.