• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar

Sarah Jarvis Team at One South Realty

at One South Realty

  • Search MLS
  • Stats
  • Deals!
  • About Us
    • The Team
    • Testimonial
    • 5 Things I Tell My Clients
  • Calling Policy
  • The Blog
  • Show Search
Hide Search

Web

The Rise of the New AVM’s

March 23, 2016 By Rick Jarvis

thesarahjarvisteam_smarthomeprice_com“Click here to get your home’s value!”
“Do you want to know what your home is worth?”
“Use this code to find out what values are doing in your area!”
“Want to know what has sold in your neighborhood?”

Yes, we get them, too. They come in the mail … and appear in our inbox … and follow us around the web … and show up in our sidebars and in the banner ads. The opportunities to check a home’s are everywhere and the services that provide them are relentless.

The Rise of the AVM

At the end of the day, the rise in the Automated Valuation Models (AVM’s) has been transformative in the real estate industry. No longer does the public have to call an agent (or appraiser) to get an estimate of value, anyone can now go to Zillow, or Realtor.com, or SmartZip, or one of the now dozens of websites that offer free valuation service and plug in an address to see what a computer thinks the home is worth.

Are they accurate? Sometimes.
Are they easy? Usually.
Are they valuable? Well, they’re free, if that tells you anything …

The Technological Achievement

On a technological level, being able to estimate a value of a home that you have never been in that sits on a lot in city you have never been to is pretty impressive. As a data nerd (in addition to being an agent,) I tip my cap to these services … I really do.

call-to-action-green
We use the SmartZip service for our home value estimator. We like its accuracy and how it illustrates values.

So when you see much of our (negative) writing on our sites dedicated to valuing property and bashing Zillow, it is for the following reason — Zillow convinced the market that it was right and everyone else (especially REALTORS) was wrong. Their stance is unfortunate because it obscures how valuable a site like Zillow can be when used correctly.

Where Zillow Missed

Until recently, Zillow’s estimate (creatively called the Zestimate!) was the only game in town.

From when they launched in 2006 until about 2015, Zillow had largely cornered the market on free estimates. They had convinced the public that their Zestimate was gospel and anyone who dared to differ was either wrong or incompetent.

Virginia_Data_Coverage_and_Zestimate_Accuracy___Zillow
The accuracy of the Zestimate in your market is available, if you know where to look. The rates for Virginia can be found here … and no, they are not that great.

As agents, we could see a ‘Zestimate-er’ coming a mile away. Sometimes a client would announce it by saying ‘But Zillow says …’ and other times we would hear a statement like ‘we feel the home is worth $337,452’ (and when you check Zillow, you would see a $337,452 Zestimate.) I do not have enough fingers and toes to count the number of times I saw a client make a decision based entirely on Zillow’s valuation yet never question either how they arrived at the number, or what data was used to compute it … but that is another post for another day.

Needless to say, it was frustrating as the public did not understand Zillow was for what it was. Zillow, while filled with great information about a million different things, was stating values in absolute terms (not in ranges) and not disclaiming the underlying information or stating values using statistical confidence intervals. In my opinion, this is a huge disservice to the very market they claim to be helping.

Zillow was saying ‘Our Zestimate = $276,400” and not ‘Our Zestimate is between $271,000 and $278,000 and our data indicates we are 80% sure of our estimate.’

While they sound like they are saying the same basic thing, one means something entirely different than the other.

Zillow’s Competition is Better

So what has changed? For one, several new services are in the market providing values right alongside of Zillow and they are doing so in ways that are much more responsible. Oh, and the value estimates range widely.

See below:

Sealing_Wax_Way_-_Google_MapsHere is a sample of AVM’s for the following home – 1857 Sealing Wax in Richmond VA 23235 :

  • HomeFacts – $191,000
  • Zillow – $182,933
  • Movoto – $188,666
  • EApprasial – $185,410
  • HomeSnap – $190,000

The difference between the highest and lowest is roughly 5%.

So which one is correct? Great question …

How it Should Be Done

Now the CoreLogic platform that we subscribe to state values differently.

They offer not only a suggested value, but also a range of probable values as well as a confidence interval around the estimate to give you a better sense of how confident they are in their own estimate … and I think that is a far more responsible way of going about it:

RealistRealist Finally, someone did their job correctly …

The Market Reacts

And you know what, we are already seeing the behavioral change.

Where a great number of people used to quote Zillow’s estimate during negotiations or during the listing presentation, they now ask why Zillow’s estimate is different from Realtor.com’s is different from the SmartZip estimate (quoted in a range, btw…) is different from Movoto. In effect, the multiple sources of estimates has undermined the reliance upon a single valuation as the primary arbiter of values. People now recognize that the estimates vary based on the algorithm used and the data that lies beneath and are far more willing to accept that values are subjective and can vary by day, week or month and are impacted by a myriad of factors.

And guess what else is happening? People are asking Realtors to assist them in sifting though the informational clutter and to help them understand what is really going on … and more importantly, why. When agents can really help their clients understand the market forces and develop strategies instead of blindly assuming that a computer algorithm contains the correct answers, then far better decisions are made by all.

So as we have said on many occasions, you should incorporate AVM’s into any analysis of a home’s value, but they should not be used IN LIEU of doing your homework.

Making Sense of the Numbers

August 17, 2015 By Rick Jarvis

We got one of these a week for my first several years in the business. As thick as a phone book .... amazing.
We got one of these a week for my first several years in the business. As thick as a phone book …. amazing.

It used to be simple(er).

When I first became licensed (1993), things were far different than they are today.  Back then, if you wanted to know what homes were available for sale, you used to have to wait for the Richmond Association of Realtors to deliver the ‘MLS Book.’ Each Friday, our local Multiple Listing Service would deliver us a stack of MLS books, approximately the size of phone books (I am not making this up) every Friday afternoon to each and every office in the Metro. As an agent, you would thumb through the pages and make copies and fax them to people or (GASP!) hop on the landline phone and call clients to tell them about the latest and greatest property for sale.

No text. No e mail. No cloud. No Authentisign. No DropBox. Just a phone book in black and white with a picture of the front of the house. That is all you got to go on. Good luck.

You know what?  We got it done.

Access.  Access.  Access.

Fast forward to today and I now have access to MLS via desktop, laptop, smartphone or tablet. I also have online access to the City and County tax records for assessments, past sales or other searches. From MLS, I can download bunches of records and export them to a spreadsheet to help with analysis, or I can also use one of the numerous functions inside of MLS to see trends and find neighborhood highs and lows.  If I am too lazy to analyze my own info, I can have it spoon fed to me by a myriad of statistical services that can slice, dice, merge and layer sales and demographic data into neat little charts and graphs.

Outside of MLS, I can look at Zillow’s estimates of value (as well as about 20 other automated value estimates) and gobs of research from Case Shiller or the NAR. And all of this info is available to me BEFORE I ever type anything into the Google bar and see what I can find out there floating in the web, on blogs or in research papers.

On one hand, it makes wonder how we ever did our job before all of this information was available. And on the other hand, it makes me wonder what is coming next … but that is another post for another day.

Easy as 1, 2, 3 … 4, 5, 6, 9, 37, 142, 359 … Wait, this is Hard!

The relative ease at which we can all access information is, in my opinion, the signature development in the last decade.  So it would stand to reason that with all of this access, being an agent, buyer or seller should be easier than ever … but is it?

I don’t think so.

Simply put, with access to an almost unlimited amount of information, it is getting incredibly difficult to tell what data is meaningful, what data matters and most importantly, what it all means.

Look at the chart above … does it really tell you anything?

As a buyer, should I care that the 2nd Quarter’s sales of 1,800 – 2,000 SF homes in 23832 is 11.1% above the same quarter last year? Or down 35.2% from the previous quarter? What do I do with these facts?  Should it change my strategy?  Does it make my offer lower??  Should I rent???  Should I pay cash???? Should I move to Canada?????  Or should I just paint my house mauve and fuchsia and stay put …

What Do I Do Differently?

As an agent, it now takes me about 3 times as long to explain my role than it did in 1993 … that’s all that has really changed. I still do the same basic things, it just takes me far longer to explain it than it used to and thus I have about 20 new speeches to help people make sense of the process.

Here are a sample of my new speeches –

  • ‘Why isn’t this house for sale in MLS when I see it on Trulia?’  (Answer –  Trulia is not MLS)
  • ‘Why is the house for sale on Trulia but not in MLS?’ (Answer, Again, Trulia is not MLS)
  • ‘Why is some other agent’s picture next to my home on Yahoo Real Estate when it is your listing?’ (Answer – because Yahoo isn’t MLS, either)
  • ‘Why can I get a 3.9% mortgage from USAA when the lender you recommended is at 4.25%?’ (Answer – because closing dates don’t mean anything to them)
  • ‘Why does Zillow say my house is worth $375,000 when I just paid $400,000 last year?’ speech (Answer – Because it is a computer generated estimate)
  • ‘What do you mean we aren’t closing Friday?!?’ (Answer – Because Dodd-Frank/TRID just mandated a 3 day wait period for changes to closing statements)

And many more.

My Job is Still the Same

The bottom line is that all of the changes in the past decade haven’t really changed what I do, it has only changed how many things I have to cover with my clients before they understand the process.

And guess what – the public is more confused than ever before.

A recent study showed that the number of people using agents has actually increased in the past 5 years. So despite the relative ubiquity of information with blogs and message boards explaining the home buying (or selling) process in great detail, the public is entrusting their real estate transactions to Realtors at increasing levels.  I find this trend both fascinating and refreshing.

At the end of the day, having information and knowing what it means are two different things.  A good agent knows the difference and can help you make sense of an increasingly complex and complicated process.

Its our job to make sense of it all. Use us.

 

Our Algorithm

August 16, 2015 By Rick Jarvis

If you ask 10 Realtors what their job is, you will get at least 11 different answers.

You would get answers like:

  • ‘We make dreams come true’
  • ‘We take the mystery out of buying or selling a home’
  • ‘We facilitate transactions’
  • ‘We market properties’

While all of those answers are true to some degree, we think they miss the most important and fundamental service Realtors can provide to our clients – accurately valuing property.

At the end of the day, helping clients understand where they stand in the market means impacting their financial health in the greatest of ways.  How you market your listings matters … the same way understanding deeds, inspections, RESPA, Fair Housing, construction materials and zoning matters. But if you don’t understand the underlying value of what you are buying and selling, then the rest of it matters far less (and if you read any of our blog posts with any regularity, you know we spend a lot of time talking about values and valuation methods.)

Why do we feel this way?

Because if we can help you understand the reasons why properties are valued the way they are, then you will make a decision that benefits you both now AND in the future.  In this new market of volatile market swings and conflicting information, helping our clients make sense of a hugely important financial decision is a responsibility we take extremely seriously.

The Rise of the Data

In case you missed it, the internet is having an impact.  How we communicate, how we date, how we shop, how we research our decisions (ok, research each other), how we promote ourselves and how we get our news have all been impacted.  And as the web continues to evolve, search engines, aggregators and analytics companies are becoming increasingly sophisticated in their ability to not only make sense of the mind-boggling amount of data available, but to present it to the user in better and better ways.

Algorithms are Everywhere

How are these companies making sense of the data?  Algorithms, that’s how.

This is Zillow's algorithm to make short term adjustments to its short term pricing predictive model.  Seems simple enough to me...
This is Zillow’s algorithm to make adjustments to their short-term pricing predictive model. Seems simple enough to me…

Algorithms for categorization, algorithms for valuations and algorithms for recommendation are becoming not only more prevalent, but more accurate.  Google is said to take into account over 200 different factors in how it ranks pages.  Zillow says it recalculates its Zestimates on over 1M homes per day.  The city (and counties) collect taxes based on valuing properties they have never been in and have to be able to defend if challenged.  And IBM advertisements claim that they can predict who is going to drop out of college based on how far they live from campus (or something like that.)

But are they getting it right?  If they get the underlying data right, then yes …

Does Zillow capture floor level in their model?  Doubtful ...
Does Zillow capture floor level in their model? Doubtful …

Agent Algorithms

Analyzing ‘housing’ (as an overall market) is one thing, but analyzing an individual house, and the surrounding neighborhood, and the floor plan, decor, color palate and neighbor’s car on blocks in the front yard, is quite another.  And this is where the agent adds value.

Good agents have algorithms, too, and they are very accurate.  Good agents have the ability to look at the data that matters and use it to help their clients make great decisions. And while they may not have the same number of µ’s and Σ’s in them that Zillow’s model does, our models contain one thing that the national predictive models never will – the correct and applicable underlying data set.

  • Do you think Zillow knows the difference in value between Grace Streets north and south sides?  Good agents do.
  • Does Realtor.com know that Woodland Heights recently received its historic designation … and what the impact will be?  Your agent should.
  • Can Google accurately reflect the subtle but important differences between the Ryan Homes and Eagle Construction warranty departments?  Good agents can.
  • Can any computer model tell you where the shrink/swell soils are in Richmond?  An experienced agent can.
  • Can Trulia tell you how another agent negotiates?  Once again, a good agent can.

Our Algorithm

You want to know about our algorithm?  And what makes it better than Zillow’s?

Here’s ours:

  • YOUR Best Decision = YOUR NEEDS + As Much Math as Required + Current Market Conditions + YOUR NEEDS + Schools + What is Available + YOUR NEEDS + Time of Year + Decor + Architect + Parking + Other Agent + Richmond + YOUR NEEDS + Timing + Development + Inspections + Lender + YOUR NEEDS + Builder + Trends + Whatever Else Needs to Go Into the Analysis + YOUR NEEDS

And do you know why our algorithm is better for your situation?  Because we wrote it for you.
And do you know what else?  If your needs change, we will change the algorithm accordingly …

Our algorithm was written for one person – you.  YOUR best decision is about what YOU need and not what we think or what Zillow, Google, your buddy, your boss, your mother, a colleague, or a friend of a friend at a barbecue thinks.

Summary

At the end of the day, good agents are far better at impacting their clients decision about individual houses than any über-computer run by any team of Stanford grads will ever be.  Our algorithms incorporate things that the computer models cannot even fathom and we change them each and every day based on the need of the clients we are working with.

All accomplished agents have advanced algorithms.  We can’t always explain them, but they work extremely well.

What Are You Going to Do to Sell My Home?

July 14, 2015 By Rick Jarvis

It is probably the most asked question by the selling public when interviewing agents for the sale of their home.  I think it is often misunderstood.

how are you going to

Each agent has a standard response to this question (it is usually some type of list) where they will tout all sorts of activities designed to impress the seller.  Some are these actions are critical and some, well, not so much.  As a matter of a fact, I once saw an agent that had broken down the home selling process into ‘113 Simple Steps’ (I kid you not.)  I always wondered if skipping a step meant failure, but I honestly didn’t have the heart to ask.

While choosing an agent to represent you in the sale of your home is important, it is not simply about tasks (otherwise ‘Mr 113 Steps’ would win every time), it is about applying the correct tools to the correct situations.

Below you will find some questions to ask and a list of things we can do for you.

What Type of Sale is Required?

In theory, all housing is unique.  In realty, much housing is very similar.

Selling contemporary infill, high performance new suburban and 20 year old town homes all require a different mix of tools.
Selling contemporary infill, high performance new suburban and 20 year old town homes all require a different mix of tools.

How an agent would approach a sale in Founder’s Bridge is largely the same as in Tarrington.  That said, selling a condo in a historic warehouse will differ greatly from selling a home on 15 acres in Goochland. The key is knowing what works in which segment.

The geographic location, the time of year, the price of the home, the type of property, the buyer’s likely profile and the age of the home all drive the correct mix of techniques.  A spring open house in the Museum District for a property priced below $400,000 might mean 100 people or more touring the property in a 2 hour period while an open house on the same day in rural Hanover County might not generate a single tour.  Similarly, putting a vinyl sided colonial built in 1992 in Estates and Homes magazine is probably not money well spent.

Just know that the ‘one-size-fits-all’ technique employed by many agents is the wrong way to go about it.  Find an agent with not only a big tool kit, but an understanding of when to use each.

To Team or Not To Team?

One of the trends in our industry over the last decade has been the rise of the real estate ‘Team.’  Teams named for the lead agent or for some esoteric concept have sprouted up everywhere. In my opinion, teams are a good thing.

It seems like all pictures of teams require the 'arms crossed' pose.  Why is that?
It seems like all pictures of real estate teams require the ‘arms crossed’ pose. Why is that?

The rise of the team is important because it acknowledges that at each level of real estate, increased specialization is beneficial.  From pricing to marketing and syndication strategies to contract administration to understanding the nuanced requirements of selling in historic or mixed-use environments, the more specific knowledge a team can bring, the better the level of service for the client.

At the end of the day, the collective value brought by a team based approach is generally better than the ‘one agent island’ employed by the majority of agents in any given market.

How Important is Zillow to Selling a Home?

When Zillow was launched in the 2006 (and cousins Trulia and Realtor.com soon thereafter), it changed our industry.  By bringing the home search process out from behind the MLS curtain and putting it on public display, it forever changed the public/Realtor dynamic.

The percentage of buyers and sellers using agents is as high as it has ever been.  Zillow and Trulia seem to think otherwise.
The percentage of buyers and sellers using agents is as high as it has ever been. Zillow and Trulia would like you to believe otherwise.

The narrative that Zillow, Trulia and Realtor would have you believe is that they disrupted the SALES process … which is, in fact, untrue.  The percentage of For Sale By Owner is at its lowest point in history and the percentage of buyers employing a Buyer’s Agent is at its highest.

What Zillow changed is the SEARCH process … not the SALES process.  It is a subtle, yet an important distinction.

This is the key takeaway –  these platforms that allow Realtors to promote properties almost instantly across a network of websites have changed how we, as agents, acquire new clients, but it has not really changed how properties are sold.  When we (Realtors) adopt an aggressive digital strategy that heavily leans on Z/T/R, the reality is that we benefit more than you do.

Be careful in mistaking an agent’s Zillow strategy as a marketing plan for your home – they are two different things.

Word_Cloud_GeneratorSo How Can You Tell the Professionals?

When you know how to correctly apply the tools, your metrics improve.

We will put our metrics up against any other company in the Metro:

  • Our marketing times are low
  • The pricing to our sellers is above the Metro average in terms of price AND of ‘price per foot’
  • And the ratio of the sold price to list price is nearly a full percentage point higher than the market average

You can read more about the way One South compares to our competition here…

Examining how well a brokerage performs on these metrics will go a long way in determining how well they know which tools work best for any given situation.

The List of Stuff We Do

All that said, if you just want a big giant list, here it is …

  • The MULTIPLE LISTING SERVICE is a big part of our every day.  Keeping the database current takes time and know that agents are fined or otherwise punished for non-complinace.  Oh, Zillow and Trulia would not exist if it was not for the data contained in MLS.
  • We spend an inordinate amount of time on the VALUATION of properties.  We help sellers understand values and we help buyers understand values.
  • We PROVIDE INSIGHT, GUIDANCE and PERSPECTIVE.  Of all of the things we do, trying to explain how we are going to help you navigate an unforeseen issue before it arises is hard.  Sometimes, problems are easy to predict  (short sales are more likely to have title issues, old houses are more likely to have inspection issues, condos are more likely to have lending issues) but being able to handle the last minute issue that can derail closing is what we do every day.
  • We hold OPEN HOUSES for our clients and we will often do OPEN HOUSES for the brokerage community to introduce new properties to the marketplace.
  • One of the primary ways we raise awareness  is via the E BLAST where we send new listings, price changes and other updates to the brokerage community.
  • ZILLOW – see the section from above.  Managing Zillow, as well as TRULIA, REALTOR.com and the hundreds of other sites vying for the public’s eyeballs takes a great deal of time and effort to do right.
  • People still love a well done PRINT BROCHURE.  Despite the digital movement and the ubiquity of online information, the public wants one … so we continue to create them.
  • PROFESSIONAL PHOTOGRAPHY is a must.  While cameras, cameraphones and a host of other ways to capture and improve images exist, when the pros shoot it, it just looks better.  Use them.
  • The LOCKBOX helps record who goes in when and reports a ton of information.  We should place one on your front porch/door/railing to provide protection for your key.
  • Often, on the sign, we will place an INFO BOX so that when someone walks/drives by, they can grab a shortened version of the brochure and find out some basic info on the house.  The Zillows and Trulias of the world have largely rendered the need for the info box obsolete
  • Some swear by the VIRTUAL TOUR while others are more ho-hum about it.  Well done photography can often times be stitched together to create the VT, but nothing replaces an actual tour.
  • Individual PROPERTY WEBSITES can be very important, especially when the property rises to a certain level.  If the home is architecturally important or very specific details are required to tell the story, the a site dedicated to the property should be created.  We do this in-house, typically.
  • The rise of VIDEO in our industry is unmistakable.  The problem is, well done video is hard, expensive and time consuming.  In a market where properties are moving quickly, video may not be worth the effort.  It depends on the goal.
  • In any given day, especially in the spring, ANSWERING INQUIRIES thoughtfully and correctly has consumed the day.  An agent’s job is to answer the inquiry (from both the public and peers) in such a way that generates showings.  It is an art.
  • You would be surprised how much time is spent SCHEDULING.  Life goes on despite a For Sale sign in the front yard and trying to coordinate everyone’s schedule (buyer, seller, agent, family, inspector, contractor, insurance agent, appraiser, running late, running early, need to reschedule) can be as time consuming as any activity we do.
  • Any good agent is also adept at SHOWING.  A typical showing will take close to 2 – 3 hours ‘all-in’ when you include preparing, printing, travel time, actual demonstration of the property, turning lights on (and off) and locking up.  And often times, we show up, meet the client and show the property only to find out afterwards that they are already working with a Buyer’s Agent who they never called to show them the property.
  • Obtaining FEEDBACK that is relevant and valuable is also an art.  It takes time and you have to be diligent.  Buyer’s Agents are busy and don’t normally have the time to stop what they are doing and tell you why their client did not like your home.  Good listing agents are diligent about the feedback loop.
  • We NEGOTIATE CONTRACTS and then we NEGOTIATE INSPECTIONS.  Remember, contracts are combinations of a price AND terms.  Many tend neglect the terms in exchange for price and it is a shame.  So much seller benefit can be gained by focusing on the terms of a deal.  Without going into too much detail and giving away all of our secrets, we firmly believe in negotiating with a plan in mind.  Know where you stand.  Know the market.  Know your goals.  Negotiate accordingly.
  • Lenders/Loan Issues delay closings more than any other reason.  COORDINATING WITH THE LENDER is the most critical thing we do while the home is under contract.  Making sure the lender has copy of all of the paperwork, contract, addendum, pest report, necessary inspections, addenda, HOA Docs and every other piece of paper they need in order to get the loan underwritten and in the closing queue to make sure we do not miss a date.  As a matter of a fact, One South views this piece as so critical, we have an entire staff dedicated to making sure that the lenders have what they need from us.
  • COORDINATING WITH THE CLOSING ATTORNEY is as equally important.  They need the same things as the lender (plus a few others) and with the volume of sales flowing through the system right now, getting everything to the closing attorney promptly (or making sure the Buyer’s Agent did) is a big part of representing you client.

Pricing a Home is Predicting Buyer Behavior

December 20, 2014 By Rick Jarvis

Dear Property Owners,

The entire real estate world is doing you a disservice.

Sincerely,

Past Sales

Beautiful cyber woman with silver ball

Our industry is set up to determine values of homes based on the sale of other homes considered to be ‘similar.’

The determination of what is similar is largely based on location, size, features as well as timing. Sales occurring in the recent past are weighted more heavily than those in the distant past. This method (commonly referred to as the ‘Comparable Sale Method’ or using ‘COMPS’) is the primary basis upon which home values are estimated.

What is a Comp?

The logic behind the use of the COMP goes something like this – if House A sold for $X, House B sold for $Y, and House C sold for $Z, then your house should sell for some weighted average of the three, provided the COMPS used are the most appropriate ones available.

The Competitive Market Analysis (or CMA) that a Realtor performs to determine pricing uses this ‘COMP-based’ method, as does the formal appraisal performed by your bank to determine loan conditions. The Assessor’s office uses a similar method when it assesses your home for tax purposes (they look at neighborhood sales) and Trulia and Zillow use a combination of COMPS and assessments to (incorrectly, usually) arrive at their estimate of the value for your home.

But is this the best method?

The Future or the Past?

Lets ask this – Do you drive a car by looking in the rear view mirror? The answer is obviously ‘No’ as most of us spend most of their time looking out the FRONT window (or looking down at their cell phones, but that is a different issue.) We look out of the front window because we are concerned with where we are going and the dangers our journey presents. Stated simply, we are more concerned with future events than past ones.

We (Realtors, Sellers, Buyers, Bankers, Appraisers, Homebuilders) have all been trained for so long to look at the COMPS for guidance and COMPS are events which have occurred in the past.

Take a look at the chart below – it tracks the trailing 24 months of homes going under contract.  

Do you notice any seasonality? Yeah, me too.

What happens if the three COMPS you used to price your house in June were from April? Or December? Do you think you have made a correct pricing decision?

Comps are Easy, Unfortunately …

The core issue is this – COMPS are easy to measure and thus prevalently used.

It is unfortunate.

The COMP is not a fact, per se, it is a result. The reasons someone else paid a specific amount for a home at a point in the past is a combination of many complex inputs which do not lend themselves to easy analysis. Inventory levels, interest rates, consumer confidence, seasonality, the ‘Wealth Effect’ created by the DOW and NASDAQ, mortgage rules, Dodd-Frank, job growth (regionally/nationally/internationally), population trends … all combine to influence buyer behavior.

When you look at the number of pending sales generated in 2010 (chart below), do you think think that April did a good job of predicting May?

This is not to say that using COMPS to help price a home is without merit as understanding what has happened recently is a good place to start. If you can determine a point from which to begin your analysis, it is of great help. Establishing patterns in past behavior has value…it is just that using COMPS exclusively falls short, especially in a dynamic market. The quicker the market shifts, the less value any individual COMP has (see the example above.)

Pricing Should Look Both Directions

Ultimately, a pricing model is not complete without some projection of future events and relatively simple tools exist to help drive the analysis. While predicting the future is far more challenging, it is not impossible, especially given the almost universal access to information we all have. The tools we use for analysis are cheap and easy to use and some level of predictive intelligence is achievable in almost all situations.

Pricing any asset for sale SHOULD be undertaken with the mindset of ‘what behavior from our audience are we EXPECTING?’ and that can only be achieved by looking into the future, as murky as the view may be.

  • Go to page 1
  • Go to page 2
  • Go to Next Page »

Primary Sidebar

804.201.9683


How Do I Schedule a Showing or Find Out More?

I am Kendall C. Kendall, Client Care Coordinator for the team. I am a licensed Realtor and it is my job to answer questions and schedule showings for the properties shown on our sites. Here's our call policy.

kendall@richmondrelocation.net

Working With Buyers

I am Sarah Jarvis, Broker at One South and I work with our buyers. I bring 20+ years of experience to our Buyers Advocacy program and take great pride in helping our clients understand the RVA marketplace.

sarah@richmondrelocation.net

From the Blog

Escalator

The Escalator Clause

The Escalator Clause A quick market update –– As I write this in January, we have already been involved in several multiple bid situations with not just our buyer clients, but with one of our listings, too. So to repeat, it’s January ... of 2019, and the market seems to think it is April ... …

[Read More...] about The Escalator Clause

More Posts from this Category

  • Facebook
  • Instagram
  • LinkedIn
  • Twitter

The Ultimate Stats Page

Ultimate Stats Page

Latest Tweets

  • Just now

Footer 1

Test Text

804.201.9683


How Do I Schedule a Showing?

I am Kendall C. Kendall, Client Care Coordinator for the team. I am a licensed Realtor and it is my job to answer questions and schedule showings for the properties shown on our sites. Here's our call policy.
kendall@richmondrelocation.net

804.305.2344


How Do I Determine What I Can Afford?

We offer competitive mortgage solutions with a commitment to exceed your expectations. We’re local industry experts who are also your friends and neighbors. Whether you want to communicate online or in person, we’re just a call or click away.
www.cfmortgagecorp.com
C&F Logo

Equal Housing

The Sarah Jarvis Team agrees to provide equal professional service without regard to the race, color, religion, sex, handicap, familial status, national origin or sexual orientation of any prospective client, customer, or of the residents of any community. Any request from a home seller, landlord, or buyer to act in a discriminatory manner will not be fulfilled.

IDX Disclaimer

All of the information displayed here is deemed to be gathered from reliable sources but no warranties, either express of implied, are made part of this site. Additionally, the IDX Feed for listing information may contain descriptions of properties not represented by One South Realty, its agents or staff and any violations or misrepresentations are the sole responsibility of the listing brokerage of the subject property in violation.

Contact The Sarah Jarvis Team

804.201.9683

One South Square Logo

2314 West Main Street Richmond, VA 23220

sarah@richmondrelocation.net

Our Call Policy

Accessibility
Copyright

Lending

Southern Trust Mortgage Logo

Chris Lester
Senior Loan Administrator
NMLS# 353830
804-307-7033
Email Southern Trust Mortgage

Our Network of Sites: RichmondVaNewHomes.net, RichmondVaCondos.net, RichmondLuxuryNeighborhoods.com,
RichmondFanRealEstate.net, RichmondVaMLSSearch.net
Housekeeping: Sitemap, Listings Sitemap

 

Members of the Sarah Jarvis team are licensed in the Commonwealth of Virginia.

 

Loading Comments...