The statistics reflect a radical change in the market: In 2005 we were at the summit of the value market, a seller’s market peak. Today we are in a valley of value, a buyer’s idea of perfect. While it is easier to appreciate how high or low the market is from an extreme position, hindsight is the best vantage point of all. Truth: the average sales price in Rhode Island has dropped from $282,500 to approximately $270,000 in the course of thirty months. East Greenwich has followed the same average adjustment. What makes East Greenwich most challenging is that the last revaluation was done in 2005. The new valuations were certified for the 2006 tax cycle. Buyers have reached an awareness that most of the homes in East Greenwich are selling at less than the assessed value. The problem is most sellers have not been advised of this information. One must remember that assessments are a tax valuation tool rather than a precise metric. The information is intended to be representative of value rather than a representation of absolute value and it is truly time sensitive. The value was set as of December 2005, the peak of the market.
One of the Moorehead houses we were marketing recently had an assessment in the mid 580s. It took almost nine months to sell. One of the challenges was pricing the property to sell in a market in which average sales price was going down. We reduced the list price from the low to 600’s to $565,000. We ultimately closed at $530,000. essentially at 90% of assessment. This is has become more common not less.
The reason this is so important is that historically assessments were significantly lower than fair market value. One would assume that their house was worth more than the tax assessor said it was. This is a new ‘reality.’
There is a more important message. Properties that are selling right now are either ‘wow properties or extremely well priced. “Wow” houses are those few properties that are so awesome that they evoke a ‘must have feeling.’ Wow houses generally represent 5% of the market. They sell quickly and often, even in this market, there are multiple offers.
We just had one in Cowesett that was a fabulous Nantucket Cape with an amazing kitchen. We had multiple bids and it sold quickly. The other groups of properties that are selling well are the ‘extremely well priced’ properties. The phrase sounds something like an oxymoron. Extremely well priced houses are those properties that are five to ten percent below fair price. There are in fact a significant number of those properties right now. They tend to sell quickly and fairly close to value. In short, they are ‘obviously’ a great value. Today that segment of the market is becoming larger due to the large number of REOs. REOs are real estate owned properties. They are owned by banks and financial institutions and are usually the result of foreclosure and short sales. Both of these categories have fluid definitions, so precise analysis of the numbers is difficult.
Right now, approximately 1 in ten properties fit the ‘extremely well priced’ definition.
So what about the remaining 85% of the market? Generally, the prices in the market are, in fact fair. Sellers must allow some room between list price and sales price to allow for negotiation. Of the houses that are selling the difference between final list price and actual sales price is between five and six percent. A house listed at $300,000 on average would sell at $282,000. and $285,000. We have so much inventory right now that it will take ten months to sell all of the single family houses if no new ones come onto the market. Sellers that are selling their properties are pricing just below what the recent sales suggest. This is an absolute acknowledgement that value is ebbing. The good news is that these properties are selling. Not necessarily quickly, but with patience and careful awareness of the details of the market, your house will sell. It is also a time when the assistance of a professional is the most critical. An experienced Realtor will be of great value in generating a sale in this market. So as value ebbs, be pro-active as a seller to reach the goal a sale
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