Southern Maryland Real Estate! Home values are established by the pool of ready, willing and able buyers; not Seller's, not REALTORS®. To be a successful seller in today's market requires knowledge, thorough analysis, a valid strategy and most of all, commitment. Getting it wrong can be catastrophic.
The property detailed on the opposite page is a very specific example of what a tentative or misguided approach to selling a home can lead to. In a two year period, this property lost 69% of it's market value. Even more troubling is the realization that when this home finally sold, every home in the area, for sale or not, will now be valued by comparison to this property.
The property was initially priced at $430,000, by the seller, in effort to sell the property with sufficient net proceeds to cover selling expenses and clear all liens. According to our analysis, the market value of this home at that time was in the $250,000 range. Over the next six months, the seller worked with his lender to pursue a "short sale" and reduced the list price in substantial increments to as low as $219,000. Unfortunately, that was too little, too late. The listing expired and the home was foreclosed upon in February of 2008.
Had the seller and lender agreed to offer the property at fair market value in September of 2007 ($250,000 rather than $430,000), the property would likely have sold and netted the lender almost double the proceeds. Instead, the pricing decisions cost the lender $125,000 plus whatever the legal and carrying costs were to complete foreclosure. While this level of loss is sustainable for an institution, a similar result for a private seller is simply devastating.
Values will continue to feel downward pressure until such time that the relationship between Inventory and number of Homes Sold return to more normal levels. The graph to the left reflects a broader regional market and considers all price ranges. The nearer a property is to the beltway, the less pronounced the imbalance. The gap between inventory and sold properties is certainly broader in property priced above $500,000 than those priced below. If you were to only consider those properties listed under 200,000, you would find a very competitive marketplace for those trying to buy a 0 home. Multiple offers are now common on property offered at this level.
In the distressed markets, median sales price declined over 40% in one year. At the new value, more than twice as many homes sold in 2008 compared to 2007. Unfortunately, the majority of properties that sold were "short sale" or foreclosure listings. Another key indicator is the ratio of owner occupied to investor purchases. In the lower price ranges, first time buyers are finding it difficult to compete successfully with investors. The seller, likely a bank, prefers selling to an investor paying cash or putting 20% down, rather than a first time buyer with a modest down payment. The first time buyer is also obtaining FHA (government insured) financing, which adds another layer of scrutiny to the property's condition.
Good News for the local counties! See the local county data reports actual
Good News for the local counties! See the local county data reports actualresults for the month of December and compare 2007 to 2008. The numbers tell the story! The local county market median sale price has not dropped as significantly year over year, but if the value trend continues, we will see a higher percentage of distressed sellers surface. The lower values go, the more likely it becomes that Institutions will be the only sellers that can afford to sell.