Interpreting Those Boring Numbers

August 10, 2010 By

You may be working with an agent, who like me, recognizes an educated client is a happy client. If not, I offer you some information to chew on. I recognize many of you reading this are qualified to buy (a great thing in this market), but perhaps waiting for property to drop further (a bad thing because you are missing an opportunity to invest in a home and move on with your life).

LINK (Listing Information Network), one of two MLS (Multiple Listing Service) systems that serve the Boston market, recently published their second quarter real estate data. There are lots of juicy details (yes, I’m an economist at heart) that will bore most of you, but the one item of particular interest I would like to share with my clients is, LINKs 2010 Second Quarter Sales Summary.

This Summary information shows a snap shot of Metro Boston neighborhoods, namely Back Bay, Beacon Hill, Charlestown, Fenway, Leather District, Midtown, North End, Seaport, South Boston, South End, Waterfront, and West End. It’s a quick look the following items that are captured: Property Sales, Average Sale Price, Median Sale Price, Average Price Per Square Foot, Median Price Per Square Foot and Days on Market.

Yes, much of the data reported by LINK may seem encrypted, dry and boring, but, like medicine it needs to be taken. The information is important and relevant to those of you seriously buying a home. Ask your REALTOR® to interpret information with you. Review recent sales in a particular neighborhood of interest including active, sold and under agreement. Consider the full picture of all condos in a neighborhood of interest, and then and only then, narrow it down to like property. Compare apples to apples. You will want to review price per square foot of property in a 90 day range. Why? Because unless you buy the home with cash, you will need financing and when you need financing that means a lender will need to get the property appraised. Because property values have dropped and the market is continuously changing, appraisers will review like property (similar living area, bedrooms etc) in a 1-5 mile radius within the past 60-90 days. Reviewing price per square foot by Boston neighborhood should be a point of interest to you and your Realtor when you are buying or selling property. This baseline information helps to compare prices, understand buyer trends and economic activity. There’s more digging your REALTOR® will have to do, but it’s a good starting point.

Another important factor is DOM or rather Days on Market. Typically a high DOM is seen to represent that a property is over priced and while that is some times the case it’s not always the reason. Real estate fact 101 is that any home even one with a rail road track running through it should sell in 30 days. When a home isn’t sold within a 30-45 DOM, it could mean a number of things, including

  • There’s a problem financing the property
  • A buyer made an offer but had problems qualifying (for a loan)
  • The listing agent over priced the property to get the business
  • The seller simply is unreasonable and emotionally charged

Your REALTOR®, particularly in this case a Buyer Agent or Representative, is trained to investigate all these little nuances, like a detective they are versed in digging up important and useful information to present to you. Information you can use to negotiate. Important wouldn’t you agree?

(South Boston) Notable Neighborhood:

The one neighborhood that continues to “rock” is South Boston.  Put another way, South Boston offers the best bargains in town. Compared to other neighborhoods on Link’s 2010 Second Quarter Sales Summary, South Boston homes are priced the lowest and seem to be most active. The price per square foot is $376.60, the Average Sale Price was $363,659. Comparatively speaking, the number of sales are highest at 202 units sold 2nd Quarter 2010.

The average DOM is 72, which tells me agents are pricing units to market or rather this is an indication that the homes in the neighborhood are priced to where/what the consumer is willing to pay. Demand = Supply. The lower the number the quicker the home was sold. Some may argue the area is over developed, however, having investigated many homes for my buyers over the past few months, I’ve observed that availability of condos on the market and quality product are mutually exclusive. Homes are priced competitively and the quality is excellent.

South Boston is a vibrant town with the best of all worlds! It has a neighborhood feel, a small community close to the water and only a few minutes from Back Bay or in another direction to the financial district and the Seaport area. Literally, a short bus ride in any direction.

I hope you find this information useful!

Filed Under: Boston Condo Statistics

Psychological Obstacles of Selling

August 3, 2010 By

Buying and selling real estate is a very emotional and psychological experience. Perhaps you’ve been on one of the two sides at some point in your life. You know when you’ve had to either decide on a minimum number to sell your home or maximum number to buy a home? Yes, that fun game of going back and forth for weeks negotiating just to end up at a stalemate feeling frustrated, deflated and back at square one.

It rarely comes as a surprise when I meet with a Boston seller and upon our first consultation they make an irrational statement about what their home is worth. Their chest sort of puffs out and they become animated explaining just why their home is worth what they say it’s worth. None of it is based on market data. It’s all about what they think it’s worth. The dialogue is actually good to hear as it allows me to gauge the person and their level of emotional connection and commitment to the transaction. I’ve had sellers insist on pricing their homes up to 40% above fair market price regardless of having seen data that advises them against doing so. When this happens, I graciously walk away because in the end the experience is like swimming rip tide the wrong way. You just end up getting swallowed up and die. These folks are not ready to move on with their lives, but perhaps are looking to make the lives of others miserable. No thanks.

Okay, so by nature I’m somewhat of an idealist, but my experience has made me a realist. First and foremost, my role is to educate and consult clients to the best of my ability so that they may make a decision, an educated decision. The information I provide may not always be welcome news, but, it is information based on fact and in essence therefore a snapshot of reality. Unfortunately, not everyone is ready to deal with their reality. My goal is to come up with the best outcome for my clients and at times that means breaking even or plugging up the projectile bleeding before foreclosure. So what can a seller do to avoid psychological obstacles of selling real estate that will lead them to stalemate?

  1. Be Committed: Assess your life and decide if you are really ready to sell your property. If not, do not waste your time nor anyone else’s.
  2. Separate Your Psychological Self from Your Physical Home: Sure, you’ve owned your home for so many years or cared for your investment property for a long time, and have natural emotional attachments to it, but try to disassociate yourself from the home. Perhaps envision yourself in an upgrade or another neighborhood, as a next step in your life.
  3. Stay Present: Focus on your finances today, not the money you spent yesterday. You may not be able to recoup your loses, but consider that delaying a decision to sell today may put you in worse financial circumstances tomorrow.
  4. Be Real About What to Recoup: After going through your inventory of various projects, such as painting the walls, building that special California style closet, or opening up a room for that open layout feel, consider what you may be able to pass on to a buyer and what you may not. For example, if your condo association recently had a special assessment to repair the roof, you may not be able to pass the cost on since it is upgrading the building, not your individual unit. You can’t expect to get back dollar for dollar on some investments like painting and sweat equity, but upgrading the windows, front door, kitchen, bathroom or deck is a different story. Have a trained and reputable Realtor® assist with evaluating your “inventory”.

As you begin the process of selling your home, work with a Realtor® who will guide you through psychological obstacles – some obvious and some not so much. Their role should be to help you so that you don’t find yourself at a stalemate. Selling and buying is really about moving on with your life. Accepting reality sooner rather than later may save you some money in your pocket, but more importantly, it will save time on your heart. And in the end isn’t that what it’s all about?

Filed Under: Seller Advice