Housing and Housing Market Trends

A short sale is when a home is sold for less than what is owed and the bank accepts the sales proceeds as full payment. This type of sale is becoming more prevelant as market values go down and unemployment goes up. It can also happen when loan rates reset and mortage payments become too high.

This is often just as difficult for the homeowner because the home is still lost. There are two main advantages to a short sale. First, if done correctly, the bank will not pursue the dificiency. Second, the damage to credit scores will not be quite as bad.

Since short sales homes often sell for less than full market value, a lot of them in a neighborhood can bring prices down even faster.

This is one of an ongoing series of posts about short sales because of their influence on home values

This will be one in a series of posts on how an agent adds value to a real estate transaction.

Almost all of the information available to agents is available to buyers and sellers on the internet. This creates what I call the super empowered client  who at the first meeting often arrives with much of the same data as the agent.

This changes the role of the agent from the provider of information to the person who explains its use. It is in knowing how to turn the available information to the clients advantage that the agent steps in to help.

The value add here is knowledge, or the ability to take data, statistics, and pricing information and turning them into actionable decisions.

Benny Cass in the Washington Post led with a great headline when he said “Only the Freshist Will Do”. He was talking about how important it is to have the most recent sales information when picking a sales price.

Many markets in Montgomery County are dropping at a rate of 1.5% per month. This makes the recent within 6 month of sale standard obsolete. With the market as price sensitive as it is, anything older than 1 month needs to be adjusted for the drop in value over time. Thus a 3 month old sale would have to be adjusted down by -4.5%.

It  is also important to see what a similar home in the neighborhood can be bought for. If a buyer can purchase a home of similar size and condition for much less than a new sale or a time adjusted sale the market price is best found among the active listings.

This situation of active listings being priced lower than sold prices turns traditional pricing methods on its head. Beware of old information and techniques that does not take the above items into account.

One of the first things to do when selling your home is to find out how many months inventory are in your market. Start with your own neighborhood and obtain the following information:

Number and prices of homes activly on the market

Number and prices of homes under contract.

Number and prices of homes sold in the last 6 months

Make a list of the number of homes that went under contract in the last few months. Then divide the number of active homes by the average number of homes that went under contract. Example: 24 homes activly for sale; 3 homes on average go under contract each month. 24 divided by 3 equals 8, or 8 months of inventory.

Make the same calculations for your own zip code to see if your neighborhood is typical of the wider market. Although not part of the months of inventory on the market, use the sales information on homes sold to see how prices are trending and how sold prices compare with the prices of homes on the market.

Did you know that women make approx. 90% of real estate buying decisions?  What this means to sellers of homes is a heavy emphasis on clean, new and fresh. In today’s slower market, it often means new flooring, fresh paint, updated kitchens and baths. This is especially important if the home you are selling is in a neighborhood with five to ten months of housing inventory available to buy. The goal is to give your home the “wow” factor that makes the decision-maker pick your home instead of the other competing homes. Making the home look great for the decision maker, typically a woman in a two-income family between the ages of 24 and 38, is just the price of entry. The home must also be priced right and marketed with the correct combination of internet, print, and MLS advertising and displays. Pricing and display will be the subject of another post.