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Roaches & Bullet Holes Or A Market Decline?

The first task in writing this post was to look up whether "bullet holes" was 1 word or 2. Turns out it's 2 words. Learn something every day right? Or is it everyday?

Anyhow, I went to a bank owned property in Falls Church today.It was disgusting. It was infested by cockroaches (we didn't see any live ones) and a bullet hole in the window (or a run in with a Kevlar beaked crow). What a gem!

The good thing was this client was able to see it as an opportunity, instead of being freaked out. Don't get me wrong, it wasn't my thing, but this isn't about me, this is about the buyer.

It got me thinking about how bank owned properties (and other dumps) affect neighborhood pricing. I've never really believed in broad market data that say that an area has gone up or down. See my UP 14%!? No, Down 26.2%!? DATA. What Is It Good For?

Market Increase??

So when I hear that DC's median price supposedly went UP, I believe an insider that tells me, "That is because the condo market stalled out, fewer condos are selling, so if homes (which cost more) are still selling, it will look as if the average is jumping."

Or Market Decrease?

Well the flipside to the DC example is also true too. If you have a community where a 2 bedroom 1,000 ft unit sold for $400,000 and then a year later a similar 2bdr 1,000 sqft condo sells for $350,000, did the area, drop 10% or is it perhaps... a $50,000 dumpier place? Yes dumpier.

So skip the headlines and dig deeper to find the data that you want.

These "average" numbers don't cover same-home-sales. They cover apples that sold in one area to oranges that sold in the same area.

With all of these bank owned properties, which tend to be dumps (not always), I wonder what part of the "average" drop is uglier houses selling, versus an actual drop in an area.

So make sure you look at specific homes that have sold and adjust for the quality of the unit.

Here is a link to a photo album (which all buyer agents should do) of the bank owned property. (viewer discretion is advised)

- Written by Frank Borges LL0SA Broker FranklyRealty.com

Please report typos.

Posted by FRANK LL0SA- Northern Virginia Broker .:. FranklyRealty.com on 02/15/2008 04:12 PM

Comments (8)

foreclosures

This post has been included in Virginia Information Falls Church City County, VA Information Falls Church, VA Information
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8 Comments on Roaches & Bullet Holes Or A Market Decline?

I came to a similar conclusion in a post I wrote this evening about a question from today's condo buyer. Averages don't tell you enough.

02/15/2008 06:13 PM

by Sharon Simms St Pete Florida CRS CIPS CLHMS (RE/MAX Metro)

Hey Sharon, feel free to post the link.

Frank

02/15/2008 06:16 PM

by Northern Virginia Homes - FRANKLY REAL ESTATE Inc

Even tho Data Quick does a good job of seperating out market trends info from SFR's and Condos in the So Cla market, and it can be a good indicator/guide of what is happening, I always do my own analysis of the area to make sure I have "apples to apples." In a market flooded with REO's/Foreclosures, they are not always the best comps to use and so weeding out REO' short sales etc., from arms-length transactions can take more time and give different results!

02/17/2008 10:00 AM

by Jeremy Cowin (Jeremy Cowin Appraisals)

Hi Frank - Good point - Coming from a relatively small (yet still thriving) condo market I hadn't thought much of the distorted information from different ends of the market.

02/20/2008 12:40 PM

by Sara Goodwin - Portland, Oregon Appraiser (Ashcroft & Associates)

Wow, looked at those photos and that is mild compared to what I've run across. Not only have I had cock roaches fall out of a door frame when I opened the front door, but I've had to be sprayed down with flea spray BEFORE I could get back into my own car! Our investors definitely see these properties as opportunities! The market is declining only so far as what they buyers are willing to pay!

02/20/2008 12:43 PM

by Sandra Workman ABR, CNHS, QSC, RCC (Speckman Realty Inc., GMAC)

Frank, from my perspective I think the numbers are skewed by the realtor associations to make things look better than they actually are. I know here in FL prices are going DOWN, but many people are holding onto their unrealistic prices because someone in the industry told them prices were on the rise. Hmmmmmm. You were right! Apples are being compared to oranges, thus skewing the figures, thus making the market seem like its recovering. BTW, I lived in Falls Church years ago. Nice town.

02/20/2008 03:38 PM

by Terry Haugen STAGE it RIGHT! 321-956-2495 (Stage it Right!)

Thanks Terry. Yeah I have heard from inside sources about the goal of "SPINNING" the data. Why not be truthful?

02/20/2008 04:22 PM

by Northern Virginia Homes - FRANKLY REAL ESTATE Inc

Good advice Frank.

You have a house pictured on your page that sold for $601,000 that looks just like the one I lived in as a child. Can't imagine someone paying that much for that house, but then Arlington has changed a little bit in 40 years. LOL

02/20/2008 09:07 PM

by Greg Myers (Greg Myers Appraisal)

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