Count the ways nearby listings impact sales
By Marilyn Kennedy Melia
CTW Features
In real estate, there can be strength in numbers, but only if buyers and sellers make the most of multiples. Sometimes, two or more “For Sale” signs pop up on the same block.
Seasonal effects can cause clustered listings. In Phoenix, for instance, many snowbirds had back north in summer, “so the best time to sell in adult communities is October through April,” says Chad Grabham of RETHINK Real Estate.
Buyers tend to think two listings close to each other are coincidence, but with three or more, “it can create the perception that something is wrong,” explains Glen Henderson of Alliance Group Real Estate.
A buyer’s agent needs to do “additional research into the properties to find out if there’s an issue. For example, “areas of San Diego are known for cracked slabs due to soil conditions,” Henderson says.
Examine if homes are “selling on an upward pricing trend,” adds Jeffrey Miller, of AE Home Group, Baltimore. If several nearby listings linger on the market “then we view it as a red flag.”
When not caused by adverse conditions, nearby listings have an “anchoring effect,” explains Manoj Thomas, Cornell University consumer psychology professor. Buyers who tour one home, priced at say $450,000 and then another for $425,000, will tend to bid lower on the more expensive home, and negotiate back and forth more than buyers making an offer on the lower priced property.
Anchoring can increase buyers’ confidence, observes Miller. “The more similar the homes are, the easier it is for buyers to analyze value, compare trade-offs, and confidently pull the trigger.”
And just like stores cluster in malls to give shoppers one-stop shopping, home sellers can take advantage of close-by listings.
“You can have several [simultaneous] open houses,” says Grabham, “and make it a mega event to pull in twice the amount of traffic.”
© CTW Features
