Wednesday, February 27, 2008
Posted on Wednesday, February 27, 2008 at 01:46PM by Bill Webb Post a Comment As a realtor, I am amazed at how many people look to the internet as the single and most accurate information on the value of their home. Sellers using website such as Zillow and other such companies as the definitive source for a pricing strategy when marketing their home for sale. Likewise buyers use these same resources as a sign of true value when determining how much to offer on a home that is for sale. I have no problem with any of the websites such as Zillow, Redfin or others as tools to use in helping a buyer or a seller with determining value. To think that we would use such information as an absolute is beyond me. The various websites available to today's consumer should be looked at as a set of tools. Many of the available tools are useful in helping us determine a possible range of value for the particular property that we are interested in buying or selling. When we use the internet as a definitive source for value we make the assumption that homes are commodities. Nothing could be further from the truth. Every home in every neighborhood is uniques is some way. It may be in good condition or it may be in poor condition. The floorplan may appeal to some while others would find it undesireable. We can only know these things by seeing the home and knowing what the market expects. Luckily Zillow and some of the others state clearly that their estimates of value are not appraisals and should not be construed as such. Yet we constantly see stories of people who use internet estimates as a true indicator of value and then use these estimates in the selling or buying of a property. Many times these individuals are sorely disappointed with the results. I recently read a story in the USA Today about how the internet is renovating the way that homes are sold. The article talks about a gentleman who listed his home on Zillow at a "Make Me Move" price of $699,000. Weeks later he was about to market the property through an agent at $659,000. This represented an almost 6% reduction in his original price. As luck would have it he recieved an email from someone on the website that was interested in the home. They settled on a price of $619,000 and he paid the agent $3095.00 to handle the paper work. This resulted in a net sale price of $615,905 or 6.5% below where he was going to list with the agent and 12% below his "Make Me Move" price. I do not know the area that this transaction took place in but it is my belief that had the seller enlisted the help of a real estate professional he would have priced his home closer too true market value to begin with, sold it in a shorter timeframe (saving carrying cost) and most likely put more money in his pocket at the end of the day. The article went on to claim how the seller had saved paying a typical 6% commission. As I see it he simply reduced the price by six percent and gave that money to the buyer in the form of a price reduction. At the end of the day, the buyer was most certainly better off having paid significantly below the original asking price. The seller on the other hand came out with far less money than his original asking price. My point is this: Use the internet as a tool in your price discovery process. 1) Use the internet to search for properties that are available in the area that you would like to move to.2) Use the internet to find information about the area that you are moving to.3) Use the internet to help determine cost of living comparisions when moving from one geographic area to another4) Use the internet to see what competition is in the market place when you are getting ready to list your home.5) Use the internet to discover what local economic conditions exist that will affect real estate values in an area. What is going on in Miami has little to do with what is going on in Dallas.6) Use the internet as a marketing vehicle to expose potential buyers to your property. When you are ready to make a move call a professional realtor. A good agent can save you thousands of dollars and can ease the stress of the transaction. The For Sale By Owner community comes to this realization every day. Realtor based transaction will sell much quicker on average and bring much higher sale prices than those of the For Sale By Owner. A home is generally the largest and most important purchase you will make in your lifetime. To handle the transaction in an uninformed and unprepared manner may cost you tens of thousands of dollars and many sleepless nights as well.
Saturday, February 16, 2008
Posted on Saturday, February 16, 2008 at 03:09PM by Bill Webb Post a Comment Plano and the surrounding areas had yet another month of declining numbers from last year. Sales for all of North Texas were down 17%. Plano Sales were down 9% and average price unchanged. Interestingly though, the median price was up 8%. Things were worse in Allen and McKinney with Allen posting a30% drop and McKinney a 28% drop. Frisco was able to show a smaller decrease in units (5%) but the area's average price was down 7% and the median price was down 14%. Builder inventories in the Frisco area are probably the reason for the downward pressure on prices. The days on market time for the area was also significantly up. Plano came in at 88 days followed by McKinney at 88, Frisco at 99 and Allen at 111. This compares with all of North Texas at 88 days. New listings were up by 1% in Plano and total listings were up 6% over the previous year. Allen and McKinney both showed a drop in listings for the month versus January of 2007. McKinney was also down 8% in total listings versus a year ago. Frisco showed a small decrease on the monthly listings but were still 12% ahead in total listings from a year ago. North Texas as a whole posted a 9% decrease on monthly new listings and a 1% increase for total listings versus a year ago. We also have a hotness ratio that is provided to us by the North Texas Real Estate Information System. This ratio is obtain by dividing the pending sales for single family homes by the current inventory. With 126 areas reporting, Plano ranked 16th. They were followed by Allen at 19th, Frisco at 70th and McKinney at 71st. This number could give us some clues as to market direction in a more timely manner than just looking at the months of inventory. We will have more on this number in future articles. So, what do we have? Statistically we have a market that is at a crossroads. We are seeing some numbers decline while other numbers stubbornly hold on to a positive bias. For instance sales for the month in Plano are down 9% from a year ago. Months of inventory however is only at 4.1 which is hardly considered a buyer's market. The road that the market chooses will be unveiled in the next few months. interest rates, recession fears, foreclosures and gas prices could all play a part in the direction we take. Regardless of the direction, I do not think we will see the wild swings that we are seeing across the country. Our gut tells us that business has been stronger in February than it was in January. I believe that the statistics will bear me out, We will continue to watch for trends and let you know as soon as they show up. Stay tuned.