Quantifying the Qualitative

We spent time this morning in a sales meeting, talking about how to help buyers and sellers evaluate multiple bids or properties.  We are beginning to develop spreadsheets, which we can use to list all the factors important in choosing a property, as a way to help buyers decide when and on what property to make an offer.  There are obvious factors that matter in all real estate decisions, like location. 


So, here's the rub.  Location, which we would weigh very heavily in any purchase decision, is not a black and white criterion, as, say, town/city sewers would be.  It's influenced by a buyer's own opinion about what he/she would like to be near--open space, public transportation, good schools, or other factors.  Then why is it still useful, when someone is using opinion to come up with a weighted number for location?


Because it helps us, and ultimately the buyer, to begin to narrow his/her list of important considerations.  He/she may come in asking for something at a certain price, but decide that, in order to get other benefits, the price range has to increase.  Or, for instance, square footage could matter less than how that square footage is laid out.  Sometimes we even see cases where people end up choosing the exact opposite of what they came in saying that they wanted to buy.  Those people may just have a gut reaction (which is admittedly very hard to pin a number on), which is both persistent and consistent, and that may end up being the tiebreaker.


And what does the agent add to the process?  It ends up being very useful to have seen this played out many, many times.  We begin to develop a sense of what will ultimately prevail, and often long before the buyer sees it.  Also, in the same way that teaching something is the best way to learn it, it's helpful for the buyer to have to explain to us what he/she is thinking, and that explanation frequently crystallizes his/her thinking. 


Where are we going with this?  We're still working on templates for both residential and commercial buyers, plus ones for sellers in multi-offer situations.  Like as not, it will always be a work in process, but will become a valuable timesaving, clarifying tool for our clients.

Recent Statistics

There have been new indications that shed some light on what we may expect for a spring market in residential real estate.  It's been a brutal winter, but the February job numbers, which just came out, were not as bad as they might have been, and put Connecticut at 50% of its jobs regained from the lowest recessionary level.  This, of course, compares with 92% of jobs regained nationwide, after awful weather everywhere, but we welcome any good news.

Other recent studies predict that the Northeast is the likeliest region to see multiple bids on property this spring, suggesting that demand has been postponed due to winter storms, and will "pop" when spring arrives (will it ever come??).  Rates are edging up, which is another indication that time is of the essence for buyers, since monthly payments matter more than total cost for most people.

Another report from Zillow suggests that the West Coast is best for sellers, and the East Coast for buyers.  That's not surprising, since prices in Connecticut are still 23% below their peak in June of 2006.  It is yet another indication that our region will see strong buyer demand.  Since the listing inventory is delayed, again by weather, supply may be tight.

In our office, we've been getting reports of greatly increased web traffic to our site, with strong demand for certain types of searches by buyers.  Again, that would seem to indicate pent-up demand.

My crystal ball is a little cloudy, but my outlook, based on all of the above, is positive!

Listing Prices and Offers

This morning at our New Haven office sales meeting, agents were saying that people still want to price their properties too high for the current market. We went on to recount numerous stories both good and bad; people who priced too high and ended up with very low offers, and people who went lower and got multiple bids over the asking price. We believe that buyers know the market conditions, and that they will correctly gauge where offers should be. When it looks like a bargain, they know to bid high. When it looks too high, however, most people deduct too much, figuring that they are in for a long round of negotiations. And, of course, that's exactly what that seller was thinking when he listed too high--a self-fulfilling prophecy all around. Agents told stories of people who ended up selling for too little by using this latter method.

We agreed that sellers don't realize that most buyers search by price. That is, they go onto the internet, our website, or Realtor.com, and they enter the sales price they want to pay. Therefore, if you list your property at $400,000, hoping to get around $350,000, a person who can pay $350,000 may never see your home, because they would be searching in a range that would not include your asking price. So, even though you might be willing to bargain, you may never get that chance, because the above buyer will be out looking at houses listed in his price range. Once you realize the way the process usually works, you will understand why Realtors push so hard to get you into the range that will give your property the maximum exposure, and therefore the greatest chance of selling.