I have suggested in my last few posts that there is so much information available about statistics and trends in Real Estate that we should be clearer on where the market is going than ever. I have also stated this is not the case because for every story with something positive (foreclosures at lowest numbers in 4 years, prices up in May and June), there is an equal negative (unemployment unexpectedly higher, closings off 30% from 2010). Because Real Estate is about numbers, and numbers can be easily manipulated, I like to share what I know is happening right now in Mass. and what I think we will continue to see for the next few years. Hopefully this explanation will eliminate confusion for buyers and sellers alike so that they can buy or sell with confidence. Or at least I hope it does. I call it the "20-60-20" rule of Real Estate, and understanding which group the home you are thinking of buying or selling falls in, explains a lot.
20% of the homes still sell quickly and for top dollar. Buyers especially know this because buyers looking to buy a high quality home in a good location for a fair price can all tell you about bidding wars and homes selling with the seller requiring that the appraisal contingency being removed because all of the comparables in the area have sold for less. These are homes that are clearly better than the competition due to upgrades, lot size, view, location or all of the above. For example, I recently sold a gorgeous home in Saugus for $910,000 with all of the above features. There really was nothing "comparable" and homes of this square footage typically sell in the $700,000's. Yet there were 4 offers and a very happy buyer and seller. Last week in Easton we had 2 offers on a remodeled 2200 square foot home that sold for $25,000 over the asking price. Both buyers removed the appraisal contingency and agreed to other seller contingencies. Why? Because they were smart enough to know that quality is tough to find and there are always buyers for quality. With all of the negative out there it is important to know that this is happening and will continue to happen. These homes, and many others, represent the 20% of the market that sells QUICKLY and for TOP DOLLAR.
60% of the Homes still sell but they take LONGER than ever and price and marketing are critical. This 60% is where a lot of the confusion comes in. There are currently about alot of homes for sale in Mass. Yet many of these homes will take months and months to sell for 2 reasons. First, buyers are very picky and if a home is just "ok" they will look but often not offer. Second, a majority of homes in this category are short sales. Meaning they can take months and months and months just to get an answer and often the answer is "no". They may get an offer in the first month, but by the time the bank answers with price and terms it will accept, that buyer is gone. Then the agent has to start all over, sometimes with a "pre-approved price" that may no longer be such a good deal. Every agent that handles short sales has been frustrated by banks taking forever to get their valuations and approvals done, only to have to re-market the property in a market that has changed. My record is 13 months for a fixer upper in milton, that when we started was a $350,000 house and when we finished was $305,000. All of this is because the bank simply could not respond in a timely manner. The other part of the 60% is "regular sales" that are nice enough homes but are not priced or marketed aggressively and in this market, those sellers have to wait...and wait...and wait, until there isn't much they compete against and a buyer wants what they have. This happened recently in Westwood where there were a dozen properties for sale in late 2010 that were slowly absorbed and not replaced by new listings. In May, two properties that had been for sale for over 10 months finally sold because the buyers wanted Westwood and there wasn't anything else to choose from. So, 60% of the homes will either be "take forever" short sales or "just ok" regular sales that will sell but NOT quickly and NOT for top dollar.
20% - Uh, oh! Can you imagine what these must be? These are properties that unless they are priced well UNDER market, they just don't move. There are over 100 homes for sale right now in Brockton that have been on the market for over 2 years. This may get worse, especially in the condo market as many complexes have lost their FHA approvals and FHA buyers represent 75% of all condo buyers. Losing the majority of our buyers means watch out for prices here. This 20% can also be unique properties in terms of floor plan or location. I am thinking of a fixer in Sharon that has a nice view and property, but access and floor plan are not for everyone. It has been on the market over 600 days. Want to sell it? REDUCE the price! I am also thinking of dozens of short sales that you can only "drive by". You can't actually show it and the agent and/or the seller are pulling who knows what kind of shenanigans to hold onto the property and avoid foreclosure. These properties are "listed" but they aren't really "for sale." They ultimately sell and often for a below market price but how many buyers want to deal with uncertainty for over a year? Not many.
So you can see why buyers and sellers are more confused than ever. I have had new buyers basically not really believe me when we tell them that a property will go quickly (it's in the top 20%), and then they see it with their own eyes and don't make that mistake again. I have had sellers that want to be a "little high" or not reduce after 30 showings and no offers. They are in the 60% that 5-7 months may be how long it takes. Sadly, I have had sellers call me, frustrated with their agent because they have been on the market over 6 months with few showings. The agent didn't tell them what they needed to do to no longer be in the bottom 20%. Unless they price it well under market, condition will have to be addressed, buyers are too picky. Knowing which category your home is in can really help you know what to expect in a market that will likely stay this way for a while!
Here are some people that did sell recently and happy just isnt a strong enough word http://www.youtube.com/my_
No comments:
Post a Comment