A homeowner’s valuation of their homes can sometimes be at odds with a Real Estate professional’s valuation. But in the end, the market is what will determine the selling price of a home.
A “Market Analysis” is the research that real estate professionals do to determine the value of a property. There are 3 specific categories we search: 1.Sold properties 2.On the Market/Active properties, and 3. Did not Sell/Expired properties. We look for properties within the same town, neighborhood or geographic area that are similar to our subject property and are current in each of the categories we search. The most important category is SOLD properties. Looking at similar properties which have sold gives us proof that a group of buyers have determined a fairly tight value range for a particular type of property. Next, we review the active listings that will compete with the subject property. This helps define where we need to place the property in the lineup with its competitors. Finally, we review similar properties that have not been successful in attracting a buyer. Pricing is the stumbling block for nearly all properties that do not sell, so it is critical we clearly communicate to our clients the price point for properties which are similar to their own that has been accepted by buyers and that which has been rejected by buyers, so we can determine a reasonable asking price for our subject property.
“What I Need” is the emotional analysis that most sellers use when determining the value of their property. There are 3 categories most sellers consider in this type of analysis. 1. How much I need to make for my next move 2. How much appreciation I think I deserve 3. Reimbursement for all improvements, maintainance and how much I owe. Refusal to “give-my-house-away” is the mantra for defending a property’s value in the minds of most owners. Some will take into consideration the geographic area, neighborhood, town or type of property when searching out comparable properties, but often times those properties sold in a different market. Sellers rarely acknowledge that foreclosures, short sales or market conditions have impacted their property values to the extent that they have. Pricing is the stumbling block for nearly all properties that do not sell. It is typical and reasonable for all property owners to want to get the highest possible price for their home or investment. If there is no urgent need to sell then it could make sense to wait…. the question is HOW LONG ?
Market Projections are based on sales price analysis and absorption rate trends for any given market and type of property. At Coldwell Banker Village Green Realty I provide the agents and clients with this information. Market projection pricing requires us to look at the trend up or down in terms of sales prices. If prices are moving down we price for that downward number, if stable we price according to our recent solds, and if going up we price for the increase in value. Absorbtion rate is how long it takes the inventory to sell based on the number of homes and number of buyers in a given year. In our market the average home takes almost 12 months to sell, longer for luxury properties and shorter for entry-level housing.
I have just completed my mid year statistics and some interesting facts have emerged. The Residential sales price is down 4% from last year. The number of Residential sales is down 20% from last year, approx 1300 sales to 1000 sales. The inventory is high and the competition is sharp in all price ranges but particularly for properties priced over $600,000. Homes are selling well in the $150,000- $275,000 range and that is a significant part of our local market. Its great news that this range appears stable.
I have no delusions, the market will not rebound any time soon, we are in a holding pattern in most segments. Another dip in prices, if it happens should be minimal, I predict 3-5% if the inventory does not move quickly enough. I am encouraging all my clients to price 5% below your best priced competition if it’s important that they close within 6 months of listing. For the long term view I do not expect any significant increase or decrease in values for at least 3-5 years and even when the market turns it will be slow, small and steady. In my opinion if you are going to wait for the market to “go up” by any amount more than 3-5% you are looking at a long road and it’s likely not to happen before 5 years. My advice: We are near or at bottom so take what you can and do what you can with it so you can move to your next goal. Oh and don’t worry, you are not giving your house away, it will sell at what the market dictates and unfortuantely not what you need.