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Below is a partial transcript of what was discussed in the above video.
House prices are up 5% to 6% locally in Central Illinois. Some areas are a little bit more, some areas are a little bit less. In a normal market, there are around 2,500 homes for sale. In a buyer's market, that number is closer to 4,000 homes for sale. Right now, there's approximately 1,000 homes for sale. Inventory of homes for sale is down 50% to 85% throughout the market. For example, there are 47 homes for sale in Dunlap High School District now, compared to 327 homes on the market just a few years ago. When the demand's high and the inventory is low, prices go up.
Is it important to prepare my home for sale in this market?
It's still very important to prepare your home properly, price your home properly and to hire a top real estate agent. A lot of people have this misconception that they don't need to do anything to prepare their home to sell. This simply is not true. A home that shows well will always sell for more money. People hear that everything's selling for full price or above, and while that's true, there are some homes that are selling for well above full price, there are other homes that are getting very few showings and not having any luck selling even in this market.
Has this market changed how real estate agents price homes?
Typically, real estate agents will look at the last 12 months of sold listings of nearby homes similar to your home, and base a large portion of our pricing on that. There's other things we look at such as homes currently for sale, current pendings, and the homes that were on the market and did not sell. We also look at the supply and demand and market absorption rate, but homes that have sold within the past 12 months were the most important. We would look at homes currently for sale only to see what the competition is. We did not base much of our pricing on these homes because these prices are only what sellers are hoping to get.
Now, fast forward to today. We can no longer price homes this way because if we look at what sold 12 months ago, it's totally irrelevant to the market today. We've never seen a market like this before. So, agents have to adjust and price homes differently. Right now, we have to focus a little more on what the competition is, the homes currently for sale, and homes that are currently pending. The best comparables are still sold homes as long as they have sold withing the past couple of months. Even then, we may still need to make adjustments.
If there's nothing on the market in the last few months that has sold, then the next step would be to go back to September. September is when most of Central Illinois communities were down to 2 months or less inventory of homes for sale.
One, two, or three months of inventory is a seller's market. Four or five months is a balanced market. Six or more is a buyer's market.
In the Peoria Illinois area, is the number of homes for sale low for all the communities?
There's not a town around the Peoria, IL area that I've looked at that has more than two months inventory of homes for sale right now. Some towns have less than one months supply of homes for sale.
What are the consequences of overpricing your home in this market?
In today's market, there's a little more guesswork than there used to be. So, if we tell a seller, "Hey, let's try $214,900 and the seller wants to try $224,900, we will try that price for a short time and see what happens. Home sellers do need to be realistic, though. I was with somebody that said, "We could probably sell our house for $100,000 more than we bought it for last year." That's not realistic. We’re going to know within the first week, even within the first few days, whether your home is overpriced or not based on the number of showings and the feedback from the showings.
It's still important to try to price your home at market value, because homes that are priced correctly have a much better chance of receiving many showings and hopefully multiple offers, which means selling over full price is probable. Homes that are priced correctly and are in showing condition can have 10-20 showings scheduled in the first 24 hours.
Are all homes in the Peoria, IL area selling well?
People have the misconception that all homes are selling well, and that's not accurate. There are homes on the market right now just sitting there. These homes are typically overpriced or the seller did not take the necessary steps to prepare the home properly or the home just simply needs a lot of updating and work.
We are in a society right now where most people want to buy a house, move in, and not have to do a lot of work.
Is there an option for home sellers that want to get their home listed for sale right away if it’s not in showing condition?
Yes, we can list the home as a “Coming Soon” listing. This way the home sellers can take the necessary time to get their home ready to sell and at the same time, we will pre-market the homes to all local real estate agents and buyers. Once the home is ready to go on the market, we will likely already have a list of buyers ready to see it.