Everyone has an opinion, especially where the real estate market is concerned. Why not back up your opinion with some hard facts and learn the 10 most important real estate numbers to know. It will help you know when to sell your home, when to talk to an agent, and when it’s a great time to buy a new house. You’ll also impress your friends.
1. The Average Sales Price
What’s the average sales price of homes in your area over the past few months? What about your neighborhood? What about your street? If you purchased your home for $195,000 a couple of years ago, wouldn’t it aid you in knowing that it was worth $180,000 now? Or maybe it’s worth $240,000! That would sway your decision of whether to sale your home or not right? You’ll generally have to get this information from a local Realtor so give them a call or (if they’re a good Realtor) they provide all kinds of market data for consumers. You will have to call them for specifics though.
2. Average Days on Market
This is the average number of days a salable home sits on the market before it goes under contract. For example… the current days on market in our area is about 168 days plus or minus depending on your home’s price range. If you are moving for a job, want to be settle by the time the kids go back to school, or need to be in the new house before the new baby comes this is VERY useful statistic for you to know. Ask a real estate agent or find some local market data online.
3. Average List Price
If you are getting ready to sell your home the average list price gives you the price of homes you are in competition with. If you aren’t listing your home within about 5% of this average list price, your property won’t get any interest, any showings, or any offers because everyone KNOWS it’s overpriced and most won’t even take a look at all the amazing remodeling you’ve done.
4. Sell Price to List Price Ratio
Now that you know the average list and sell prices for comparable properties in your market you can put those together to find the Sell/List Ratio. This will give you a good idea of what price to expect from buyers as well as a close approximation of what your final sale price may be.
5. Inventory
This is a pretty basic number. How many homes are for sale in the city, area, neighborhood, and street? Knowing the current inventory is a cool number to tell your friends as well as very useful in finding the next number…the absorption rate.
6. Absorption Rate
The absorption rate is number that tells us how long it would take the market to “absorb” the inventory currently on the market based on historical sales data. Most of the time, this is figured using the number of sold properties last month and the number of properties currently for sale. As you are really looking for trends with this number (is it going up, down, or staying the same) I figure it in a way that makes a little more sense to me… I average the past 3 months sales and make a sort of ‘Rolling Average Absorption Rate” It makes it easier to see trends that way. Sorry, didn’t mean to get too technical there.
7. Interest Rate
Whether selling a home or buying one, the interest rate is a great number to know. For sellers, it helps you know when buyers will be ‘out’ and looking for homes because rates are good.
For buyers, a one point difference in interest rate on a $200,000 home mortgage is over $125/month difference. That’s $1,500 a year and $45,000 over the life of the loan! One percent is a pretty big deal!
8. Property Taxes
Lots of people forget about this number but it’s there, eating at your pocket just like your mortgage. If you property taxes are high you might consider listing (or having your agent list) all of the amazing public parks, schools, and roads that your exorbitant taxes go towards. As a buyer, remember to take a glance at the estimated property taxes before making your purchase. That’s one expense you aren’t getting away from after buying the house.
9. Marketing Fee
Whether you sell by owner or use a professional or something in between, you need to know how much it’s going to cost. Flat fee companies charge anywhere between $50-$5,000 and real estate agents range from 0%-10% of the sale price of the home with the majority somewhere in the middle. Ask what you get for these fees? How is your property exposed online and off? What’s the plan? When you know the fee… you can calculate the most important number of all…
10 Seller’s Net
This is the bottom line. Want to know what you’ll walk away with when you sell your home? Work up a seller’s net sheet. I have a good excel document that does just that for sellers in Northwest Arkansas. Obviously, the numbers won’t match up for other areas but you can use it as a template to create your own. Shoot me an email if you want the actual excel document to play with.
I hope this list of 10 Important Real Estate Numbers helps you out. Let me know if I missed any important numbers that should be on this list or let me know what you think the top 2 or 3 are.
Sunday, July 25, 2010
IMPORTANT OF REAL ESTATE INVESTING
To start my presentation, I asked for questions from the students. What questions do they have about real estate, etc.? What do they want answers to?
One young man spoke up: “What’s the big deal about home prices? I keep seeing it on the news that home prices went up or down, but so what? It doesn’t mean anything to me because I don’t own a home.”
“Let me come back to that question later,” I replied, and collected a few more questions from the audience before presenting some facts about buying a home, the tax credit and so on. Eventually, I came back to the question the young man had asked at the beginning.
“So, why are home values important to you?” I asked, “First, let me ask if you have a job; do you work part time after work?” “Yes,” he replied, “at the restaurant down the street, washing dishes. Been there since I was fifteen.”
“So you’ve been there a few years now,” I said, “and have you been working as many hours lately as you were, say, three years ago?”
“Not really,” he said, “about half as many as when I started. I used to work the breakfast shift from 5:30 till 7:00 but I don’t any more.”
“I see,” I went on, “and why don’t you work breakfast any more?”
“Well, because the guys who used to come in before work aren’t coming in.”
And what did these customers do for a living?”
“Construction guys, mostly – builders, carpenters, drywallers, painters.”
“Uh-huh,” I continued, “and why aren’t they coming in now?”
“They haven’t had any work.”
“Ah-hah!” I replied. “So, let me get this straight. Building trades workers are out of work because nobody is buying new homes. Why? Because the house they need to sell in order to buy a new home isn’t selling (or won’t sell for a price high enough to have any equity left to put down on their next home), right? So those construction guys who are out of work don’t have the money to come into your restaurant for breakfast so YOU GET LAID OFF. Are you starting to see why home prices are important not just to you but to everyone in our economy?”
“If homeowners lose the equity they have built in their homes, they can’t “buy up” or downsize. They must stay put and the real estate market stagnates. Homeowners don’t go out to the hardware store to fix their home up to get it ready to sell – paint, carpet, countertops, new cupboards, etc. – nor do new home purchasers go out to the appliance stores to buy new refrigerators and furniture for their new home. People who work for those retailers get laid off, too, so they can’t buy houses, or cars, or appliances, or go to dinner at your restaurant."
When real estate grinds to a halt, so does a multi-billion dollar segment of our nation’s economy. It impacts everything from retail sales, to jobs, to new home starts, construction projects (like finishing a basement or adding on a room). It causes companies engaged in those businesses to cut back on personnel and people without jobs don’t have money to spend on necessities, let alone dinner out."
“Now do you see why home prices are important to YOU?” I asked.
One young man spoke up: “What’s the big deal about home prices? I keep seeing it on the news that home prices went up or down, but so what? It doesn’t mean anything to me because I don’t own a home.”
“Let me come back to that question later,” I replied, and collected a few more questions from the audience before presenting some facts about buying a home, the tax credit and so on. Eventually, I came back to the question the young man had asked at the beginning.
“So, why are home values important to you?” I asked, “First, let me ask if you have a job; do you work part time after work?” “Yes,” he replied, “at the restaurant down the street, washing dishes. Been there since I was fifteen.”
“So you’ve been there a few years now,” I said, “and have you been working as many hours lately as you were, say, three years ago?”
“Not really,” he said, “about half as many as when I started. I used to work the breakfast shift from 5:30 till 7:00 but I don’t any more.”
“I see,” I went on, “and why don’t you work breakfast any more?”
“Well, because the guys who used to come in before work aren’t coming in.”
And what did these customers do for a living?”
“Construction guys, mostly – builders, carpenters, drywallers, painters.”
“Uh-huh,” I continued, “and why aren’t they coming in now?”
“They haven’t had any work.”
“Ah-hah!” I replied. “So, let me get this straight. Building trades workers are out of work because nobody is buying new homes. Why? Because the house they need to sell in order to buy a new home isn’t selling (or won’t sell for a price high enough to have any equity left to put down on their next home), right? So those construction guys who are out of work don’t have the money to come into your restaurant for breakfast so YOU GET LAID OFF. Are you starting to see why home prices are important not just to you but to everyone in our economy?”
“If homeowners lose the equity they have built in their homes, they can’t “buy up” or downsize. They must stay put and the real estate market stagnates. Homeowners don’t go out to the hardware store to fix their home up to get it ready to sell – paint, carpet, countertops, new cupboards, etc. – nor do new home purchasers go out to the appliance stores to buy new refrigerators and furniture for their new home. People who work for those retailers get laid off, too, so they can’t buy houses, or cars, or appliances, or go to dinner at your restaurant."
When real estate grinds to a halt, so does a multi-billion dollar segment of our nation’s economy. It impacts everything from retail sales, to jobs, to new home starts, construction projects (like finishing a basement or adding on a room). It causes companies engaged in those businesses to cut back on personnel and people without jobs don’t have money to spend on necessities, let alone dinner out."
“Now do you see why home prices are important to YOU?” I asked.
Saturday, July 24, 2010
HOMES FOR SALE: HOW TO GET THE BEST VALUE
There are many alternatives to choose from when talking about residential qualities on sale. You can select to contact a real estate broker to help you out with the same. However, if you'd like to buy a house without involving a middle man, you ought to ideally go in for a home on sale by the owner. There are a number of benefits linked to this particular real estate dealing.
The 1st and foremost benefit of purchasing a FSBO house is that you get abundant choices to select your pick from. It's an accepted reality that several house owners are not registered with agencies for the basic cause that they want to save money. Nevertheless, you'll be shocked to see plenty of preferences that are accessible in homes for sale by owner. With so many choices at your aid, you can always select the one which befits your desires and requirements appropriately.
In case savings is your first concern when searching for a house, then FSBO is the greatest alternative that may appropriately fit the bill for you. Reason for the same being, purchasing such house, doesn't require you to pay hefty commission or fees that a real estate broker charges. Eliminating broker charges can certainly make for a substantial amount of savings. The bucks that you save could be used for other vital purposes like buying an acne treatment. If you wish to utilize the same savings for any other purpose, you could always use cost efficient acne solutions like Exposed Skin care System too.
You are also allowed to close the deal in this kind of a real estate transaction. Owners selling their homes by themselves are more likely to be up for talks. And, you may negotiate with the owner till you both find a price that's satisfactory. Even if the owner doesn't offer a particularly low price, you will still save a huge amount by just negotiating. On the other hand, you'll not be provided an opportunity to negotiate in case you are purchasing a home through an agency. So, a house for sale by owner will allow you to buy it at a reduced cost and perhaps even present it as an anniversary gift.
Purchasing this type of home not only allows you to control the prices but also the entire sales process. Buying through a real estate agent doesn't allow you to do so. In the former case however, you may find out every minute detail you wish to know about the home, including the condition of the furniture, home insurance and the general neighborhood etc. This kind of info is just obtainable when you are looking at a home for sale by the owner.
Hence, given the many benefits of purchasing a house on sale by owner, there is no reason why you should be consulting a real estate agent for the same. Unless, you do not mind parting with a little extra cash, this is the ideal option for you for sure.
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