We were reviewing year-end numbers for 2014 and discovered some disappointing stats on listing to sales performance across the board during the year.
Success rate only 48.1% for new listings during initial listing period!
Ottawa Real Estate Board statistics show that there were 28,943 new listings for residential and condo properties during 2014. The number of sales totalled 13,928 for a ratio of only 48.1%. This means that less than half of all MLS® listings generated an offer and firmed up a sale during the original listing period.
Note: figures are made worse by the fact that a single listing may have been listed 2 or 3 times during the year thus overstating the number of new listings.
If one took in to account all existing listings at the beginning of 2014 the ratio would look even worse.(less than 36% of all listings successfully sold)
Residential vs condo ratios:
Residential properties fared better than condos with 51% of new listings selling while new condos only generated a 38.8% success rate
Sellers and Realtors are both to blame:
Sellers generally have an overly optimistic estimate of the market value of their home by 5 or 10%. Realtors have a responsibility to try to manage seller expectations but with the “list to exist” principle in professional real estate, many Realtors may be overly optimistic on listing price to ensure they don’t lose out on the listing.
Salespeople are typically optimistic in outlook and also very astute at finding out what a seller wants to hear. Sellers will tend to gravitate to the salesperson that tells them what they want to hear and understands their vision of the special property to be marketed. This can lead to overpriced listings and extended listing periods.
Realtors derive ancillary activity and advertising value by carrying a listing, so there is great incentive for them to do whatever is necessary to convince that seller to list with them.
Changing market conditions not well enough understood:
Whether Realtors fail to properly explain that our market has transitioned to a “buyer’s market” or sellers simply fail to acknowledge this fact is hard to say. Clearly, many sellers have still been operating on the assumption that their house will sell fast and at top $ (as it would have in our “seller’s market” between 2000-2010) when the reality is that days-on-market times are growing and we have a significant quantity of excess listing inventory which heightens competition and puts pressure on listing and selling prices.
Organized real estate also fails to clearly point out existing market conditions in their press releases which overstate the positive and sometimes is simply blatant “spin”.
Should more sellers “fire” their Realtor?
What is missing in most listing interviews is a discussion of how long it will take to sell the property at the listing price under discussion and what is to be done if the property does not sell within an agreed upon time. As a professional a Realtor should be held accountable for results and if a sale is not recognized in 30-60 days (for most properties) then a seller should probably “fire” their Realtor and try someone else. Though we don’t have stats on this, our experience tells us that this happens in only a very small % of cases i.e. 10% or less of listings.
If this type of expectation was agreed at listing time, including a time line and expected selling price, we believe a much more realistic listing price would be generated and a much higher % degree of success. For a list of 20 questions to ask a prospective listing sales person/broker see our website at www.oasisrealtyottawa.com or our Ottawa real estate blog at http://www.oasisrealtyottawa.com/Ottawa_Real_estate_blog/page_2628670.html#.VN-Yx_nF-K0
For the record:
Our sales to listings ratio historically runs right around 80%, so while not perfect, it is significantly better than the overall Board results noted above.
If you are not already working with another Realtor and would like to work with a broker who provides this level of analysis and disclosure by all means give us a call at 613-435-4692 or email to email@example.com. We are away on vacation until March 1 but watch our website for some special pricing programs and new service level offerings coming for spring 2015!
Gord McCormick, Broker of Record
Dawn Davey, Broker
Oasis Realty Brokerage
experienced professional brokers with lower listing fees for sellers