I aim to give my clients as much information as possible to help them make the most informed decisions possible. I have received A TON of training and coaching in my field, and I believe that passing that information along is a value add to my clients. I don’t tell them every single factor I put into finding the market value of a home, because some things would just not be worth taking the time to explain unless they themselves wanted to be a realtor.
One of the things that I always do though, is find out what type of market their micro market is. Every time that I evaluate a house, I look at the micro market of that house. By that I mean I look at a mile radius around that house. This is standard for most appraisers when they are working to find value, so it is the measurement that I use. Within that mile radius, I look at the number of houses that are pending and sold, and the number of houses that are active.
Here is an example:
Let’s say you have a house that has 18 houses currently active within one mile of it. In the last year, 97 houses have sold within that one mile radius. The first thing that I need to find is how many houses sold per month on average. 97 (total sales) divided by 12 (months) is 8.08 houses sold per month on average.
With 18 houses currently for sale, I can divide that number by 8.08 (monthly average) to find that there are currently 2.23 months of active inventory. This means that if no other houses came on the market, and the average (8.08 houses sold per month) stayed the same, then all of these houses should be sold in 2.23 months.
Then I just need to know:
0-4 months equals a Seller’s Market
4-6 months equals a Balanced Market
6+ months equals a Buyer’s Market
Now I can look at this house and say that they are in a strong Seller’s Market and that their competition right now is relatively low. That adjusts how I price them. This is just one factor in pricing. If you are interested in knowing the price of your home, reach out any time.
~Ryan Lynch
