Seller’s expectations are still too high when it comes to price. How do I know? Look at our Zip Code of the WeekÂ (below).Â November to December 2007: 163 Orlando condos listed – 6 sold =Â 157 unhappy sellers. True, there may be several reasons for the lack of sales – one ofÂ which is that buyersÂ can be incrediblyÂ slow to catch on, and alsoÂ the fact thatÂ it’s harder to get aÂ loan these daysÂ – but in most cases, the seller is still hoping, against hope, to get what they think they deserve -Â instead of waking up to the reality of today’s market.
Buyer’s are are cherry-picking the best condos from each communityÂ – but if you’re trulyÂ motivated to sell and just aren’t sure how to price your Orlando condo, you might want to consider ‘absorption rate pricing’ (ARP) – which asks not how much you want – but how quickly you want to sell.
Step 1: Work with your agent to find out how many Orlando condos entered the market in the past 6 months, how many sales closed during the same period.
Step 2: Do the math andÂ divide the closings by the listings.Â UsingÂ above numbers, ifÂ there are 6 closings out of 163 listings, then you have about a 3 percent chance of selling your condo in that zip code in that time frame. Ouch!
Then doÂ this: Figure out how many sales fitting your search criteria were closed in the past year and divide that number by 12. You’ll now knowÂ how many condosÂ closed per month (on average). Divide the number of listings by the average closed per month andÂ that will tell you how many months of condo supply exist in your chosen market. I’d do the overall Orlando condo math for you, but I won’t. BecauseÂ if you’re a seller you’d probably burst into tears. (How does 18-24 months sound?)
Using the ARP method, you can figure out how aggressive you need to be using time instead of price as your yardstick. If you desperately need to sell in the next 3 months and there is a two year supply of condos, thenÂ you may need to get real. Look at the prices of the condos in your own development that have sold and price your condoÂ in that ballpark – or just below, because the unhappy truth is that in many parts of Orlando, there are only two hopes that you can sell your condo – no hope – and Bob Hope… unless you do something pretty drastic to make it attractive to a smart, bargain-hungryÂ buyer who just knows theyÂ deserve aÂ great deal.
Absorption pricing will give you a sixty day price, a ninety day price and so on. It doesn’tÂ guarantee a sale – but you shouldÂ get a couple of sniffs at least. The rest is up to you.