Marketing

While 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…

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?