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Invite us in. We’ll bring results. ® Factor the Market Trend into Pricing (for real!)

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Presentation on theme: "Invite us in. We’ll bring results. ® Factor the Market Trend into Pricing (for real!)"— Presentation transcript:

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2 Invite us in. We’ll bring results. ® Factor the Market Trend into Pricing (for real!)

3 Invite us in. We’ll bring results. ® Your House as seen by… Yourself

4 Invite us in. We’ll bring results. ® Your House as seen by… Your Buyer

5 Invite us in. We’ll bring results. ® Your House as seen by… Your Lender

6 Invite us in. We’ll bring results. ® Your House as seen by… Your Appraiser

7 Invite us in. We’ll bring results. ® Your House as seen by… And…Your County’s Tax Assessor

8 Invite us in. We’ll bring results. ® Agenda Price to meet the market not chase it True Market Value Reading the Trends Exercise: Price to the Future The Weichert ® approach to pricing What the buyer’s market taught us Introduction to the Enhanced PTA Calculator

9 Invite us in. We’ll bring results. ® “There is a gap between what sellers think and the realistic price they can get. That gap is where your skills must work.” Jim Weichert, 2008

10 Invite us in. We’ll bring results. ® Price to Meet the Market Not Chase It Your Listing Market

11 Invite us in. We’ll bring results. ® Show of Hands... Who here has had a seller who wanted to list their house for 30% higher than what you know they can get for the house? Who here has lost a listing to the competition who took it for an unrealistically high price?

12 Invite us in. We’ll bring results. ® What’s in the Sellers’ Mind? Think carefully... On WHAT did the sellers base their price?

13 Invite us in. We’ll bring results. ® Factor the Market Trend into Pricing Seeking the True Market Value Statistics, Trends & Forecasts

14 Invite us in. We’ll bring results. ® True Market Value True market value = the price paid by a ready, willing and able buyer not forced to buy, to a ready, willing and able seller not forced to sell, in an arms length transaction, after sufficient exposure to the market.

15 Invite us in. We’ll bring results. ® Pricing to Reach the True Market Value Time [DOM] Buyers 30 Well Priced Listing: Maximum Activity Multiple Offers Highly Priced Listing: Weak Activity/ No Offers Offer within 30 Days High Price: “Low Ball” Offers High Activity Low Activity Almost No Activity 0 Unrealistically Highly Priced Well Priced Early Offer

16 Invite us in. We’ll bring results. ® Elements of the Real Estate Trend 1.Absorption Rate 2.Variation (Appreciation/Depreciation) 3.Sales Price to Listing Price Ratio 4.“Temperature” of the Market

17 Invite us in. We’ll bring results. ® 1. Absorption Rate TOTAL ACTIVES UNDER CONTRACT PAST 30 DAYS = ABSORPTION RATE SUPPLY DEMAND

18 Invite us in. We’ll bring results. ® Absorption Rate = ABSORPTION RATE SUPPLY DEMAND

19 Invite us in. We’ll bring results. ® Market Absorption Market Absorption Monday, Feb 9, 2010 MLS ACTIVE LISTINGS LISTED IN LAST 30 DAYS UC LAST 30 DAYS ABSORPTION RATE (MONTHS) Town A Town B Town C Town D 1630 Town E Composite

20 Invite us in. We’ll bring results. ® Market Appreciation/Depreciation High Supply/Low DemandLow Supply/High Demand Normal Market Absorption in Months Normal Weichert has been studying market conditions for more than 3 decades and has found a direct correlation between market absorption and property values. As absorption rates increase beyond a normal market level of 5-6 months, property values depreciate annually. Note: This Market Scale is valid only for absorption rates between 1 and 12 months.

21 Invite us in. We’ll bring results. ® 2. The Math Behind the Chart New Price – Old Price Old Price = Variation Variation > 0 APPRECIATION

22 Invite us in. We’ll bring results. ® The Math Behind the Chart $550,000 – $500,000 $500,000 = VARIATION = 0.1 = 10% > 0 $50,000 $500,000 = $550,000 Price [$] T0 Time [Month] Old Price New Price APPRECIATION

23 Invite us in. We’ll bring results. ® 2. The Math Behind the Chart New Price – Old Price Old Price = Variation Variation > 0 DEPRECIATION

24 Invite us in. We’ll bring results. ® The Math Behind the Chart $450,000 – $500,000 $500,000 = VARIATION = = - 10% < 0 - $50,000 $500,000 = $450,000 $500,000 Price [$] T0 Time [Month] Old Price New Price DEPRECIATION

25 Invite us in. We’ll bring results. ® Correlation between Absorption and Appreciation/Depreciation High Supply/Low DemandLow Supply/High Demand Normal Market Absorption in Months Normal Weichert has been studying market conditions for more than 3 decades and has found a direct correlation between market absorption and property values. As absorption rates increase beyond a normal market level of 5-6 months, property values depreciate annually. Note: This Market Scale is valid only for absorption rates between 1 and 12 months.

26 Invite us in. We’ll bring results. ® The Caveat Note: Because absorption rates vary throughout the year, look at average absorption rates or trends over the last six months.

27 Invite us in. We’ll bring results. ® Monday, February 9, 2010 CLOSED LAST 30 DAYS AVERAGE LIST PRICE AVG. DOM TO UC AVERAGE SOLD PRICE SOLD VS. LISTED Town A 2$294,500163$272,50093% Town B 1$345,000183$327,00095% Town C 3$325,96621$306,33394% Town D 1$399,900304$352,00088% Town E 2$339,45030$309,00091% Composite9$332,300140$306,77892% 3. Sold Price/List Price Ratio

28 Invite us in. We’ll bring results. ® 4. “Temperature” of the Market What would give you more of an indication of the “temperature” of the market.... ? When a listing Closed? OR When a listing went Under Contract?

29 Invite us in. We’ll bring results. ® Market Overview Temperature Monday, February 9, 2010 MLS ACTIVE LISTINGS AVERAGE ACTIVE PRICE LISTED IN LAST 30 DAYS PRICE IMPR. LAST 30 DAYS IMPROV. RATE UC LAST 30 DAYS AVERAGE UC PRICE PENDINGS VS. ACTIVES ABSORPTION RATE (MONTHS) CLOSEDLAST 30 DAYS AVERAGE LISTED PRICE AVERAGE SOLD PRICE SOLD VS. LISTED SOLD VS. ACTIVES Town A75$387, % 9$396,322102%8.32$294,500$272,50093%70% Town B88$270, %7$179,55766%12.61$345,000$327,00095%121% Town C116$384, %11$314,05482%10.53$325,966$306,33394%80% Town D16$417, %0 1$399,900$352,00088%84% Town E6$489, %1$420,00086%6.02$339,450$309,00091%63% Composite301$355, %28$310,65787%10.89$332,300$306,77892%86%

30 Invite us in. We’ll bring results. ® Exercise: Price to the Future Most Recent Under Contract Comparable: $519,000 Under Contract Date: 15 Days Ago Days-on-Market to Contract = 120 days Sale Price to List Price Ratio = 93% Absorption Rate = 9 month WHAT SHOULD THE LIST PRICE BE ?

31 Invite us in. We’ll bring results. ® Sales Price to List Price Ratio = 93% List Price for Under Contract Comp = $519,000 Expected Sales Price: $519,000 x 0.93 = $482, Determine the Expected Sales Price for the Under Contract Comp

32 Invite us in. We’ll bring results. ® Absorption Rate = 9 month Annual Depreciation = = - 15% to – 20% Monthly Depreciation = = % to % Averaged Monthly Depreciation = = - 1.5% 2. Determine the Effect of Absorption on Market Value Market Absorption in Months Normal

33 Invite us in. We’ll bring results. ® 120 Days On Market = 4 Month - 1.5% Monthly Depreciation x 4 Month = - 6% Depreciation Factor: 100% - 6% = 94% DOM Depreciated Price: $482,670 x 94% = $453, Effect of DOM on Price

34 Invite us in. We’ll bring results. ® Under Contract Date = 15 Days Ago = 0.5 Month - 1.5% Monthly Depreciation x 0.5 Month = % Depreciation Factor 100% % = 99.25% UCD Depreciated Price: $453,710 x 99.25% = $450, Effect of UCD on Price

35 Invite us in. We’ll bring results. ® 34 Price to the Future Waiting doesn’t work in seller’s favor. Overpricing doesn’t work in seller’s favor. Price today for the price of tomorrow. Be the more attractive price on the market. Induce competing offers. Good properties, attractively priced still sell over the asking price. Sell within 30 days for more than you could expect in 120 days. Save 3 to 4 month of mortgage payments. Protect yourself from the incertitude of listing in a depreciating market. PRICE TO MEET THE MARKET INSTEAD OF CHASING THE MARKET!

36 Invite us in. We’ll bring results. ® Factor the Market Trend into Pricing Enhanced PTA Calculator & How It Works

37 Invite us in. We’ll bring results. ® 36

38 Invite us in. We’ll bring results. ® Current PTA vs. Enhanced PTA Current PTA The trend is determined by analyzing comps: –Sold 12 months ago; –Sold 6 month ago; –Pending sales in the past 30 days; –Active listings The Absorption Rate is calculated but not incorporated in the trend DOM are calculated, but not incorporated in the trend “Temperature” of the Market is important, but not essential Enhanced PTA Uses absorption rate to determine market appreciation/depreciation (long term trend) Uses comparable sold listings to establish the sales price to listing price ratio. Applies the variation to the most recently under contract pending listings. Eliminates the current active comps Temperature of the market is essential

39 Invite us in. We’ll bring results. ®

40 Math Behind the Enhanced PTA Calculator Time [Months] Price [$] PTA2 PTA1 30 Days Pending List Price 6 Month Sold Price 12 Month Sold Price Pending Expected Sales Price 1314

41 Invite us in. We’ll bring results. ® Price to Meet the Market Not to Chase It Your Listing Market

42 Invite us in. We’ll bring results. ® How the Enhanced Calculator Works

43 Invite us in. We’ll bring results. ® Enhanced PTA Calculator: Calculation 1

44 Invite us in. We’ll bring results. ® Enhanced PTA Calculator: Calculation 1

45 Invite us in. We’ll bring results. ® Enhanced PTA Calculator: Calculation 2

46 Invite us in. We’ll bring results. ® Enhanced PTA Calculator: Calculation 2

47 Invite us in. We’ll bring results. ® Enhanced PTA Calculator: Calculation 2

48 Invite us in. We’ll bring results. ® Enhanced PTA Calculator: Calculation 2 Note: -Mark with an asterisk any address of a listing on which an adjustment was applied (i.e. extra rooms, extra bathrooms, extra square footage, etc.)

49 Invite us in. We’ll bring results. ® Enhanced PTA Calculator: Price Guide

50 Invite us in. We’ll bring results. ® Enhanced PTA Calculator: Price Guide

51 Invite us in. We’ll bring results. ® Enhanced PTA Calculator: Price Guide Note: THIS PRICE GUIDE IS NOT TO BE SHOWN TO THE SELLER. YOU HAVE TO LEARN, UNDERSTAND AND BE ABLE TO EXPLAIN THE RATIONALE BEHIND THE "NEW PTA CALCULATOR" TO THE SELLER.

52 Invite us in. We’ll bring results. ® Enhanced PTA Calculator: Price Guide

53 Invite us in. We’ll bring results. ® Enhanced PTA Calculator: Price Guide

54 Invite us in. We’ll bring results. ® Enhanced PTA Calculator: Print Page

55 Invite us in. We’ll bring results. ® Enhanced PTA Calculator: Print Page Note: - This is compatible with MS Excel 2003 to If you need help using Excel, go to Weichert University and take the Excel online courses in the technology courses section. - This may not be compatible with MAC and MS Vista.

56 Invite us in. We’ll bring results. ®

57 Pricing Toolkit What to bring:

58 Invite us in. We’ll bring results. ® Assignment for (insert date) 1.Hands on practice session using REAL information for a listing or price improvement. No listing? Get one! 2.Download the Enhanced PTA Calculator 3.(insert date), please bring: –Laptop, if you have one (with Calculator on it) –Sold Comps (12 months, 6 months) –Under Contract in Past 30 Days –One-Line report of actives

59 Get Stamped!

60 Invite us in. We’ll bring results. ® “The only thing you can do to sell real estate right now is price it to sell.” Jim Weichert November 14, 2008


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