These days home sellers have a wealth of data to call upon to evaluate the Hamilton real estate market. From recent house sales to auction clearance rates and median sales prices, there’s a lot of information to process.
With so much information, it’s easy to overlook one of the most important elements home sellers need to consider when taking their property to market.
It’s stock turnover.
Stock turnover originates in retail. It’s the number of sales divided by the number of units in your inventory. While real estate is very different from retail, the purpose of this formula remains the same: to measure how many times a “product” is sold in a given period.
A low turnover rate means you’re overstocked—the market is flooded with a certain type of property. Meanwhile, a high turnover rate means that that particular property type is in demand.
In real estate, we work out stock turnover by comparing the number of competitor properties on the market to how many properties of that type are actually selling in a month. For example, if there are 10 properties on the market like yours, but only two are selling each month, you’ve got a turnover rate of 20 per cent.
“It’s a really important number to understand,” says Jeremy O’Rourke, Managing Director at Lodge Real Estate. “Homeowners often don’t consider it enough. Even salespeople can not place enough emphasis on it, and that’s a mistake.”
To go back to our previous example, if only two homes are selling per month, it means there is five months worth of stock still on the market when you list. And if you’re the highest priced of all those properties, don’t expect to sell anytime soon.
“Where there is a low demand and an oversupply of homes like yours, you really need to be the top one or top two of those properties on the market,” says Jeremy. “Calculating the stock turnover of homes comparable to yours within your neighbourhood is a good way to assess this.”
The key to getting an accurate picture of real estate stock turnover is to talk to a local real estate agent. Their access to sales data—in particular, recent home sales data that is relevant to your Hamilton suburb—can help you make an accurate assessment of your neighbourhood housing stock.
Moreover, local real estate agents walk and talk to buyers in your area every day. As such, they have a good grasp of how the local market is behaving, what types of property are in demand and what’s not. If a certain property type is attracting six figures every time one of its kind goes to market, chances are they’ll alert you to the opportunity.
“While an agent’s comparative market analysis might tell sellers one thing, real estate agents are trained to read the market and alert sellers when there’s a shortage of a certain property and an opportunity that their property could fetch more than initially predicted,” says Jeremy.
“From there they can devise appropriate promotion and selling strategies to take advantage of the market’s current behaviour.”
As a seller, being able to have a fluent conversation with your salesperson about Hamilton house sales, current selling conditions and the turnover of properties on the market is hugely powerful.
“With these conversations, you can start to build a real understanding of what buyers are doing,” Jeremy says. “Moreover, you can learn what their behaviour looks like and what their preferred selection of properties are.”