For those of you who spend much of your time reading blogs and white papers about the real estate market, it is likely that you have stumbled upon reports published by Redfin.
Some time ago an article caught my eye. After examining 17 markets, Redfin created a top 5 list for home selling tips. One of the tips was that they found that Friday was the best day to list a home since it resulted in a faster sale — and a sale price closer to the asking price.
In order to examine whether we can make similar claims on when a price is changed, I pulled 7 years of data for multi-unit properties in Chicago. Of the 11,000 parcels that sold, nearly 4,800 had at least one price change with a max of nearly three dozen.
This 4,800 is what I am looking at here.
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The Importance of Top Listing Positions
For those of you on the brokerage side, you are well aware that both the original listing, as well as each price change leads to a top listing position on multiple listing services. Stated more plainly, the multiple listing service will position a listing “on top” when it is new or when a price change is made.
This positioning will tend to bring a listing in front of investors’ eyes and presumably increases the attention on it in a similar way to that of an original, or “new,” listing. The argument here is that since the goal is to draw attention to a parcel, practitioners should have a firm understanding of both the optimal day to list, as well as the optimal day to initiate price changes in order to garner the most attention from prospects.
What follows is a very brief breakdown of how price changes affect the sale of properties.
4 Conclusions We Can Draw from Data on Price Changes
1. Most Price Changes Are Discounts
When price changes become necessary, the data shows that 77% of all parcels that undergo price changes require three or fewer changes and that the average price changes are discounts that are approximately 6-8% from the most recent list price.
2. Mondays and Tuesdays Are the Most Popular Days to Initiate Price Changes
Still, the discounts are not significantly different than other days. From a practical point of view this may encourage us not to change prices on these days since we will likely be facing so much competition for attention.
3. Friday May Not Really Be the Best Day to List
Even though previous research supported the position that Friday is the optimal day to list single family homes, this cannot be defended when examining the statistical difference between days.
In fact, the marginal benefits to a seller seemed to come to those who initiated price changes on a Wednesday, since these resulted in a reduction of the discount by approximately 1.9 percent, selling marginally closer to the asking price. Additionally, changing prices on Wednesday resulted in a reduction in time on market of approximately 5 days. Both of these factors were significant at the 10 percent level.
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In other words, Wednesday price changes resulted in prices closer to list and shorter times on markets.
4. Prices Changes on Fridays Are Most Significant
From a buyer’s perspective the story changes slightly. When price changes occur on Friday, the resulting average discount is greatest at 9.31%. Similarly, discounts from the market price are greatest when a price change is submitted between Friday and Sunday.
So from the data, we can conclude that Monday and Tuesday seem to be the most popular days to initiate a price change, but the most significant discounts (as related to the final sale) take place on the weekend, Friday through Sunday, as stated above.
Practitioners may consider that not only are price changes of the weekend less common, but that they also tend to result in the most significant discounts on the sale price. This may result in practitioners that are selling to avoid price changes on the weekends.
What do you see in your personal experience — do your properties tend to sell faster and for closer to list price on a certain day of the week?
Leave me a comment below!