PRICE YOUR HOME TO SELL
BY JOHN OCCHI, HEMET REALTOR®
Originally posted to this BLOG
Thanks for coming back. In the first part of this report, we looked at the motivation of the home seller. We asked ourselves some tough questions to help determine what our real motivation is and what condition our home is in, to sell.
Today, we are going to take a look at how we determine who the best REALTOR is for "US" the individual seller. Just like you, each realtor is an individual also, and there is a match that needs to be made.
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Part 2 of 5
Who Is the Best Hemet Realtor?
As much as I wish I could tell you I am, there really is no clear cut answer. The real question is who the best real estate agent for you is. Today's market place has become very diverse. Not long ago, your choices were all the same, just different brands. The big national franchises dominated the real estate industry and other than a few small boutique offices all of the competition was between the mega-brokers.
With the internet and all of the tools available today, the entire process is evolving, yet it really remains the same (again another topic for another article).
My suggestion is to find a Hemet Realtor that 1) you feel comfortable working with and 2) you feel confident in their abilities. Do a gut check and run with your instincts.
The one criteria you should NEVER use for the selection process of a Realtor is what the real estate agent tells you they can sell the home for. A real estate agent NEVER has control over the market conditions. Many Realtors will ‘pitch' their services based on an over-inflated price so they can get the ‘listing', knowing full well they will be back in several weeks for a price reductions. A professional Realtor will always give you the facts along with candid feedback so that you can price your home to sell, within the current market.
Comparative Market Analysis
Any Hemet Real Estate agent worth their salt will prepare a 'Comprehensive Market Analysis' (CMA) that will provide you with the tools necessary to make a sound decision on setting the price of your home. Remember, the decision is all yours.
At a minimum, the CMA will look at different types of listings on the MLS. I believe the local Hemet MLS actually has 10 different classifications of listings. They all boil down to one of 3 different general classifications that need to be considered when pricing your Hemet house for sale.
EXPIREDS
Expired listings are listings that have been on the market, ran the course of the contract period and the contract has expired. These are homes that the market has rejected - typically because of price.
Lets look at the overall numbers from yesterdays article:
Overall Market - EXPIRED
Number of Listings: 41
Average Price: $427,807
Medium Price: $385,000
Total Inventory: $17,540,090
Days On Market: 134.73
Overall Market - SOLD
Number of Listings: 40
Average Price: $346,325
Medium Price: $264,500
Total Inventory: $13,853,000
Days On Market: 87.55
Big difference! These are real numbers from the Hemet MLS for single family residences, covering the period of October 2006, for zip code 92544 in East Hemet.
Notice, just about as many listings expired as sold last month (40/41) - but check out the other numbers. The difference between the Average Price is $81,412. The medium price is even more extreme - $120,500. (Read yesterday's article for discussion on the difference between the Average Price vs. the Medium Price.)
The sad news is that the Expired listings sat on the market for over a month and a half longer (48+ days), with the seller cleaning their home every day for showings that typically did not happen - dashing their hopes of moving some time soon.
Other MLS categories that can be considered with a similar bearing on the MLS are those that have been ‘Cancelled' and ‘Withdrawn'.
ACTIVE
Active listings make up the greatest number of listings, as these are the homes that are currently for sale. These properties are considered to be ‘Inventory' for all Realtors belonging to any MLS. By listing a home in the MLS, the listing agent is contractually bound to pay the selling agent a commission, as it is posted in the MLS. This is perhaps the biggest advantage to listing your home with a Realtor, because through the MLS, your Hemet real estate agent can market your home across town, across the state, across the country and even around the world. The MLS is that powerful. (Remember, buyers use a Realtor for free to help them buy their home, so the Realtors have the buyers.)
Pricing in the Active category can be misleading. It has often been referred to as a fantasy value - it is what the buyer wants to sell for and in many cases it is an over inflated value a real estate agents suggested to get the listing.
One of the best criteria you can use for examining a MLS listing is the ‘Days on Market' (DOM). The DOM will tell you if the home has been on the market for a long time. Once the DOM exceeds the average DOM, you know without certainty there is a price or other issue.
The current single family residences stats for the Hemet MLS, for the East Hemet zip code of 92544, for looks like this:
Overall Market - ACTIVE
Number of Listings: 291
Average Price: $391,904
Medium Price: $339,900
Total Inventory: $114,044,131
Days On Market: 84.67
Compare these numbers to the SOLD summary above and you will see there is $45,579 difference, representing an approximate 13% difference in price. Even between the Medium value, there is a $75,400 disparity.
Other MLS sub-categories that will include homes that may still be sold are the ‘Back-Up', ‘First Right of Refusal', and ‘Hold - Do Not Show'.
SOLDS
Sold listings tell us the real value of the current market. Looking at the numbers tell us what price point is selling, how much inventory is available, what commission points are selling, and most important what price specific homes in specific neighborhoods are selling for.
These are the actual sales price which offers the best evidence to base the decision of where to price your home. Remember, you want to find homes as similar to yours and as close to yours as possible. This is often very easy to do in established tract home neighborhoods. However in areas like east Hemet where we have so many custom and semi-custom homes we are often left with the task of making numerous adjustments.
For example, when I prepare a CMA, some of the standard adjustments I will use to make the homes appear more similar are:
Square Footage $100 per sq foot
Lot Square Footage $2 per sq ft
Bedroom $10,000 per bedroom
Bathroom $2,500 per bathroom
Age of Home $2,000 per year difference
Pool (in ground - gunite) $20,000
Spa (in ground - gunite) $2,500
View $2,500
There is nothing concrete about these numbers. It really depends on the price range of the home and a number of different factors. The key is to be consistent when comparing the subject property (your home) to the comps.
Of course, the numbers have to be either added or subtracted, depending which side of the equation the difference is on. For example if your home is 2,000 sq ft and the comp is 2,100 sq feet then the 100 sq ft difference would be multiplied by the $100 per sq ft for a $10,000 adjustment that would have to be deducted from the comp in order to make the homes more similar.
Again, I cannot strongly emphasis enough how subjective these numbers are and how open to interpretation they are. As a Realtor, I use my professional opinion. An appraiser goes through a very similar process, but an appraiser is licensed for this specific task and lenders rely on their network of licensed and certified appraisers. Never substitute or confuse a Realtor (or self) prepared CMA with a professional appraisal.
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In the next segment we will take a look at what ‘trends' mean to a market and how they apply to several different principals about pricing a home for sale.
Until next time, Have a Blessed Day,
JOHN OCCHI, HEMET REALTOR
http://www.johnocchi.com/
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