No matter where you live, there always exists two real estate “markets”. One market consists of homes that are priced “in the market”. These are the homes that will sell. The other market consists of homes priced “out of the market”. These are homes that probably won’t sell unless a price or condition adjustment is made to move the property to the “in” section of the market. It is the combination of pricing and condition that determines whether or not a property is in or out of the market, and thus whether it will sell. The best graphical depiction I’ve seen of the “two market” rule was outlined in a Power Point presentation at the Keller Williams Mega Agent Camp earlier this year in Austin. I’m going to share the graphics and explain this simple but powerful rule.
Take a look at the chart below.
The dark yellow portion in the bottom left corner represents the relative position, based on the competition that the “in the market” listings hold. Homes in the outer light yellow band, are either over-priced, not properly prepared, or both. The vertical left line represents pricing, and the horizontal bottom line represents condition. The closer your listing can be to the bottom left on both price and condition, the better your chance of a quick sale at full price. And, by the way, many listings in Austin are in fact selling very quickly, even while many others are sitting stale on the market for more than 6 months.
Now let’s take a look at what the chart looks like in a Seller’s Market.