Wednesday, May 30, 2007

Sales Statistics

National Association of Realtors statistics show that the sales of existing homes dropped by another 2.6%, the slowest in four years. The supply of existing homes increases by 394,000 in April, for a total of 4.2 million units on the market nationally. New construction saw a sales unit increase of 16.2%, although the median price of new homes was down 11.1%. Builders have cut prices to sell sitting inventory, thus the increase in volume, but decrease in price.

Monday, May 14, 2007

What is Market Value?

"I am not going to give it away". I have heard that comment from sellers hundreds of time in my 19 years selling real estate. The assumption is that the seller will not sell the property below what he feels is market value. What is "market value"? "The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: (1) buyer and seller are typically motivated; (2) both parties are well informed or well advised and acting in what they consider their own best interests; (3) a reasonable time is allowed for exposure in the open market; (4) payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and (5) the price represents the normal consideration for the property sold unaffected by special or creative financing or sale concessions granted by anyone associated with the sale." This has been my favorite, though lengthy definition, from Horizon relocation company. Market value can not be "set". If a property has been exposed to the market place for a reasonable period of time, and has not sold, then the market has rejected the price. In other words, buyers have not deemed the list price to represent the actual "value" of the property. When the price equals the point of demand, then the price will be at market value, and the property will sell. "Giving the property away" implies that market value is incorrect. It never is.