November 1, 2015 Terravita Market Update
Eight homes under contract – that’s a decent October for Terravita home sales.
It’s actually not what I was hoping for, but it is double what we had last year. And the weather back east is really not doing its part at all. Chicago is forecast to be 72 degrees on Wednesday! Are you kidding me? I was back there to play golf last Halloween and it snowed!!
The weather does play a small role in deciding how much demand we have, but the largest reason we are not seeing more sales is a lack of inventory. Or at least a lack of inventory in what the market is seeking. There are a number of pockets of the Terravita real estate market showing very strong demand right now, and it is very important for sellers – and agents – to know what those pockets are and how to market to them.
A good example of a hot pocket is what I call “the exceptional market.” These are the homes the public views as exceptional or extraordinary. But they only pay exceptional prices if we help them view these homes as exceptional and show they are worth the extra money.
The percentage of the people who are willing to pay the numbers these homes command is fairly small – maybe 5% of the total market. But Terravita’s inventory has been so low for so long on all homes in general, and on exceptional homes in particular, that there is now a good pent-up demand for them. The home I just sold this month on 70th (33707 N. 70th) is a great example of this because it sold at $875,000 which is just over $300 per square foot.
When the current seller bought this home 17 months ago, I had it listed and was disappointed that we could only get $740,000 for the purchase price. (By the way, the current seller told me that the reason he hired me to sell the home for him now was because I was such a pain in the butt on price when he bought it. He wanted somebody to be that tough for him!)
At the time he bought the home there was a good bit of inventory on the market and consequently we heard quite a few reasons that people were not willing to pay an exceptional price for it. None of these reasons made sense to me – but if I have learned anything over the years, it is that “the market is what the market is.”
When he called me in July to sell his home, due to the low inventory this time around I felt we had a much better chance of reaching the home’s real value: the exceptional value.
He had done some upgrading to the home and that was going to help. To stoke the pent-up demand, we decided to do some pre-marketing, add some social proof for recent exceptional sales, and wait for the cooler days of October to offer the home. When we put the home back on the market last month we quickly had multiple offers, and wound up with a full price offer, all cash and it closed in 2 weeks.
A note of caution, though – it is not just about pricing exceptional homes high and selling them. That will not work.
They have to be marketed properly. Really. A lot needs to be done to help the market understand that these extraordinary homes really are exceptional, and then persuade buyers to pay prices that no appraiser would ever put his blessing on.
On the other side of the coin, pricing a home that is not perceived to be in one of these high demand “hot pockets” as if it is one of those homes, is a formula for frustration. We have numerous examples of listings that we have taken over where this was the case. The homes were on the market for almost a year before the seller called us to take over the listing. In each case we went in and reshaped the marketing, then relisted at the same asking price and sold it within 30 days.
Whatever “pocket” your home fits into, my team will make sure to get you top dollar.
Here are the October 2015 Terravita Real Estate Market Statistics: