Why June 30th is important in Real Estate

Why June 30th is important in Real Estate

The Curious Case of June 30: The Day of Expired and Canceled Listings

As a real estate professional, one of the most intriguing stats I’ve seen is the spike in expired and canceled listings that occur every year on June 30. I asked myself “why.” When I thought about it, I realized this stat isn’t random; it stems from the time-frames found in listing agreements and the timing as to when the listings were signed. I’ll explain more about what I am referring to below.

Understanding Listing Agreement Time-Frames

Most sellers sign listing agreements with their real estate agents for specific timeframes, typically 3 months or 6 months. These contracts indicate the time at which an agent has the exclusive right to sell the property. If the property doesn’t sell within this period, the listing either expires or gets canceled.

The 6-Month Agreement

The 6-month listing agreements signed during the holiday season are a significant contributor to the June 30 spike. Here’s why:

  1. Holiday Season Signings: These sellers list their homes during the holiday season, a period traditionally slower for real estate. The listings often extend from December into June. The sellers that are looking to list their homes above market value are the ones that are impacted the most during the holidays.

Let me also say we are a little bit more immune to the Holiday listings in Orange County than most parts of the US. Why? Well our year-round, nice weather gives us the opportunity to be able to show homes, even in the winter months. We don’t have to worry about shoveling a driveway to get the house ready for a showing, or scraping a windshield before we put buyers in our care for the home tour.

  1. Slow Start: The holiday season and the early months of the year see less buyer activity nationally, resulting in slower sales for some. Real estate activity usually picks up in February (post- Super Bowl) as the spring market approaches.
  2. Stale Listings: By June, homes listed in December have been on the market for 6 months. If sellers were not motivated or flexible with pricing, these listings become stale. Buyers tend to overlook properties that have been on the market for extended periods, reducing their chances of selling.
  3. Price Adjustments: Sellers who resist lowering their prices to reflect market conditions often see their homes sit unsold. By the end of June, these properties either expire or are canceled, contributing to the spike.

The 3-Month Agreement

Springtime is synonymous with the real estate selling season. Here’s how 3-month agreements play into the June 30 trend:

  1. Spring Listings: Many sellers aim to take advantage of the heightened buyer interest during spring. These listings typically begin in March or April.
  2. Overpricing: Sellers often get ahead of themselves during the spring market. The optimism of the season leads some to overprice their homes, hoping to “test the market.” This strategy rarely pays off.
  3. Market Dynamics: Homes priced at or near market value tend to sell quickly in the spring. However, those listed above market value struggle to attract offers. These overpriced listings often linger, leading to expiration or cancellation by the end of June.

Lessons for Sellers

Understanding these cycles can help sellers make more informed decisions about their listing strategies. Here are a few key takeaways:

  1. Realistic Pricing: Pricing your home correctly from the start is crucial. Overpricing can lead to a property becoming stale, making it harder to sell in the long run.
  2. Market Conditions: Be aware of market conditions and be willing to adjust your price if necessary. A property that doesn’t sell within a reasonable timeframe may need a price reduction to attract buyers.
  3. Motivation and Flexibility: Sellers should be prepared to negotiate and make necessary adjustments to their listing. A motivated seller who is flexible with pricing and terms is more likely to achieve a successful sale.
  4. Strategic Listing Timing: Consider the timing of your listing. While the spring is a popular time to list, ensure that your pricing and marketing strategies are aligned with market conditions to avoid becoming one of the many expired or canceled listings on June 30.

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