Archive for October, 2008
Sellers-Are you getting the full story on your Neighborhood?
October 18th, 2008 Categories: Selling Thoughts
It doesn’t matter if you are a buyer or seller in today’s Northern Virginia market reading the newspapers or listening to the TV news can completely make you lose your equilibrium. The best advice that anyone can give you is not to rely on the paper or news reports to help you make a decision on either the listing price of your home or what price to offer.
Instead you need to turn to a local Realtor® with knowledge of your area to help you decide about pricing. Not all agents look at a neighborhood and see the same number so it is important to understand how they derive their data. For example if you are getting ready to list your home for sale an agent might present you with sales from the last three months and show you an average sales to list ratio. This is a good start but it isn’t the entire story that you need to consider.
Most agents look at the last list price of a home and compare that to the final sales price and say homes in your neighborhood are selling for 96% of list price. But was the final list price the original list price? Homes in the neighborhood could have originally been listed for higher and then the price dropped one or more times until they reached a price where an offer was made. When an agent looks at those numbers they may find that the true list price to sales price may be 90%.
Here is an example of a few recent sales in a West Springfield neighborhood:
Now take a look at the second set of numbers for the same townhouses:
As you can see there is a difference in the list to sales price percentage when you go back to the original list price. If sales prices in your neighborhood are coming down as these are then you begin to understand that only looking at one set of numbers isn’t giving you the true picture of the list to sales price ratio.
There are additional numbers in a market report that are critical to your pricing decision as well. If you are interested in learning more about how to price your home right in today’s market for the best chance of putting a SOLD sign in your yard give me a call. I’d be glad to walk you through multiple pricing strategies and show you my list to sales ratio numbers for 2008.
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Northern Virginia Market Reports-Get the Data Right
October 7th, 2008 Categories: Buyers Corner, Local Market Updates, Real Estate Ramblings
We hear the doom and gloom on the real estate market everyday on the news. We remind ourselves and our clients regularly that all real estate is local and what they read in the Wall Street Journal may not translate to their neighborhood. So when we make the decision to post a market report about our own area don’t we have a duty to make sure that the data we post is accurate? Will our market reports picked up by Google and spread throughout the blogosphere create more concerns if they are inaccurate?
Recently I’ve been doing some “fact checking” on local market reports posted on a variety of blogs across the Northern Virginia area and found some major discrepancies in market data. We tend to forget that most of the data we have access to ourselves is also now available to the average person with a computer. So not only can other agents “fact check” our market reports but so can a savvy buyer or seller. I often check the MLS sales data against the local county tax records something that anyone can do. Not all sales are reflected in the MLS at the time they happen. New home sales may not appear until the end of the year, if an agent was involved and never if there was no agent involved. The same is true with FSBO transactions. Then you get into the naming conventions in a neighborhood. Not all agents know that what might look like one neighborhood in a basic MLS search might actually be multiple sections of a neighborhood with different names.
If we are going to post a market report are we ready to stand behind our data. If a consumer reads our reports and asks the question how accurate is our report can we provide the data to back it up? If market reports are close then it would be easy to say that it was the time that the agent compiled their data but if they are significantly different how do they decide who is right? Recently I came across a market report that showed only one townhouse sale in a Prince William neighborhood in 2008 and only two currently on the market. Since I had sold a townhouse in the neighborhood I knew that data wasn’t correct. In fact 18 townhouses have sold in the neighborhood in 2008 and 4 under contract. That is not an insignficant difference in data.
If as agents we want to help stem some of the fears of our clients and our prospective clients then we need to be diligent that the data we post is accurate. No one is expecting us to be statisticians and get every analysis dead on. I took two semesters of statistics in graduate school and there is not way I’m going to even come close to knowing all the formulas needed to compile 100% accurate variables. However, consumers do rely on us for basic accurate information and if we don’t get that right then we need to be ready for a long cold winter.
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Marketing Reports-The Paul Harvey View
October 3rd, 2008 Categories: Buyers Corner, Local Market Updates
I rarely post market reports. On occasion when an area is on the rise or on a steep decline as the market in Prince William County has been over the last year it is interesting to post a perspective. The reason I don’t post many market reports is because they don’t tell the whole story about a community and can often lead to confusion. As Paul Harvey would say ” and now for the rest of the story.”
A perfect example of how a market report can confuse buyers and sellers is to look at Belmont Bay in Prince William County. To date in 2008 there have been 19 settled condo transactions in the neighborhood. Six of those transactions are new construction either in HarborSide or River Club 2 and the other 13 are spread out in the other condo buildings in the neighborhood.
Prices have ranged from a low of $237,000 to a high of $490,000. This is obviously a wide range and it would lead a buyer to question why would anyone pay $490,000 for a condo when you could buy one for $237,000? The difference between the two units is significant and unravels the story of the price difference. The unit that sold at $237,000 was a ground floor condo in foreclosure. The only view that this unit has is of a street and a small view of the community tennis courts on the side. It does not have a balcony and due to its location provides absolutely no privacy for the owner. In fact the previous tenants who lived in the property said they were never able to open their blinds so it was like living in a cave.
The highest priced unit at $490,000 sits on the top floor with views of the Belmont Bay Marina and Occoquan River. It has light all the time and a balcony with terrific views. The owners could leave their blinds open 24 x 7 if they wanted and no one is going to be walking by peering in their window at any time day or night. Each of the other condos that have sold can tell similar stories. Since I have sold 6 condos in the neighborhood this year and been in all of the ones for sale I could easily describe the differences.
If I posted a market report that is only based on number of units sold and the price range of those units I’ve only told you part of the story. When I break it down to tell you the differences in the units, the differences in the amenities in the buildings and the differences in the views then the picture becomes a whole lot clearer.
Thanks Paul Harvey for always reminding us that there is another part to every story. In the case of market reports the true picture of a neighborhood goes deeper than the latest MLS statistics.
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