When evaluating whether a property is priced correctly or not, it’s important to take a few big picture steps to understand the market clearly. We like to think of it as looking down at the market from a 30,000 foot perspective, and then zooming in quickly and efficiently on the house.
So what I mean by a 30,000 foot perspective?
By looking at it as if we were flying over it in an airplane, it will give us the ability to notice certain trends in the market. We do this by looking at a three or four year history of the market broken down by months.
For example, if you are looking at a home on Daniel Island we would run a report on the supply and demand for Daniel Island for several years.
It will include columns such as:
- The number of active homes each month.
- The cumulative number of days on the market.
- The number of sales each month.
- The number of sellers competing for these sales each month.
- The percentage of list price to asking price.
- The number of months it would take for inventory to dry up.
The next step is to culminate a list of relevant homes that are available for sale, under contract, failed to sold in the past, and of recently closed. By pairing this data with the trends that we identified in the previous step, we are able to determine if the price is correct, and what a reasonable offer may look like.