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Washington, DC

McEnearney Sign

July-August 2014

MarketWatch, authored by David Howell, is published on a bi-monthly basis by McEnearney Associates, Inc. It provides useful and insightful summaries of current housing market trends. MarketWatch statistics include housing sales from all companies serving our Virginia - Washington DC - Maryland Metropolitan area.

 

IS “COMING SOON” IN THE CLIENT’S BEST INTEREST?

 

You may have seen a sign in front of a home that says “Coming Soon,” or you may have heard the terms “pocket” or “whisper” listings. While those are not the same things, they all represent areas of possible concern when it comes to doing the right thing for a seller. 

Let’s start with some basics. 

  1. We firmly believe that a seller will get the most for their property in the shortest amount of time when it is exposed to the broadest possible market. And doesn’t that make sense? After all, you never know where that buyer is coming from. No real estate company and no real estate agent has all the buyers, so why hide a listing?
     
  2. A property receives the most traffic and the most exposure in the first few weeks on the market. We know that to be the case in good markets and bad, and everything in between. So “testing” or teasing the market in a limited way may not be the best idea.
     
  3. A home shows best when it is fully ready for the market, when all improvements or repairs have been made. You don’t see a new car showroom with a model on the sales floor that needs a paint job.
     
  4. This is the most important one: the seller of any home should give their informed consent to have their home marketed prematurely or to a limited audience.

So, with all that being said, and with inventory being tight in so many parts of the Washington, DC metropolitan area, we see a fair number of homes with a “Coming Soon” sign in the yard. There can be some very legitimate reasons for that – a home may be a couple of weeks away from being ready to go on the market and the seller wants to be sure that buyers looking in their area are aware that they will have another option in the near future, and they don’t want to run the risk they’ll lose that buyer to a home already on the market.  

But remember that the people who are aware of that sign may be limited to the people who drive by. One of them may approach the seller to see the house before it’s fully ready to be shown – or even make an offer so they get the jump on other buyers. On the surface, that may seem like a good thing: the seller gets interest and maybe even an offer before the house is fully exposed to the market, and are spared the hassle of having to make the beds every day. But that seller doesn’t know what they’re missing. They don’t know how many potential buyers there are who might have been interested in their home if they had known it was on the market. If one was interested enough to make an offer, how many more might there have been if the home had been fully marketed? If the seller wants to entertain such an offer, it is of course their prerogative to do so, and they may place a higher premium on speed and convenience than price.

Other times, that “Coming Soon” sign may be up so that the listing agent increases their chances of selling the house themselves – putting them on both sides of the transaction. And that’s especially true of a “pocket” or “whisper” listing – when the agent only tells a handful of people that a house is available with no intention to expose it to the full market. And who is best served by that? There certainly are sellers who value privacy above all else and don’t want their home “on the market.” But in most cases, it’s hard to see how a seller benefits from a stealth listing, and lots of would-be purchasers are deprived of the chance to buy at the market price.

The point is simply this: a seller should know the pluses and minuses of marketing their home to a limited audience, and it should be their decision whether to cut off part of the pool of potential purchasers.


ABSORPTION RATE BY PROPERTY TYPE

The following tables track absorption rate by property type, comparing the rates in the just-completed month to the rates in the same month of the previous year. The absorption rate is a measure of the health of the market, and tracks the percentage of homes that were on the market during the given month and in the given price range that went under contract. [The formula is # Contracts/(# Contracts + # Available).] An example: The absorption rate for condos/co-ops priced $750,000-$999,999 in June 2014 was 32.6%; that compares to a rate of 23.7% in June 2013, and the increase means the market was better in 2014 for that type of home. If the absorption rate was less in 2014 than in 2013, we have put the more recent absorption rate in red. This month there was improvement for 8 of the 18 individual price categories.


ABSORPTION RATES - CONDOS AND CO-OPS

  • The overall absorption rate for condos and co-ops for June was 37.0%, a decrease from the 38.7% rate in June 2013.
  • The absorption rate for condos across most price ranges is more balanced in DC than anywhere else in the region.

 

ABSORPTION RATES - ATTACHED HOMES

  • The overall absorption rate for attached homes for June was 46.1%, which was the same rate as June 2013.
  • Again, look at the balance across most price ranges.

 

ABSORPTION RATES - DETACHED HOMES

  • June 2014’s absorption rate for detached homes was 33.8%, a decrease from 35.6% in June 2013.
  • And the balance among the price ranges is evident here as well.
     

 

McEnearney Property Management McEnearney Commerical Luxury Real Estate
 

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