• 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

Listing

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.

An Insider’s Look at Online Search

October 21, 2014 By Rick Jarvis

Want to know the best way to search for homes online? See the chart below.

The explosion of online search sites has changed the landscape for both the public and Realtors as it relates to searching for a home…both good and bad.

The good is that the information the public seeks is far more available than it ever was. The bad news is that not all search sites are created equally.

Untitled_2

At the end of the day, the ‘closer’ the site is to the local MLS, the more accurate it is. Without going into boring technical details, the MLS (Multiple Listing Service) is the most accurate database of both available homes and sold ones. Not only do Realtors use MLS, Appraisers use it as well due to its accuracy.

The public may only have access to the MLS database via a ‘Client Portal.’ This can only be set up by a licensed Realtor who is a member of MLS and the information therein cannot be displayed publicly.

IDX Search sites (the one you are on right now) is a very close approximation of the FOR SALE (not SOLD) properties available and pulls its data directly from MLS. Since an IDX feed is published by the MLS, it is subject to a very specific set of rules as to how it can be used and its accuracy is directly related to many of these rules. Generally speaking, an IDX search site will be accurate to within a day or two of real time meaning any change in a property status will be reflected usually in no more than 48 hours from the change. IDX does not show sold data.

Trulia and Zillow do not receive data directly from MLS and thus are far less accurate in both property availability and status (ACTIVE, SOLD, UNDER CONTRACT). While they have numerous tools available to help predict values and market conditions, by their own admission, are only able to predict values within 10% of the actual value roughly 60% of the time. It should also be noted that the search results are skewed by who pays to be at the top of the list. In effect, T and Z act more as a message board and far less like the true database they claim to be.

Make sure to understand the strengths and limitations of the site you choose to use.

If you’d like us to set up a ‘client portal’ for you that gets you direct access to MLS, just click here.

Citizen 6 New Homes in Richmond VA

December 30, 2013 By Rick Jarvis

I have long held the belief that the best real estate developments are ‘about something.’  The Citizen 6 Project is certainly ‘about something.’

A development can be about location, design, size, views, layouts, schools, neighborhood, proximity, affordability, exclusivity, history or any other number of reasons. The best ones appeal to a specific segment of the market very powerfully and the poor ones do not. Those which hold value the longest are also the ones who appeal to their market in a superlative way.

The Citizen 6 project is a group of six new homes built along Floyd Avenue in the Fan district of Richmond VA. Located along the 2600 block of Floyd, near the Virginia Museum of Fine Arts and Carytown, Citizen 6 offers its owners an amazing combination of attributes sure to make this powerful contributor to Richmond’s real estate landscape for decades.

< Download the Brochure here >

The first thing you notice is the look of the homes. Professionally designed with a decidedly modern aesthetic, the homes of Citizen 6 will be recognizable by all. Richmond’s architecture, especially in our older neighborhoods, is generally traditional period architecture. One of Richmond’s most talented architects was enlisted to ensure that Citizen 6’s striking and sleek exterior envelope will both contrast and compliment the existing housing stock of such an important Richmond neighborhood.

For developers, it is hard to find opportunities to develop in neighborhoods where development is not pioneering. Most redevelopment occurs in areas where redevelopment is needed due to blight or obsolescence. For Citizen 6, this is exactly the opposite. The site was underutilized and replacing a vacant parking lot and small ‘non-period’ office building with 6 new homes was a far higher use of the property. The fact that this site is located a mere 4 blocks from both Carytown and The VMFA, as well as so many other amenities inherent in the Fan means that the new residents will be met with one of Richmond’s most pedestrian-friendly neighborhoods on the day they move in, not years or decades later.

Lastly, the ability to own a new home, with the latest technologies and materials is many’s dream. It is rare to find new construction in a neighborhood whose average home is approximately 100 years old. Citizen 6 offers precisely that – the best in materials and techniques in and amongst the best amenities a century old neighborhood can provide.

While the reasons listed above are important, there are other reasons why Citizen 6 is important. The appeal of the modern design, the open and flowing interiors, the first and floor master suites, off street parking, the potential for Floyd Avenue to become a ‘Bicycle Boulevard’ and the responsible/green building methods are some others.

We are pretty excited to be a part of the project.

Pushing Back

May 9, 2013 By Rick Jarvis

iStock_000001117222SmallWhile every purchase or sale situation and deal is different, at some point in the offer/counter-offer process one of the three following statements is uttered:

  • “What should we offer?”
  • “Should we take it or should we push back?”
  • “Tell them to take it or leave it!”

When to Push Back

Having a sense for whether or not to push back one (or more) times in an attempt to maximize your yield is hard.  No matter what the scenario, having more information is better than having less.  Knowing where you stand relative to the market is critical in capturing that last several thousand dollars.

While there are many ways to analyze your place in the market, one of my favorite charts to help offer guidance is below.  The chart shows the percentage of the home’s asking price that a seller received (sometimes called the Ask/Bid Spread).  When inventory levels tighten or demand increases typically, the higher the percentage.  You will also see the ‘Days on Market’ statistic move in concert with the Ask/Bid as when demand increases, buyers will act more quickly and thus tend to pay prices closer to asking prices in order to secure the right to purchase the home.

You can toggle on or off the individual zip codes (click the dots below the chart) to compare how one is preforming relative to another.

Numbers Never Lie, Right?

“So we should follow the chart above, correct?”

Not necessarily.

All statistics contain some ‘noise’ which can skew results and/or give less than accurate guidance.  And while each individual MLS handles their statistical packages differently, all MLS’s should offer some sort of package to help both agents and the public make some sense of the data.

So when looking at the charts above, please keep in mind the following:

  • Most statistics packages use Zip Codes, not MLS Zones, so some zips may encompass radically different neighborhoods. This more typical in the urban zips.
  • New Homes are typically entered into MLS at 100% (or more) of asking price so zip codes with larger numbers of New Homes may have slightly higher percentages than the market is really dictating.  Conversely, resale homes in new home neighborhoods may be in weaker bargaining positions than the chart would indicate.
  • 23220/23221/23226 have a smaller data size so the percentages will bounce around more.  Smaller data sets are also more more skewed by an extreme individual sale.

Dig in, Move or Accept?

So should you dig in and fight for that last little bit when selling your home?  Simply put, it depends.

Remember, there is no magic formula as each purchase/sale event is unique.  We wrote a post about using COMPS exclusively in the analysis which discusses the issue of looking backwards to predict future events.  We also wrote a post about understanding the difference between the many different interpretations of value.  But just know that those who know how interpret data will always come out ahead.

Ask your agent about the stats and see what they say…

Million Dollar Homes For Sale in Richmond VA

April 14, 2013 By Rick Jarvis

No matter where you go in the US, one million dollars is a measurement by which salaries and homes are compared.

[ listings in excess of $1MM are below ]

Each market in the US (and the world) has their own inputs that drive values and specifically, what drives values to $1,000,000.  For some it is proximity, for some it is history and for some it is space.

Regardless of the reason that a home can justify an asking price in excess of $1MM, in Richmond and surrounding areas, the $1MM threshold is not an easy one to crack.

What makes you worth 7 (or more) digits in Richmond?

The first and most important factor in getting to the $1MM mark is involvement with water….specifically, the James River.  The condos on the upper floors of the Vistas, Rocketts Landing and the homes in both the City and Henrico, Goochland and Chesterfield that have expansive River views, can command that price.  While I am sure that some of the properties that front smaller lakes or other smaller rivers or creeks (South Anna) can ask a premium, having property along the James drives a large portion of value.

History also plays a role.  Monument Avenue, Seminary Avenue and Cary Street Road all have enough historic currency to command the $1MM+ number.  Richmond’s powerful (and oft divisive) history is highly valued by many.  Additionally, those who own some of Richmond’s most iconic properties along these avenues feel a responsibility to steward these properties from one generation to the next.

While size matters, simply being big does not necessarily mean expensive.  While there are certainly homes whose scale (and thus, cost) generates a price over the $1MM mark, often times, size without another element (river, history, estate setting) will not necessarily mean ‘a mil’ (or more) is the value.

Lastly, there is a geographic component to value.  There are more areas in Henrico that can command the price than Chesterfield.  There are more areas in Goochland than in Hanover and Powhatan and so on.  Owning a million dollar home in Chesterfield is likely only in very specific  neighborhoods.  Henrico offers more spots where 7 digit home prices are justified.

Overall, Richmond is not really a $1MM city quite yet.

What does a million dollars buy you in (and around) Richmond?


  • « Go to Previous Page
  • Go to page 1
  • Interim pages omitted …
  • Go to page 7
  • Go to page 8
  • Go to page 9
  • Go to page 10
  • 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

You’re Gonna Be Mad at Us…

You are about to get really mad at your Realtor ... and your lender ... and your attorney. And you know what?  It isn't our fault. Beginning in late 2015/early 2016, the way real estate transactions are closed will change and change substantially.  Since becoming licensed in the early 1990's, …

[Read More...] about You’re Gonna Be Mad at Us…

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...