Originally posted here at Consumer Home Value
Crisp cool air, blue skies, changing foliage and, oh yes, PSL (pumpkin spice latte to the lay person). These thoughts may come to your mind when you think about the fall. It’s my favorite time of the year. Summertime is always crazy. The kids are out of school. Between grad parties, barbecues and yard work, the summer months go by quickly.
Hunger Games & Amusement Parks
The summertime is also peak season for most real estate markets. This last summer, more than one real estate agent confessed to me that it was a more hectic summer selling season than most. Most sales had multiple offers. Multiple offers mean a more stressful purchase transaction. It also generally means that people are paying higher prices for homes. Summertime is a bustling time to be an agent or home seller. I asked one agent to describe the market situation this summer. She said that it was like the “Hunger Games”. Low inventory and lots of multiple bids.
It’s kind of like being at an amusement park during peak season. The lines are long, the weather is hot, and things are full price. However, if you wait until the fall to visit most parks, the lines are shorter, the weather is cooler and usually the prices are usually a bit less expensive. Doesn’t that sound a little more inviting?
Real Estate Trends in the Fall
The real estate market is very similar. In the summer months, homes are generally selling for more than in the winter. By January, sellers are getting less for their homes than they do in the summertime. Of course, much of this has to do with less activity and less competition.
Here is a chart reflecting data from the Cleveland, Ohio market, where I live. This chart reflects the percentage of the price that homes sold for, in relation to what they were listed for. Notice that the dip is always in January and then usually peaks out around July? I think that this is probably true in most markets around the country.
In the fall months, the amount of money a seller is likely to get, is less then in the summer months. This last year the percentage difference between January and July was around 1.7%. What does that mean? If a person was listing their home for $200,000 in January, they were likely to sell it for around 97% of what they had it listed for. Namely, $194,000. If the seller waited until July of this year to sell, they would have likely sold their home for approximately 98.7% of what they listed it for. Or $197,400.
Now that the summer months are over, does that mean that it’s a bad time to sell your home? Not at all! In the autumn months, there is less competition, which equates to a less stressful time to sell. Less multiple bids make it easier on real estate agents. Buyers are not in such a frenzy to purchase a home.
In the fall, people seem to be a little more relaxed. The kids are back in school, which lends to a more structured schedule. The weather is not as oppressive, which means that buyers may be a little happier! Especially if their favorite drink of choice in their hand.
In the example above, if you waited to sell your home until the fall, you might sell your home for a few thousand dollars less, but you are likely to have a much less stressful time doing so. It’s not a bad trade off in my opinion!
What About the Appraised Value?
You may be wondering about how your home will appraise during the fall months? When appraising properties, appraisers will pull the most recent comparable sales. In October, we are going to be looking at sales from July through September. (If possible) Those happen to be some of the months when the prices are at peak levels.
Here is another chart from the Cleveland area. Notice that sales prices are at their lowest point in January. That makes sense, since there is less competition in the winter months. And again, sales prices peak around July.
For appraisals being completed in the fall months, appraisers are pulling sales from the peak months. While that is not a guarantee that your home will appraise at the purchase price, if you have priced your home based upon what other comparable sales have sold for in the summer months, it should appraise!
If you’re thinking of selling your home in the fall, go for it! What you lose in terms of a few thousand dollars may well be worth it in terms of less stress and a more positive selling experience!
Enjoy the crisp weather, the corn mazes, the PSL’s or hot cider. Enjoy spending time with your family. If you have children that are back in school, enjoy the more structured schedule. It’s a great time of the year no matter what you’re doing!
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Jamie Owen is a State Certified Residential Real Estate Appraiser located in Cleveland, Ohio. He grew up in Denver, Colorado and moved to Ohio in 1996. He has been an appraiser since 1998 and continues to work full time as an independent fee appraiser. Jamie has completed more than 7,000 appraisals in his career. He writes a weekly blog at www.clevelandappraisalblog.com, where he writes on topics related to real estate appraising and other real estate related topics. Jamie enjoys sharing information with others about the appraisal profession, while at the same time learning from other real estate professionals.