Traditionally, past sold data has almost always been better than current and pending inventory. Many times today the past sold data is outdated, predicated on a market we had last year.
In some subdivisions, there may be 80 homes on the market and 0 or 1 pending sales. There may be 0 sales in the last 4 months, making it difficult to use past data. And the new inventory may be priced less than the past sales, guaranteeing future sales will be at a lower price point.
Experienced agents must account for all of this and make a recommendation. In the end, the free market will always determine the value. Which buyers and sellers get there is another story.
The seller sets the price, and the market determines the value. If the price is out of line with the value, nothing good can happen for the seller. If it’s too high, it just sits there, perhaps going down in value as the market falls. If it’s too low, the seller just gave all the equity away to the buyer.
Correctly setting the price takes skill. No computer model has been able to do it.
For a computerized Valuation of your home, check out The Ellis Team Home Value Model.
2006 State of the Market Report
The real estate market is much like a finely tuned jet airplane. To fly at optimal speed and efficiency, the pilot sets the course at optimal altitude, which provides for greatest speed and least resistance. The SW Florida real estate market flew at high altitude from 2001-2003. In 2004, the jet airplane transformed itself into a space shuttle and left the earth’s atmosphere. For two years the shuttle flew at super sonic speed, at altitudes never experienced before.2005 was a year where nothing could stop the shuttle. It was flying faster than the engineers said it could, and seemed unstoppable; until the oxygen sprung a leak. Suddenly, the shuttle was forced to return to earth as there wasn’t enough oxygen to sustain this altitude. Like all re-entries, it can be bumpy and chaotic. The 4th Quarter of 2005 wasn’t bumpy or chaotic. It was as if the world had stopped, and we were flying in slow motion. Speed and altitude dropped quickly. Once the shuttle emerged on radar, it didn’t fly like a loud and confident jet airplane. It felt more like a hot air balloon, drifting slowly, silent and quiet, awaiting word on its future course from the tower. The tower didn’t answer. The flight became choppy in the 1st Quarter of 2006 when everyone realized we were back to flying at earthly speeds and altitude. Sellers began to grasp the gravity of the situation, and made adjustments.
The final altitude has not been set. Once our market finds its optimal altitude, it will once again be in balance. Once our market reaches balance, it will again rise, fly at great speeds and take us all to new heights. No one can say for certain what the correct altitude for this market is, or exactly when we will reach it. One thing we can say with certainty is that the market is balancing itself right before our eyes, and quickly. We are starting to see activity pick up again, either from pent-up demand or price corrections, or both. Once the plane levels we believe we’ll be in for another long and smooth ride. This plane will never land.
Download the full State of the Market Report
The annual Cyber Star Summit is being held this week in San Antonio Texas. The Cyber Stars are the Top 200 agents nationwide out of more than 1.5 million Realtors. The Cyber Stars are discussing the latest trends in technology, improving communications with buyers and sellers, and evaluating the latests products to better serve the Real Estate community.Brett Ellis is is a Cyber Star and was asked to speak at this years Summit. Not only was it a pleasure speaking to such a powerful group, I also enjoyed learning from some of the brightest minds in the business today. We look forward to bringing some of the latest trends to the Fort Myers, Southwest real estate market. Technology, along with real estate is developing at lightning speed, and those that adapt and change with it will become more efficient and prosper.