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Dale Athanas' Blog

By Dale Athanas | Agent in Guilford, CT

So, you think it's a bad real estate market?


So, you think it’s a bad real estate market?

 

As a real estate agent, I am often greeted by comments such as, “Is the market as bad as they say?” or “I’d like to sell but everyone says it’s the wrong time.”

 

So just how bad is it? It’s true that residential sales are way down from a few years ago but down from what? Remember, we were in an unsustainable real estate boom so it should have come as no surprise when the market pendulum swung the other way. Let’s take a look at the numbers. We monitor sales in twenty Connecticut towns along the shoreline and immediately inland from East Haven to Niantic. In 2006, 3300 residential properties were sold – in 2009, 2642. Down? Yes, but still a lot of homes were sold. In the 3rd quarter of 2009, sales were up 4.89% over 2008 and in the 4th quarter of 2009, sales were up 30.96% over 2008. Certainly not the doom and gloom that you hear from the talking heads on network news!

 

So, is it the right time or the wrong time to sell your home? Well, that depends on you and your expectations. Did you ever wonder why some homes, even in this market, sell within a few days and others are for sale for so long that the seller’s eventually take them off the market? Consider this, as of the date of this post there are 20 homes listed in the MLS for the twenty towns that we monitor that have been on the market for over a year!  And on the other hand, 2642 homes did sell during the same period. So what’s wrong with this picture? Simple, homes that do not sell are overpriced. In good times and bad, there is always a market for residential real estate. It all comes down to supply and demand. To create demand for your home, it must be priced at fair market value for today’s market.

 

So what do we mean by Fair Market Value and who or what determines it? Good question. As a seller, neither you nor your real estate agent is in control of the market so neither determines fair market value. Fair market value is what a qualified buyer is willing to pay for your home. OK, so how do we determine what a hypothetical buyer will be willing to pay for your home so that we can come up with a realistic listing price?

 

There are two ways of determining a listing price that will result in fair market value for your home. A market analysis performed by your real estate agent and an independent appraisal performed by a licensed appraiser. Both approaches will use recently sold comparable homes (called comps) in your neighborhood to arrive at an estimate of fair market value. When possible, homes that have sold within the last six months and are located within a mile or two of your property will be used for comps. However, please note that this is not always possible and it may be necessary to use older comps or comps that are further away. A thorough market analysis is part of the service that your real estate agent provides you when you list your house with him or her. There is no additional fee for this as it is included in the service fee in the listing agreement. An experienced real estate agent will do a thorough market analysis to arrive at an estimate of fair market value.  The list price is usually set at 5-10% above the estimated fair market value to allow negotiating room.

 

Because of the declining market of the past few years, many homeowners do not realize how much their homes have depreciated and feel that the fair market value determined by the real estate agent is too low. In these situations, you can always hire a licensed appraiser for a reality check. A typical residential appraisal will cost @ $400.00. You can then use both the appraisal and the market analysis to arrive at fair market value and a realistic listing price.

 

So, if you are ready to sell, call us now. Remember, all residential properties have depreciated so what you think you are losing on the sale of your current home, you will likely make up when you purchase your next home. With interest rates predicted to go up this year, there is no better time to buy!

 

Dale. P Athanas

Realtor®, ePro®

River to Shore Group

 

 

 

 

 

 

Comments

By Ken Allen,  Tue Nov 22 2011, 07:08
Thanks for an interesting perspective.

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