I am having a very difficult time training some agents who still want to believe that “a house is worth what a buyer is willing to pay for it.” That is just SO not true. That runs more along the lines of “A sucker is born every minute.”
On the other hand I once fired an agent for saying, “I won’t let you pay a dime more than the property is worth!” If you are pretending that you can value a property “to the dime” you are just blowing hot air.
I spend two to three hours a week, outside of my normal real estate activities, training agents on a variety of topics. Many who have had their licenses for 2-3 years have never had to fine tune their home valuation skills, and find themselves feeling like they are rookies again. It’s a difficult change to embrace, but necessary. When there were five offers, buyer agent skills involved “how to win the bid” more than what is this house “worth”. When garnering an offer for a seller client, how to handle multiple offers was more important than how to price the property in the first place. That is no longer the case, and agents must spend time learning how to value property, with a reasonable degree of accuracy.
One of my mantras is “Agents are not allowed to use the word like”, unless they are referring to what a majority of buyers may like. “I like” coming from an agent, is like a stock broker recommending that you buy Target stock because he enjoys his shopping experience at that store better than at Fred Meyers. I often tell agents that they are not allowed to personally like or dislike properties. Whether or not you personally like a property is often a sign that you have not yet honed your valuation skills to the level of a true professional. When an agent stops saying “I like”, that is the day they begin to cross over from apprentice to professional.
This changing market leaves much less margin for error. Every week we go out and look at six to eight properties (Broker’s Opens) and come back and value them. To many this seems like a foreign exercise. Some still say “but I think my buyer would like…” or “I didn’t like”.
I don’t expect everyone to buy into the concept that an agent really can know what a property is worth. But I do think it’s odd that they all seem to know what it’s worth when a seller won’t list it at “the right price”, but then play dumb when the buyer wants to know what it’s worth. The conversation all too often turns to what it will take to “get it” vs. what it’s worth, when there is a buyer client in the room vs. a seller client.
Maybe this is just part of the 15 year old problem of a double standard for buyer clients vs. seller clients. Maybe it’s the conflict of interest involved in the agent needing the price to be fairly accuate in order to sell it for a seller, but not wanting to value it properly for a buyer client, because then they might have to say DON’T buy it.
We’re definitely “back to basics” with regard to real estate agent training classes. Those who refuse to accept any valuation technique beyond “it’s worth whatever a buyer is willing to pay for it”, will be left in the dust . If agents continue to refuse to accept the fact that property valuation is one of their duties as an agent, I may have to switch to holding these classes for people who are buying property vs. those charged with guiding them well through the process.
Licensing criteria does not involve training agents in an ongoing way in the art of home valuation. All to often, Brokers want to say “go out and SELL!”. Maybe it’s time for the buyers themselves to be able to access classes on home valuation techniques that go well beyond “price per square foot” and “the comps”. For now, suffice it to say that “comps” are not relevant to your valuation, unless you have at least driven by that “comp” to see if it had obvious differences beyond the photos available in the mls. “comps” are not properties “for sale”. “Comps” are properties that have SOLD.
And in this changing market, if it sold before August of 2007…it ain’t a comp, unless you make appropriate adjustments for what happened in the latter part of 2007.
I remember you saying sometime back that you would price any property 5% above the last sold comparable property…are you turning back on that?
Hmmm…
Are you suggesting there is a model for home valuation that is universal?
Please elaborate.
So, tell us your secrets on pricing homes.
ARDELL, Arriving at the right price, be it for a a Seller or a Buyer, is very very important. Nothing irks me more than hearing a buyers agent say the right price is 5% below list price. What the heck is that about? The list price may or may not have anything to do with the value of the property. In fact in my market, most of the list prices I see aren’t anywhere near the true value. They are either grossly overpriced or grossly under priced(short sale).
Arriving at the right price takes market knowledge AND experience. Especially now that even recent comps could be way off.
As a listing broker arriving at the right price is imperative. As a buyers broker arriving at the right price could be the difference between the buyer getting a home or not. Paying the list price or more could very well be a good deal. If the buyer and their agent get stuck on paying 5% less than list they could very well be missing out on some good opportunities.
Unfortunately, pricing, is one of the skills that slipped through the cracks over the last few years. Nows the time to learn it.
The “right” price is a price that sells a property quickly. If the property hasn’t sold in a month then the price is too high. It’s that simple.
This principal is of particular importance in a declining market (like we have now). You do NOT want to be chasing the market down. So what if your home is priced within the same range as all the other listings. If inventory isn’t moving, then that shows that everyone has their places mis-priced.
In my view (having sold 3 of my own homes), I always want to price my home BELOW what the current market is. I want buyers to view my place as the best deal available.
By the time you figure out what a buyer is willing to pay, it is too late to use that information (because the house has been sold). Valuation is important so that you can predict the price at which a buyer will pay.
Alan,
So, where do you think the sellers are going wrong with their “valuations”, in places like San Diego, Las Vegas, or Florida, when properties sit on the market forever, and it seems like nothing is moving at all?
Would it be true to say that any home that doesn’t sell within 2 months was over-priced?
I don’t know what the specific cut off date is for saying a price is too high, but, yes, if a house is not selling then it is priced too high.
I’ve been thinking that if I were to sell a house again I might publish a discount schedule. Set a starting price and announce something like “every week I take another $1000 off.” If someone wants to make a lower offer I simply tell them to wait X weeks and hope someone else doesn’t buy it in the meantime. That is a classic Dutch auction.
We are seeing a similar kind of buyer reticence in the debt markets these days. Many investors, and banks, who own structured debt securities claim there is “no market” for them, and that they can’t really value them because there are no bids.
This is innacurate. There would be bids if buyers thought the owners would be willing to accept truly depressed values. There are plenty of buyers for these asset backed securities at 10 cents on the dollar, but the owners of these securities aren’t even willing to accept 70 cents on the dollar in most cases. Thus, the owners of these securities keep hanging on, hoping that the market will improve, and keep dribbling out write-downs month after month as they are forced to acknowledge that the market price has declined even more.
These guys would have been SO much better off just dumping their assets for 90 cents on the dollar last summer, but no one wanted to accept “below par”. Now they would be eager just to take 70% (although no one will buy at even that price now).
Interestingly, the only sales of these securities taking place are under distress, where a lender siezes assets, or a fund is forced into liquidation, etc. When this happens the fire-sale prices now become the only recorded market prices around.
Likewise, in residential housing markets, there can be situations where virtually all the homes are significantly priced above what the buyers are willing to pay, resulting in a long drawn out waiting game. Here too, the only sales that seem to occur in these depressed markets are of a distressed nature. Owner occupied homes, where there is no financial stress, just don’t sell (i.e. they are the least willing to drop their prices to the clearing rate).
I certainly agree that valuation is an art. An agent has to deal with a home seller who is still 6 months behind the current market facts, and then deal with agents who “price to list” as opposed to “price to sell’.
You can be bulls-eye correct with your valuations only to lose business to someone with 2-3 price reductions. I think in this business, they don’t pay a second place finish.
I agree comps are properties that have sold. And they are also comparable properties that has sold–that seems to be forgotten a lot of the time. My often repeated example of that is not recognizing the distinction between a 1.5 and 1.75 bath home.
I don’t agree that you have to make an adjustment for what has happened since August, because that depends on the area. For some areas/properties, that adjustment is zero. But at this point in time that’s becoming somewhat of a moot point since we’re getting to be 6 months out from then anyway. While there are some properties you might have to go more than six months out, that isn’t true for most properties, so typically you shouldn’t be looking at prior to September in any event. Thus only the September and maybe the first-half October closings would be suspect.
A house that doesn’t sell in a month or two might still be priced appropriately IF there are other reasons that might impact buyer interest. We’ve all seen homes with no pictures or terrible pictures, and buyers use pictures to screen out homes that they don’t even go see. I’ve also seen plenty of listings with no room size information, incorrect information such as a home being listed in the wrong area/high school or as having zero bathrooms. Many of these homes could be priced appropriately, but the buyer can’t find them or the marketing doesn’t encourage a buyer to come see them.
There are also plenty of sellers that sabotage their home sale by refusing to leave for showings, not letting buyers come at a time that is convenient for the buyer, not putting the house on a lockbox, sellers that don’t keep the house clean & picked up, and sellers that refuse to make the changes so that the house will show well.
If everything is being done properly, and the house shows as well as it can for the features it contains, and it STILL isn’t sold in a couple of months, then the price is definitely too high for the current market. That doesn’t mean that it might not sell to someone eventually, but some buyers overpay for homes…and create comps that are overly inflated.
My broker teaches using supply & demand and a subdivision’s average annual appreciation, combined with unique features of the home, as a way to value a home. The result has been one of the highest % of sales in 60 days or less over the last few years compared to almost every other office/brand in our market.
Unless you are in a market that just has no buyer traffic, every house will see when it it the best home in the comparable area, with the best features, for the best price.
What about a property has been on the market for 13 months with no price reductions and then sells, was it priced to high?
Apologies. It’s been a long day and I just got in at 10 p.m. I have a 9 a.m. appointment, but will get to these questions ASAP, likely by tomorrow afternoon.
Sniglet wrote:
“These guys would have been SO much better off just dumping their assets for 90 cents on the dollar last summer, but no one wanted to accept “below par
Call them bottom feeders if you want.
If a house sells, then it was “priced” right, no matter how long it takes. Of course, if someone had to cover carrying costs for a year carrying two mortgages, hoping for the place to sell, then it might have been worth taking a hit earlier on.
Without answering everyone individually, I’ll address a few points that came up repeatedly.
Pricing a property for a seller client is different than pricing a property for a buyer client. I would never price a property for a buyer client at 5% up from estimated sale price. That is a method for determining a list price, not a sale price. Except in very hot markets, list price and sale price are not one in the same.
We are not currently in a market that would call for price changes every 30 days, and have not been since August. Price changes are determined by a different method. If you are getting NO showings, than your price is too high and must be adjusted. You can’t sell your home if no one is coming to see it.
If you have had 20 people view your home and 5 of those people bought homes at a similar price, than you are too high for your market. 5 other homes at similar value selling while yours did not, even 3 buyers choosing other homes of similar value, would indicate a price change is in order. That could happen in 30 days or 60 days or sometimes 90 days. The fewer the buyers, the longer it may take to test your price.
Take the same example but say 20 people viewed your home, but all of them went home and bought nothing. That could just mean no one is pulling the trigger due to interest rates or because they feel better homes may come on market. If five of 20 bought homes, but all paid substantially more than the price of your home, that does not say you are overpriced. That simply says that “wave of buyers” adjusted their spending price to suit their wants and desires. That scenario does not reflect negatively on your price.
However those answers address many of the questions that talk more about how a seller prices a house, or how an agent prices a house for a seller client. This post is about how an agent values a property for a buyer client, and that is a completely different animal. I’ll address valuing a property for a buyer client in a different comment as soon as I can. It’s midnight…and time for sleep 🙂
As to Ardell’s comments about people going through, that is important. But it’s also important to have some idea of “hits” on the NWMLS and other sites. There’s sort of two levels bad. If no one is going through in person, that’s bad. But if no one is even searching for houses of the same type in that area at that price, that’s really bad. Unfortunately, I don’t think all agents necessarily pass this information along, so the sellers don’t have the assistance they need with the thing they need the most assistance with.
As to the house selling after 12 months, that depends. If the owner was living there anyway, and didn’t really care when it sold, that wouldn’t be so bad. But if the house is vacant, and heavily encumbered, then it could be a lower price earlier would have netted more.
Kary,
Hit count is very important to me. For those reading, the hit count is the amount of agents who pull it, not buyers direct. I use a formula of 100 hits to offer that worked well in the past. If you have 100 hits and no offers, that generally is an indication that a price change is warranted. For some properties that can take a short time, for others it can take much longer. Often that is price range driven, but sometimes it is just the difference between “close-in” and not.
Generally, if I get close to 50 hits in the first day, that is an indication that the property will sell quickly.
If average days on market moves from below 30 to 60 or so on average, and I think it will, we will need to adjust our methods of evaluating price. Often, but not always, an agent is quicker to recommend price changes if the agent and seller did not agree on the price in the first place. If the price was in line with what the agent recommended at the beginning, the agent is less likely to jump to price reduction too quickly in a slower market.
M,
The 5% above is for a seller list price. When you price for a seller you go to the high side of a range, when you price for a buyer you go to the lower side of the range. Some buyers need to include all or some of their closing costs, even if they have the downpayment funds. So you need to allow for that scenario.
“The range” is not nearly as wide as a Zillow Zestimate range. Usually you are looking for a property to sell at 98% of asking price give or take, when setting a price for a seller. When you price for a buyer, you are approaching it from the other side of the fence.
There is very little change in the YTD sales from the last quarter of 2007 with SFHs selling at 98% of asking price and condos selling at 99.5% to 100% of asking price as the median. The higher number on the condo side is likely attributable to a larger percentage of those including all or some of the buyer’s closing costs.
You have to leave a bit of room in asking prices to accommodate those who need cash for closing costs. It is better to include them within the original asking price and negotiate down for buyers who don’t need the seller to pay them. I think we will be moving to including requests within closing and not stacking costs on top of the asking price, and the stats are reflecting that to be the norm in the last five months.
Appraisal; an estimate and opinion of value; a conclusion resulting from the analysis of facts. If this is to be a true definition it would seem to me that the price to a buyer client and a seller client would be the same as of the date valuation. In Cowlitz County the median price in October came in at $205,000 dropping to $178,000 by end of January with inventory rising to 12.5 months supply. Supply has been increasing at about 5% per month since last January. FHA limit is at $201,000 and the amount of property going to trustee sale has more than tripled since last July. The demand is still here but the financing is driving the market down. Now to be a buyer of the foreclosed property at trustee sale, before or after the sale, to repair and resale within a year legally one needs to be a registered contractor putting more pressure on the down side of the market. For a $178,000 resale 1% to L&I licensing fee $12,000 bond or cash on account and $18,000 for liability insurance. This market can absorb the fee to L&I and bond cost but not money spent for liability insurance. It takes me and my $300K out because I figure I can only safely do two to three a year, one would have to be done just to cover the liability insurance. What is a small time investor to do? I am not a contractor, I am an investor. At any rate when I place a value on a piece of property I always look at it from a buyer’s point of view because they are the ones with the money. Real Estate is not a liquid asset and if an owner were to place a property on the market clean and spit shined at 3 to 5% below the last comps adjusted monthly in this market place will sell…. Just my opinion buyers, buy payment…
Q-Diddy and Matt,
It usually takes an agent at least three to six months to learn the valuation techniques, if they devote at least 8-16 hours or so a week to that activity.
It generally takes seeing 50 or so comparable properties, and evaluating them one to another in a given market place to fine tune the skill. It is best to look at property in succession that are in the same price range. Seeing a house for $550,000 and then one for $3M and then one for $1.7 in succession pretty much tells you nothing.
You look at 50 houses priced between $550,000 and $650,000 in succession, make notes as to what you think the value is based on property specifics and assessed values. It could take a couple of months to gather data and see 50 or more comparable homes You keep these and then mark them as to actual sale prices when they do sell. For a new agent, the goal is to get to 75% accuracy. No one will ever be able to predict a selling price with 100% accuracy. You keep at it and continue to diminish the margin for error. At one time, only 10% sold outside of value range. In recent years that figure rose to as much as 30% being sold outside of value range when properties were bidding out as the norm.
Generally you do this throughout your entire career and you reach a point where you do not need the sheets or notes and can quickly value a property just by walking in and out with no notes.
Ugly or smelly property should sell for less than inherent value. In recent years the premium for “turnkey’ was growing and growing, as was the premium for true fixer as flippers bid each other out, but that is changing rapidly. Premium for turnkey is still in effect as many people are so busy at work, they don’t want to have to do anything. Just buy it, move in and get back to work.
A formal market analysis was initially introduced not as a way to value property, but as a way to convey that value to the owner in a way they can understand it. Too many agents have bought into the concept of the CMA program and presentation being HOW they value the property, vs. how to display that value to their seller client.
Supply and demand is the final stage of valuation, and one that is continually juggled as nearby properties come on market and/or sell near the subject property. Supply and demand factor never goes away until the property is sold. Once you have a list price, comps are no longer the basis for pricing. Comps are only used to get a list price.
From a buyer’s perspective, valuing the property comes before negotiation. I wrote an offer this week on a short sale where the asking price was inflated by 36% over the value, even after adjusting downward from what the seller owed. You don’t want to offer even 80% of asking price, if the value is 74% under asking price. Be wary of short sales where the loans were cash out refis vs. purchase loans.
BB,
Unfortunately supply and demand in a market where only 3 of 10 homes will sell at all, will take its toll on standard valuation techniques. We are not there, but I think from reading your blog that your area may be.
At that point supply and demand totally takes over a market regardless of valuation skills. When you are in a total buyer’s market, 10 out of 10 properties for sale are NOT going to sell. The ratio of 9 out of 10 will sell vs. 3 out of 10 will sell period, will throw a market down fast as to value. It’s like jumping off a cliff, or more accurately being thrown down a cliff.
I have read that you often tell people not to sell unless they absolutely have to in your marketplace. Good advice. But here in Seattle we are not at that level at this time, not even close.
The busy roads and properties with inherent issues, like near utility towers, are being hit hard right now. But the remainder are still fairly intact as to value.
Sniglet,
Contrary to popular belief, many sellers do not want to sell their home quickly. In fact many are not really ready to think about moving out when they first list their homes. I think you will stop seeing vacant property for sale as the norm as more and more sellers refuse to buy before they sell.
A 30 day price from a BPO perspective, or quick price, is lower than a 60-90 day price. Fast equals cheapest and the majority of sellers would choose higher over faster.
I had some friends in Newcastle who were stuck paying two mortgages for almost a year after buying a new house. In the end they had to reduce their price $100,000. They would have been better off if they had just reduced the price by $140,000 at the very beginning, rather than go through all the expense, and grief, of having two homes for the year.
Somewhere along the line I think their realtor did them a big disservice in helping them find a price.
By the way, my friend’s realtor had them do all kinds of improvement (e.g. roof, kitchen update, etc) that cost around $20K, as well as hire a staging expert.
But why it didn’t occur to this real-estate professional to just reduce the price significantly way at the beginning (instead of in slow incremements through the year) is beyond me.
I think that some realtors play on the home-owners desires to get a good price and aren’t as honest with them as they should be. Either that or some realtors don’t really have a clue about pricing to begin with.
ARDELL, To put things in perspective, we had 19 closing in Poinciana for January out of 1152 active listings!! That’s a 5 year inventory. I have listings that are priced very low and I can’t even get showings on them.
If all the overpriced listings and underpriced listings were removed our inventory would be reduced by about 65% (in my opinion).
Our biggest problem is all the short sale listings. Many of these are priced so low they will never sale. The lenders are not going to accept $.40 on the dollar. But the buyers don’t know that, nor do their agents, so they are placing them under contract and waiting. After 4 months of waiting they end up geting foreclosed on.
The perfectly good buyer is now frustrated because of this and goes back to sitting on the fence. Buyers are being wasted on deals that won’t close.
It’s very frustrating to be a broker in Poinciana Fl right now. And it’s getting worse every day.
Alan,
No matter how good an agent is, often premiums and reductions of value have to be tested, when pricing for a seller client. For instance:
How much will the current buyers in the marketplace reduce a property for being on a busy road? How much will the seller have to reduce the price to get a buyer to even make an offer on a house on a busy road?
With those kinds of factors, no agent can ascertain the price to a certainty without under-cutting the price. Pricing for sellers is not an area that permits undercutting. Pricing for buyers often comes from the standpoint of undercutting.
So an agent price opinion is based on whether they represent the buyer or the seller from the standpoint of “what’s the best one might hope for” to “don’t buy it at all”.
One of the advantages of pricing for a buyer is that 80% or more of the properties don’t need to be valued at all. With a buyer I am determining Yes, No or Maybe first. You only price out the yes homes for the most part. I don’t think I have had a buyer who purchased a home that I marked as a NO!. No means don’t call me to list this if you do buy it when you try to sell it 🙂
BB,
Thank you for that info. I’m sure people in Seattle will find that to be very interesting.
To make matters even worse, while appraisers are supposed to eliminate sales under duress from the comps, in areas where ALL sales or most are under duress, appraisers simply can’t ignore that reality.
Sniglet,
I had three agents come to me with that question in the recent past.
“Can you help me? My listing ins’t selling and the seller wants to know what improvements he can make to get his price?”
One was a condo on the Eastside priced at $315,000. I said drop it to $299,950 and do nothing. The seller was prepared to spend $12,000 on improvements BTW. The property sold within a week.
Another was a home in Shoreline priced at $415,000. Again the seller was prepared to spend at least $10,000. I said price it at $399,950 and do nothing. The property sold within 72 hours.
The last one I did tell to change out the countertop in a bathroom along with the wall color and not change the price. The counterop was peacock blue and very visible while coming up the stairs. The house sold within two weeks after the improvement and the owner was more than capable of making the improvement himself, so the cost was very low.
It never occurred to me that the agent would have recommended the improvements in the first two scenarios. I assumed the seller asked the question without the agent suggesting it. But in that last one I did recommend a change vs. a price change. The first two were obvious because they were each $15,000 over a “price point”. The last one, a price change wouldn’t have helped, at least not a price change in the amount the seller was willing to consider.
There is no one way to do things. In your example the roof may have come up at inspection anyway if they had not made the repairs. You can’t reduce a price to compensate for roof issues. The inspection or the lender if it is really bad, will want those fixed regardless of how low the price is.
Doug,
I agree with you. Pricing it correctly of even under a smidge is a dangerous move in a market where buyers expect a price reduction or two or will submit offers for asking price no matter what you do.
“I don’t agree that you have to make an adjustment for what has happened since August, because that depends on the area.”
Kary,
I’m only seeing one example that MIGHT not be affected by the subprime issue. Are you saying most of King County is still where it was in May or June of 2007? It will be interesting to see how this May and June compare to last year.
bobr,
I did see agents recommending 5% under the last comp in Redondo Beach, CA awhile back, but the sellers wouldn’t do it for the most part. It’s hard to convince a seller to price for less than the neighbors just sold for. I can’t imagine recommending someone do that, but I have a friend in CA who did recommend it without success. None of the sellers would listen. Now they are selling at even lower prices.
I remember the same market conditions back when I started in 1990 in Cherry Hill, NJ. Many owners took their properties off the market vs. pricing under the comps.
Karen makes many excellent points and valuing property properly can still fail if the owner and agent don’t do EVERYTHING else in addition to pricing well.
It drives me NUTS! when an agent is in more of a hurry to get it in the mls and does that before good photos, etc… Kind of like “no wine before its time”, a house should not go into the mls and then replace with good photos a month down the line. Often that is “too little; too late”
“Unless you are in a market that just has no buyer traffic, every house will sell when it it the best home in the comparable area, with the best features, for the best price.”
That last line of Karen’s quoted above is why I think it is important for an agent to be able to say “don’t be this one PERIOD!”. No one can foresee or control the market when you sell, so don’t buy the worst location. One exception could be that it is the only way to get into a certain school district. Trading off wise investment when buying and exchanging that for better schools for your children, is often a good choice. But townhome vs. house in bad location is sometimes a better choice. Depends on the family particulars.
“I’m only seeing one example that MIGHT not be affected by the subprime issue. Are you saying most of King County is still where it was in May or June of 2007? It will be interesting to see how this May and June compare to last year.”
Ardell, you’ve really changed your tune in the past year. Last year you seemed to be ridiculing any suggestion of a downward trend. I’m a fan of the new you.
czb,
I think “ridiculing” is in the eye of the beholder 🙂 Last year I felt that the market, as in prices, would go up in the 2007 “season”. Which it did BTW. This year I feel the market will go down in the 2008 “season” by about the same amount it went up in 2007. How much is that? It’s kind of a reverse pattern. The ones that went up the most will go down the least. The ones that went up the least will go down the most.
From my perspective, calling each year with some forward projection is warranted, and that is what I do. Saying in 2004 or earlier that “some day” it is going to go down, just doesn’t make sense to me and doesn’t make someone right when that eventually happens.
Every agent has to keep their eye on the recent past and the predictable future.
I’m glad you are a fan of the new me. It is true that the more I blog the more I change. Getting on the same page with consumers is a difficult process.
Throwing up the kool-aid is a lot less pleasant than drinking it 🙂
Ardell –
I like your philosophy of your ‘Yes, Maybe, NO homes”, and that there are just some homes that you don’t want your clients to buy. I feel the same way.
I spent today with relocating buyers looking at homes. As we drove up to the first house (which was his top choice based on the MLS listings), I told them that they needed to pass on the house no matter how nice it was inside. It is on the corner of a 4 lane busy street, and it was angled out towards the busy street. The buyer commented that it might be worth it if you could get it for $50,000 less than the similar homes in the subdivision, and I told him that I thought he was wrong. Someday, he’ll want to sell that house, and he doesn’t want to be in a position of it taking a year to sell…while he and his family is living in temporary housing in another city because he had to move for a job.
Somebody will eventually buy homes that are on busy streets or have power line towers behind them, but it won’t be one of my clients.
Instead, these clients settled on two other homes that are both rehabs with the same floor plan. Mr. Buyer likes the one with the fabulous finished basement that includes a bedroom and bathroom better. But, that house has only a basement laundry and the yard is 100% wooded. The other house also has a finished basement, but it doesn’t have the bedroom/bathroom. BUT, it does have a 1st floor laundry room and a yard that not only backs to dense woods, but also has a grassy area that would be useable for pets or playsets. There is no doubt in my mind which is the better house, and I think he is coming around. Someday they will want to sell, and they’ll want to have a house that has the best features around.
Every time I work with a buyer, resale problems are part of every discussion. Just about everyone will eventually need to sell, and there will always be competition that doesn’t have the HUGE resale issues. Working for a buyer’s best interests means that you focus on what can’t be changed (or changed without big expense). Location, floor plan, and lot placement/size just can’t be changed.
As a buyer’s agent, I want my clients to get a home for a good price, but I also want them to get a good home.
Karen,
Are you sure you aren’t me? LOL! I agree with all of it…100%
czb,
I posted that Tam O’Shanter post for you. See? I was right this time last year. That neighborhood did go up about the same amount as it did in the previous year. I didn’t search for a positive story, I simply went to where my last closing was.
I’ll do more of these throughout the year as a counter-balance to the macro King County stats. Micro research in areas I work will be a good exercise in Why do I only or at least mostly work in only the best of neighborhoods 🙂 As I said, “good advices” in a changing market. And that means knowing how to pick them, and not relying on market influences, but a keen sense of what and where.
With a little tlc, I am fairly certain I could sell that property up there for well more than my buyers paid for it, should they ever call me back to sell it. I liked it enough to buy it myself 🙂 I may have to go find me one just like it if and when my house sells. Not on the market yet. No pink trees in bloom yet and I’m not nearly ready.
Ardell wrote: “I’m only seeing one example that MIGHT not be affected by the subprime issue. Are you saying most of King County is still where it was in May or June of 2007? It will be interesting to see how this May and June compare to last year.”
I don’t like making predictions, but I think February will probably be our last month where the YOY comparisons are slightly favorable or about equal. I don’t think we’re going to get the same crazy level of appreciation that we had last year (e.g. the median in March won’t jump $25,000, and then April $10,000 more and then May $5,000 more.)
That said, there are a lot of types of properties in a number of areas where you didn’t see that type of runup on a percentage basis. So for those there’d be no need to adjust (assuming you were going to go that far back for some reason).
Stated differently, I wouldn’t necessarily adjust a comp from July just because it was from July.
Ardell,
“I Like
We’re in year two of the downtown in Colorado Springs. Presently my seller analysis looks like a phone book of info. I start with an annual report, go to all-city stats by MLS area and $25K price increment, then I get to their own Zillow, public record, MLS churned evalution, a matrix of days on market, original asking, final asking and closing costs with expireds than a line graph. Yes, it’s a ton of stuff. Yes, a seller can’t decipher it themself. No, that’s not the point. The point is that when a market changes, a seller deserves tons of options. If their equity is skinny and their time is short. what their home is “worth” is very different than a truly similar property for someone with fatter equity and a few months to spare. We are seeing wild disparities in our 500,000 person market with properties typically selling in less than 30 days or over 120. The under 30 sell closer to asking, the over 120 are typically down 7 to 12% off of original asking and then get dinged for another 3% of asking and probably some costs.
So to that end, I completely AGREE that a property is worth what a buyer says it’s worth. That’s very true in a buyer’s market. But qualifying what really is a buyer’s market is really important. Even within my own market of 500,000, which is not that big compared to many other American markets, there are micro markets with totally different numbers. A big air force relo neighborhood with a $260,000 mean price is showing market time of 3.5 months when the rest of that MLS area is 7.9 months and the city is 9.8 months. So the exhaustive, phonebook evaluation shows all of that data and then allows the consumer to make both an educated pricing decision, but also one that is in line with their needs.
Ardell, I really “enjoy” (no sarcasm, really!) your teaching on the word “like”. It’s a terribly important delineation for the agents to separate their preferences from the consumers and allow their analytical skills to be understood as professional benefits.
Benny,
Loved your blog! I can see right through to you at first glance. Fabulous! and I like what I see as well…
“czb, I posted that Tam O’Shanter post for you”.
Ardell, I am so touched that you would think of me (tears well up in eyes).
LOL, check out tonight’s Sunday Night Stats. Pretty soon they are going to make me post over at Seattle Bubble and kick me off RCG 🙂 Just kidding. I have no pressure here to do anything but tell the truth.