Everyone has an opinion, especially where the real estate market is concerned. Why not back up your opinion with some hard facts and learn the 10 most important real estate numbers to know. It will help you know when to sell your home, when to talk to an agent, and when it’s a great time to buy a new house. You’ll also impress your friends.
1. The Average Sales Price
What’s the average sales price of homes in your area over the past few months? What about your neighborhood? What about your street? If you purchased your home for $195,000 a couple of years ago, wouldn’t it aid you in knowing that it was worth $180,000 now? Or maybe it’s worth $240,000! That would sway your decision of whether to sale your home or not right? You’ll generally have to get this information from a local Realtor so give them a call or (if they’re a good Realtor) they provide all kinds of market data for consumers. You will have to call them for specifics though.
2. Average Days on Market
This is the average number of days a salable home sits on the market before it goes under contract. For example… the current days on market in our area is about 168 days plus or minus depending on your home’s price range. If you are moving for a job, want to be settle by the time the kids go back to school, or need to be in the new house before the new baby comes this is VERY useful statistic for you to know. Ask a real estate agent or find some local market data online.
3. Average List Price
If you are getting ready to sell your home the average list price gives you the price of homes you are in competition with. If you aren’t listing your home within about 5% of this average list price, your property won’t get any interest, any showings, or any offers because everyone KNOWS it’s overpriced and most won’t even take a look at all the amazing remodeling you’ve done.
4. Sell Price to List Price Ratio
Now that you know the average list and sell prices for comparable properties in your market you can put those together to find the Sell/List Ratio. This will give you a good idea of what price to expect from buyers as well as a close approximation of what your final sale price may be.
This is a pretty basic number. How many homes are for sale in the city, area, neighborhood, and street? Knowing the current inventory is a cool number to tell your friends as well as very useful in finding the next number…the absorption rate.
6. Absorption Rate
The absorption rate is number that tells us how long it would take the market to “absorb” the inventory currently on the market based on historical sales data. Most of the time, this is figured using the number of sold properties last month and the number of properties currently for sale. As you are really looking for trends with this number (is it going up, down, or staying the same) I figure it in a way that makes a little more sense to me… I average the past 3 months sales and make a sort of ‘Rolling Average Absorption Rate” It makes it easier to see trends that way. Sorry, didn’t mean to get too technical there.
7. Interest Rate
Whether selling a home or buying one, the interest rate is a great number to know. For sellers, it helps you know when buyers will be ‘out’ and looking for homes because rates are good.
For buyers, a one point difference in interest rate on a $200,000 home mortgage is over $125/month difference. That’s $1,500 a year and $45,000 over the life of the loan! One percent is a pretty big deal!
8. Property Taxes
Lots of people forget about this number but it’s there, eating at your pocket just like your mortgage. If you property taxes are high you might consider listing (or having your agent list) all of the amazing public parks, schools, and roads that your exorbitant taxes go towards. As a buyer, remember to take a glance at the estimated property taxes before making your purchase. That’s one expense you aren’t getting away from after buying the house.
9. Marketing Fee
Whether you sell by owner or use a professional or something in between, you need to know how much it’s going to cost. Flat fee companies charge anywhere between $50-$5,000 and real estate agents range from 0%-10% of the sale price of the home with the majority somewhere in the middle. Ask what you get for these fees? How is your property exposed online and off? What’s the plan? When you know the fee… you can calculate the most important number of all…
10 Seller’s Net
This is the bottom line. Want to know what you’ll walk away with when you sell your home? Work up a seller’s net sheet. I have a good excel document that does just that for sellers in Northwest Arkansas. Obviously, the numbers won’t match up for other areas but you can use it as a template to create your own. Shoot me an email if you want the actual excel document to play with.