Recently in Buyer Tips Category
As of this morning there are 71 single family homes listed for sale in MLSPIN, the multiple listing service, with an average list price of $534,218 and an average days on market of 162.63. In 2007, 121 single family homes sold with an average list price of $519,082, an average sales price of $503,260 and an average days on market of 151.79.
The absorption rate, which is the amount of months it would take to sell all the properties currently on the market based on the last 12 months sales rate, at this moment for Foxboro is 7.04 months of inventory. Conventional thinking is when you get below 6 months the market favors the seller and over 6 months it favors the buyers. When the market was booming the absorption rate was around 2 months. If this trend holds were are getting very near the bottom of the market. Whether it plateaus at the bottom for a while we will have to watch and see.
If we segment the market into price ranges, let say for first time homebuyers, and look in a range from zero up to 400K which from my experience is the range most first time homebuyers look in, the absorption rate is down to 5.89 months. If this trend holds going forward then the lower end of the market has bottomed for Foxboro. If you're timing the market you should get ready to move soon to catch the bottom and take advantage of the low interest rates.
The absorption rate, which is the amount of months it would take to sell all the properties currently on the market based on the last 12 months sales rate, at this moment for Foxboro is 7.04 months of inventory. Conventional thinking is when you get below 6 months the market favors the seller and over 6 months it favors the buyers. When the market was booming the absorption rate was around 2 months. If this trend holds were are getting very near the bottom of the market. Whether it plateaus at the bottom for a while we will have to watch and see.
If we segment the market into price ranges, let say for first time homebuyers, and look in a range from zero up to 400K which from my experience is the range most first time homebuyers look in, the absorption rate is down to 5.89 months. If this trend holds going forward then the lower end of the market has bottomed for Foxboro. If you're timing the market you should get ready to move soon to catch the bottom and take advantage of the low interest rates.
This question was asked on Linkedin.com and this was my response:
Real estate is local so some areas have hit bottom and many areas have not.
A good indicator is when the days on market start declining and the absorption rate is six to seven months or less.
The absorption rate is derived by dividing the active properties on the market by the number of homes that have sold in the last 12 months so if no new homes come on the market the inventory would sell in x number of months.
In my town of Foxboro, MA at the height of the market the absorbtion rate for single family homes was 2 to 3 months. It went up to around 8 to 9 months and now this morning, Nov. 25, 2007 it is at around 6.5 months. I'd say my home town is getting near the bottom or is close to the bottom.
The days on market for the first six months of 2007 in Foxboro were 164.12 days and the second half of the year so far the days on market is 144.44 days.
The stats came from my local MLS.
If you want to really get into this you could look at different price points and see if the lower end is doing better than the higher end or vice a versa.
Real estate is local so some areas have hit bottom and many areas have not.
A good indicator is when the days on market start declining and the absorption rate is six to seven months or less.
The absorption rate is derived by dividing the active properties on the market by the number of homes that have sold in the last 12 months so if no new homes come on the market the inventory would sell in x number of months.
In my town of Foxboro, MA at the height of the market the absorbtion rate for single family homes was 2 to 3 months. It went up to around 8 to 9 months and now this morning, Nov. 25, 2007 it is at around 6.5 months. I'd say my home town is getting near the bottom or is close to the bottom.
The days on market for the first six months of 2007 in Foxboro were 164.12 days and the second half of the year so far the days on market is 144.44 days.
The stats came from my local MLS.
If you want to really get into this you could look at different price points and see if the lower end is doing better than the higher end or vice a versa.
That's right! Market History of the property and Days on Market or (DOM) are two great pieces of information to have to be able to negotiate a great deal as a buyer. Why's that?
Time is a lubricant that greases the seller's motivation to sell. When a property comes on the market the seller is full of expectations of a quick sale at full or near to full price. If the property is priced correctly it will happen. If it doesn't happen it's only with time and with feedback from the market does the seller realize that the market has rejected the initial offer. For the serious seller, s/he will adjust the price to better align their property with the market.
This is where the market history comes into play for the buyer. In MLSPIN, the multiple listing service for my area, they compile the market history for the listing of the property. Changes to the listing sheet such as going under agreement and then coming back on the market or price changes with the date of the change are noted in the market history of the listing. This info. is available to the agents only. So, if you are working with a buyer agent they should be sharing this information with you as part of their fiduciary duties.
When you look at the market history in conjunction with the DOM you get a good picture as to the motivation of the seller. For example, if the property has been on the market for 155 days and no price drops and no accepted offers in a declining market you will have a strong sense that the seller is not serious about selling and they are waiting for someone with "sucker" tattooed on their forehead.
Which reminds me of a story. I showed a multi-family to this couple one day. The husband had all kinds of artwork on his body which you could see when he wore shorts and a T-shirt. After looking at the property we were in the backyard discussing the property which needed a ton of work. It was in rough shape. This couple thought the property was way over priced. They were asking out loud how the seller could ask that kind of money for the property and without thinking I said, "They are looking for someone with sucker tattooed across their forehead." Upon which the wife said, "My husband has a lot of tattoos but that isn't one of them." We had a good laugh over that one.
On the other hand, if you see the property has been on the market for 155 days with no accepted offers and the seller has been lowering the price consistently over that 155 days then you get a strong sense that they are motivated to sell the property and should be more welcoming to your lower priced offer.
You, as the buyer, armed with this information with your buyer agent will be better able to read the motivation of the seller and therefore negotiate from a stronger position. Unless you have "sucker" tattooed across your forehead find out the Market History and Days on Market on a property before making an offer.
Time is a lubricant that greases the seller's motivation to sell. When a property comes on the market the seller is full of expectations of a quick sale at full or near to full price. If the property is priced correctly it will happen. If it doesn't happen it's only with time and with feedback from the market does the seller realize that the market has rejected the initial offer. For the serious seller, s/he will adjust the price to better align their property with the market.
This is where the market history comes into play for the buyer. In MLSPIN, the multiple listing service for my area, they compile the market history for the listing of the property. Changes to the listing sheet such as going under agreement and then coming back on the market or price changes with the date of the change are noted in the market history of the listing. This info. is available to the agents only. So, if you are working with a buyer agent they should be sharing this information with you as part of their fiduciary duties.
When you look at the market history in conjunction with the DOM you get a good picture as to the motivation of the seller. For example, if the property has been on the market for 155 days and no price drops and no accepted offers in a declining market you will have a strong sense that the seller is not serious about selling and they are waiting for someone with "sucker" tattooed on their forehead.
Which reminds me of a story. I showed a multi-family to this couple one day. The husband had all kinds of artwork on his body which you could see when he wore shorts and a T-shirt. After looking at the property we were in the backyard discussing the property which needed a ton of work. It was in rough shape. This couple thought the property was way over priced. They were asking out loud how the seller could ask that kind of money for the property and without thinking I said, "They are looking for someone with sucker tattooed across their forehead." Upon which the wife said, "My husband has a lot of tattoos but that isn't one of them." We had a good laugh over that one.
On the other hand, if you see the property has been on the market for 155 days with no accepted offers and the seller has been lowering the price consistently over that 155 days then you get a strong sense that they are motivated to sell the property and should be more welcoming to your lower priced offer.
You, as the buyer, armed with this information with your buyer agent will be better able to read the motivation of the seller and therefore negotiate from a stronger position. Unless you have "sucker" tattooed across your forehead find out the Market History and Days on Market on a property before making an offer.
Did you know that there is a private side to the MLS where real estate agents get information that the buyer doesn't get but would want?
In 1991 before I got my real estate license my wife and I were looking for properties to buy and fix up. Back then, if you don't remember, there was no internet or email and only businesses had faxes. So agents would print out listing sheets (text only) on lousy dot matrix machines and mail them to you. One day I received listing sheets that didn't look the same as the ones I was getting before. The agent must have screwed up and sent the internal listing sheets. The ones the agents were suppose to keep private for themselves. It had the original list price, how many days on market for the property, and the expiration date.
When I would look at a property I would ask the agents (who back then were all working as seller agents) how long was the property on the market and some would say, "I don't know." I now knew that if they truly didn't know they could easily find out.
I wanted access to this information. I figured if I could get a Bachelor of Science degree from Michigan State University I shouldn't have any problem getting a real estate license. So, that's what I did. I took the big 24 hour course, passed the test, associated with a real estate company and I now had direct access to the private side of the MLS.
Today you don't need to get a license to access this information. With a click of a button the whole market history of the property including days on market, price drops, whether it's gone under agreement and came back on the market can be attached to the listing sheet. Since most agents in my area work as a buyer agent when working with a buyer they should be giving this information to their buyer clients. For those people who hire me as their buyer agent I give them this information on every property they are interested in. If your buyer agent is not giving you this information I suggest you find out why not and ask them to start sharing it with you.
The more informed you are the better you will be at negotiating.
In 1991 before I got my real estate license my wife and I were looking for properties to buy and fix up. Back then, if you don't remember, there was no internet or email and only businesses had faxes. So agents would print out listing sheets (text only) on lousy dot matrix machines and mail them to you. One day I received listing sheets that didn't look the same as the ones I was getting before. The agent must have screwed up and sent the internal listing sheets. The ones the agents were suppose to keep private for themselves. It had the original list price, how many days on market for the property, and the expiration date.
When I would look at a property I would ask the agents (who back then were all working as seller agents) how long was the property on the market and some would say, "I don't know." I now knew that if they truly didn't know they could easily find out.
I wanted access to this information. I figured if I could get a Bachelor of Science degree from Michigan State University I shouldn't have any problem getting a real estate license. So, that's what I did. I took the big 24 hour course, passed the test, associated with a real estate company and I now had direct access to the private side of the MLS.
Today you don't need to get a license to access this information. With a click of a button the whole market history of the property including days on market, price drops, whether it's gone under agreement and came back on the market can be attached to the listing sheet. Since most agents in my area work as a buyer agent when working with a buyer they should be giving this information to their buyer clients. For those people who hire me as their buyer agent I give them this information on every property they are interested in. If your buyer agent is not giving you this information I suggest you find out why not and ask them to start sharing it with you.
The more informed you are the better you will be at negotiating.
