6935 Stockwell Drive

I'm always excited to list a house in the Powers area.  With close proximity to military bases as well as shopping and amenities, this location is always a good one.  

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This charming 2-story home sits on an oversized cul-de-sac lot and offers gorgeous mountain views, RV parking, formal living and dining areas, vaulted ceilings, family room with gas fireplace, air conditioning, new carpet, new roof, new water heater, new windows and a huge unfinished basement ready to expand into.   The neighborhood is quiet and within walking distance of parks, schools and shopping!

 

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6387 Hannah Rose Road

I keep saying it's a seller's market, and I'm right. This property is further proof of that. I listed it recently and after only two days on market, we had several showings and an attractive offer submitted. It's now under contract. Sellers are happy. Buyers are happy.

Truth is our market inventory, meaning homes for sale, is so low that buyers are scrambling to find quality, affordable housing right now. The good stuff is getting swooped up fast and at top dollar, especially in locations like this. 

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This home is located in the Powers area, conveniently located near to Peterson Air Force Base, Shriever Air Force Base, The Air Force Academy and Fort Carson Army Post.

Interest rates remain at record lows, and rumor has it they will stay at such until after the upcoming presidential election. These low rates give today's buyers more buying power, enabling them to purchase more house. Now they just need more houses like this to go up for sale.

 

 

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Successful Pricing Takes Market Trends Into Account, Month's Supply of Inventory (MSI)

As discussed in a previous article, determining a baseline value for your home before determining the actual listing price is a good practice. Another good practice is to study and understand the current market conditions before you actually decide on a final listing price.

There are several statics, rates and numbers you can look at when trying to determine the health of a specific Real Estate Market but when we price a home for sale we only consider a few. The primary statistic we want to know about as we prepare to put a home on the market is “Months Supply of Inventory” (MSI). This number indicates how long it would take to sell through all of the existing inventory. Since we are trying to price a specific property, we look at MSI as it pertains to a specific area and price niche not the entire market. MSI for the overall market is more useful when answering a question like “How’s the Real Estate Market”, not so helpful when trying to answer the questions “How much can you sell my house for”?

So, for the purpose of listing a home for sale, we want to drill into a specific area, price range and type of home. For the sake of this article let’s say we are selling a:

    • 4 bedroom
    • 3 bath
    • 3 car garage
    • 2,800 square foot
    • Two-Story home
    • Located in the Academy, District #20 attendance area.

The first step to establishing the Months Supply of Inventory is to find the “Absorption Rate”. This is the number of homes that sell in a particular market segment over a specified amount of time (we use one year).

To establish absorption rate, we look at the total number of similar homes that have sold over the past year. Let’s say there have been 225 sales of this particular type of home over the past year.

This means 18.75 homes like this, sell on average each month (225 sales/12 months). If there are currently 42 homes like this for sale on the market, we have a 2.3 Month inventory of that kind of home. We determine this by dividing the number of available homes by the number that sell per month. It is important to note that Absorption Rate is often expressed as a true percentage, especially in the Commercial Real Estate world but for the purpose of establishing MSI, our method is sufficient. For the purists the actual absorption would be 5.33% of the inventory.

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The MSI in our example ends up being 2.3 Months of inventory. This is a very low amount of inventory and constitutes a “Sellers Market”. Common acceptance of a Seller's market is anything less than 5 Months of inventory is considered to be a Sellers Market.

    • An MSI of less than 5 months = Seller’s MarketAn
    • MSI of 5 to 7 months = Balanced Market
    • An MSI of more than 7 months = Buyer’s Market

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An MSI of 2.3 months would certainly encourage us to move higher on our listing price, although there are still a handful of other factors we look at, like: “Days on Market”, “List to Sold Percentage” as well as trends in the appraisal industry.

Months Supply of Inventory is an essential indicator to know and understand whether buying or selling.

 

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909 Fire Rock Place

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I keep saying it's a Seller's market.  Here is proof.  This is one of my recent listings.  It's a really cute 2-story home located in the Greyhawk neighborhood in Northgate.  It was built in 2011.  It's got 4 bedrooms, 4 baths, finished basement and over 2,300 finished square feet.  I put it on the market last Tuesday, and two days later we were under contract.  In the course of two days on market we had about seven showings.  The offer which was accepted was a strong one with few concessions.  And clearly, if that one hadn't gone through there would have been another offer shortly.

The real estate market in Colorado Springs is crazy, folks.  Homes are selling fast and at top dollar.  Sellers are often getting full price or are close to that.  We are even seeing buyers come down from Denver to buy homes here and commute, mostly because there is so little inventory in Denver right now.

It's a great time to sell a house here.  Woo hoo, I say!

 

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Successful Pricing Starts With a Realistic Baseline Value

The first question on the minds of most people getting ready to sell their home is, how much is my home really worth?

Homeowners thinking about selling have usually gotten an estimate from a home valuation site like Zillow or even asked a Realtor what they thought the value might be. It is important to keep in mind that those numbers should only be used as a rough estimate. Zillow freely admits that their zestimates are on average 8% +/- correct. On an median priced home in El Paso County, Colorado that is about a $20,000 delta +/-, pretty significant, in our opinion. The Zestimate was never meant to be the be the final word, just a rough idea of what the home is worth.

When a homeowner becomes serious about selling, they have a couple of options when it comes to getting the price right. First, they can order a Professional Appraisal, this is a great way to find out the “baseline value” of the property. Appraisers don’t take into account market trends or supply conditions, so their price is a true value but not necessarily a market value. Depending on the current market conditions (Buyers Market vs. Seller’s Market) the actual listing price could be quite different.

The second method, and the one we use when putting a home on the market is called a CMA (Comparative Market Analysis), this is a document that helps us determine the baseline value as well as the best actual listing price of a home.

Ideally a professional CMA examines the sales data and characteristics of the most similar homes, located within the closest proximity to the “Subject Property” (the home we are trying to price). Essentially we look for identical matches to the subject property, we call these matches “Comparables” (Comps) since this is not really possible to find “Exact Matches”, we filter through these comps in order to find the closest matches possible.

The “Comps” are then put into a spreadsheet alongside the “Subject” property so we can start to apply debits and credits to the “Subject” property in order to compensate for any differences. These adjustments are based on things like:

    • Location
    • Square Footage
    • Floorplan
    • Number of Bedrooms
    • Number of Bathrooms
    • Garage Size
    • Lot Size
    • Upgrades

These adjustments show us where the “Subject” property should sell when compared to the Comparable Solds. This figure now becomes our baseline, or the number we start from when choosing a listing price.

There are a number of additional factors we consider before deciding on an actual list price, we will examine these in future articles. Until we have a realistic number to work from or a baseline value, any additional considerations are actually counterproductive.

The first step in any Residential Real Estate sale is setting a baseline value to work from.

If you would like to talk to us about the value of your home, please contact us for a no cost, no obligation analysis.  

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