flickr photo credit: iainrbanks

We are deluged with information daily especially data and statistics in charts, graphs, pie charts etc.  There appears to be no shortage of statistical information.  We are also used to instant answers many of which are simply thrown out there without much thought or reason.  I am sure it has created problems on many levels and in many industries but none more so than the real estate industry.  Making local real estate decisions based on national housing headlines is a little bit like trying to dress for national weather, even Willard Scott wouldn’t suggest it.  What real estate consumers need is someone who can provide Information Analysis! Someone like Scott and Sandy Farmer of John Hall & Associates’ Scottsdale office.

I talked to Scott at length last week about his methods of conveying and analyzing data for his clients and customers.  Scott says that people come to him with vague impressions about what is going on in the market.  Seldom can they quote the source of their perceptions, only that it is negative.  For example, take the constant comparison of the stock market with housing prices.  A share of stock is priced the same whether you buy it in Phoenix or Houston, location doesn’t matter.  Additionally, stock doesn’t require maintenance, insurance, monthly payments or property taxes.  People resist selling their present house if it’s lost value thinking that they can “get back” the lost equity.  Actually, selling now to buy something with greater value potential makes much more sense. Consumers that would not hesitate to dump a stock that wasn’t performing are trying to hold on to their houses until the “market comes back”.

In order to help clients and customers “get real” about housing decisions, Scott narrows their 360-degree view down to their own property.  Localizing the housing facts is the first step in helping consumers analyze their position and make solid decisions based on those numbers that are relevant.  Scott says that comparable sales that are even 3 weeks old are no indication of successful pricing of the subject property.  Scott prefers the absorption method of determining value and helping the prospect understand the market.  Absorption pricing takes into consideration the number of listings currently on the market in a given market area and then looks at the rate at which those houses are selling.  For example, if there are 120 similar properties for sale in the market area and they are selling at an average of 10 per month, you have a one-year inventory.  Your seller will have to price the property near the bottom in order to sell it.  And, that’s only if no new listing come on the market.  According to Scott, absorption pricing also applies to price ranges.  Examples include properties under $200,000 have a current supply of approximately five months or less while homes over $1,000,00 have a six year supply.  Sobering information for any seller.

For more information about Scott and Sandy’s information analysis check out www.scottsdalescott.com.  You’ll find lots of great information and solid advise about the current real estate market.

DF

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