Positioning Against Actives and Pendings

The closed sales establish the range. They say nothing about which listings a buyer will open on the same afternoon as the subject, and that is the question the list price has to answer. A buyer searching for a house of the subject’s type, size, condition and price tier sees the subject in a list beside the other active listings in that segment. The list price is positioned within the range in relation to that list. This lesson sets out how the office reads active and pending listings, what each of them is evidence of, and how a position inside the range is chosen and written down.

What a buyer sees this week

A buyer’s search returns properties, not comparables. The search is defined by the buyer’s own limits: a property type, a location, a size, a condition the buyer is prepared to take on, and a price ceiling. Everything inside those limits appears together, and the buyer sorts it by whatever the buyer cares about most. The subject competes with what is in that list on the day the buyer looks, not with the sales that closed last spring.

The segment, for this purpose, is defined by the objective facts a search uses: the subject’s property type, its size band, its condition, its site, and its price tier, within the area where buyers of that kind of property look. A remodeled house on a cul-de-sac and a dated house on a collector road may both be colonials of 2,000 square feet in the same market area and still differ in condition and site, the facts that place them in different segments. Positioning begins by identifying which active listings are genuinely in the subject’s segment and setting the rest aside with a note.

What a pending listing is evidence of

A pending sale is the freshest evidence in the analysis. Its contract price is not yet public, but two facts are: the list price at which a buyer stepped forward, and the number of days it took to go under contract, read from the full listing history, since a relisting resets the days on market the MLS shows. A pending that went under contract within a week while listed at that price shows strong buyer response at that level now. A pending that took ninety days and a reduction shows the opposite about its original price, and something about the reduced price. Several pendings in the segment, read together, show where current demand is meeting current asking prices, and they are read against the range: pendings near the top of the closed range that went quickly support a position near the top; pendings that stalled at the top and went under contract only after reductions support a position lower.

A pending does not move the range. It is not a closed sale, its price is not known, and contracts fall apart. It positions.

What an active listing is evidence of

An active listing is the competition and, after substantial exposure without a contract, an indication of a price buyers have not yet accepted. A listing in the subject’s segment at $464,900 after thirty-eight days without a contract has had substantial exposure without buyers committing at that price. Its price is not a data point for the range; it generally marks a level buyers have not yet accepted, and the subject is positioned below it.

A new active, on the market a few days, is competition without a verdict yet. A listing that has been reduced tells two things: the original price did not attract a contract, and the list price is now the reduced figure. The active with the longest exposure in the segment (measured by its full listing history, since a relisting resets the days on market the MLS shows) is often the most useful, because its price has had the most exposure to the segment’s buyers.

The position

With the closed range established and the pendings and actives read, the position is chosen by three questions. Where within the range do the pendings show buyers responding to list prices now? Which actives will the subject appear beside, and is the subject superior, similar or inferior to each in the facts a buyer weighs? And where does the resulting figure fall relative to the price bands buyers search in?

The last question is practical. Buyers commonly set search ceilings at round figures, and a listing just above a common ceiling does not appear in the results of a buyer whose search stops at it. A list price of $462,500 does not appear in a search to $460,000; a list price of $459,900 appears in that search and in searches set higher. Where the range permits, the position is set just under a band edge rather than just over it.

The general practice this course teaches is that the list price is positioned below the most similar active listings when the closed sales support it, so that the subject compares favorably with the listings buyers are currently seeing. A position at the top of the range is supported when the pendings show buyers responding at that level and the subject has no similar active competition beneath it. A position toward the bottom is supported when several similar actives sit below the range’s top or when pendings show that listings near the top went under contract only after reductions.

Writing the position down

The CMA shows the three categories separately: the closed sales in the grid, the pendings beneath it with list price and days to contract, and the actives with list price, days on market and any reduction. A sentence beneath the tables states the range, names the pendings and actives that set the position, and gives the list price recommendation with the reason. That sentence is what the seller reads and what the file records.

Application

The reconciled range for 42 Ledgewood Drive, a 2,000-square-foot colonial in good condition with a two-car garage on an interior street, is $452,000 to $462,000. The tables show:

A first draft of the recommendation reads $464,900, “matching the neighbor.”

The position is reasoned through. The two pendings went under contract within six and eight days while listed at $454,900 and $459,900, which shows buyers responding to list prices within the closed range now. The active at 15 Ledgewood is the subject’s direct competition: same street, same size, same condition, and after thirty-eight days without a contract at $464,900, buyers have generally not been willing to pay that price. Listed at the same figure, the subject would sit beside a listing that has not attracted a contract at that price in 38 days. The Birchwood listing is in a different condition tier and is not the subject’s competition, and the Quarry Road listing is in a different condition and site tier, which is noted rather than argued. The position is $457,900: within the range, in line with the two pendings, below the $464,900 active, and under the $460,000 search band. The sentence beneath the tables reads: “The closed sales support $452,000 to $462,000. Two similar houses went under contract this month, within 6 and 8 days, while listed at $454,900 and $459,900; the most similar active has not attracted a contract in 38 days at $464,900. The recommended list price is $457,900.”

Summary

The closed sales establish the range and the listings a buyer sees this week position the list price within it. Pendings are the freshest evidence, read by list price and days to contract, and they show where buyers are responding now. Actives are the competition, and an active with substantial exposure and no contract generally marks a price buyers have not yet accepted. The position is chosen below the most similar actives when the sales support it, in line with the pendings, and under a search band edge rather than over it, and it is written in a sentence beneath three separate tables.