I've done a market analysis on your home at 15 Preston Rd in Lexington and have prepared this document to help explain how I've arrived at a price for your home. I perform a market analysis and calculate a price taking into consideration a home’s location, size, configuration, number of bedrooms and baths, lot size and general condition. I also scrutinize the home for issues that, in my experience, will impact the price of a home making it more or less valuable. Then, I look at your current competition - the other homes that buyers in your price range will be viewing, to help determine your price.
There are always a number of buyers looking to buy in Lexington because of the strong school system, the community dynamics and vibrant downtown. People like the feeling of the downtown area, and want to stop and have a coffee, or have dinner at the many restaurants, or just watch the world go by, chatting with folks who are out and about. The Minuteman bike path and conservation areas close by pull those who desire an outdoor lifestyle while still remaining within commuting distance to Boston.
Each of the data points in the graph below show the number of available homes to buy at the beginning of the month. Between 2012 and 2013, buyer confidence increased and the demand increased. From 2013 - 2016, even though supply increased the increased buyer demand meant that the number of available homes decreased. The drop in available homes for 2017 and 2018 is caused by a decrease in supply also. The Lexington market has seen increasing prices over the last few years but has stalled during the last 2 years and the market is beginning to stabilize and become a more balanced market.
Average prices in Lexington are well above average prices obtained in the peak of the market in 2005. Average single family home prices have been increasing steadily since 2009, but over the last 2 years has begun to stall given concerns over the economy and rising interest rates.
Sales distribution statistics for single family homes show that the $1M-$1.5M price-range is the most active in Lexington. The next busiest price range in Lexington is the $1.5M - $2M price range. This is an indicator that new construction is having a significant impact on the average single family home prices in Lexington. The number of new construction homes being built in Lexington in 2013 was 55 homes, 70 homes in 2014, 71 homes in 2015, 66 homes in 2016, 55 in 2017 and has dropped to 39 in 2018.
Before reviewing the price per sq foot charts it is important to throw in a caveat of using the average as the definitive guide. There is wide variability among agents as to what is included in the living area reported in MLS. In some instances, agents will include a finished component of the basement in the living area and this is acceptable so long as how the living area is calculated is disclosed. Others report the living area reported in public record, which never includes finished areas in the basement, but note in MLS that there is a finished basement. To this end, it is important to review each individual listing to determine the ‘true’ price per sq. ft. of above ground living area, but we also need to factor into this when a home has a finished basement.
Reviewing the price per sq. foot charts for single family homes shows us that the average price per sq. ft. in Lexington along with the maximum price per sq. ft. and the minimum obtained for each price range.
The following graph shows the average, maximum and minimum price per sq ft for the year built of a home.
The chart below shows the price per sq ft of single family homes in Lexington given the total living area of the home. It is common across towns to see an increase in the price per square foot for smaller sized homes, as it reflects the minimum cost of a home in a town irrespective of the property size.
The chart below shows how many months’ supply of inventory there is in a given price range. It uses the assumption that given the same rate of sales over the prior 12 months, and considering current inventory available for sale, how many months it should take to sell the available inventory. This is referred to “Absorption” in the real estate world.
Any price range where there is more than 7 months’ supply, we consider there to be an oversupply of inventory, also known as a ‘buyer’s market’. Anything between 4 – 6 months is considered a balanced market. Anything less than 3 months’ supply is considered a shortage of inventory on the market at this price range, also known as a ‘sellers’ market’.
It is worth noting that we are seeing a softening of the market beginning in the fall of 2018. We are starting to see more homes sitting on the market unsold whereas they would have sold for competing offers in the spring/summer market up until the end of July 2018. Some sellers chose to bring their homes on the market in fall 2018 instead of spring 2019 citing their concerns over the economy and hearing talk of a 'housing bubble'. What we are currently seeing is buyer reluctance to make an offer on homes, and we are seeing less 'stickiness' of buyers when they do have an accepted offer. It is becoming clearer as the 2019 market progresses that if a home doesnt get an offer on it after the first weekend of it being on the market, the buyer traffic dramatically slows down and the only way to get buyers back in again is to adjust the price of the home. It is even more important in the market we are currently in, to price realistically.
My analysis of the relevant homes outlined above suggests a final market value for your home of $1,50,000 - $1,200,000.
It is worth noting that I believe your second floor size is larger than is shown in the assessors database. I have estimated it at 1275 sq ft vs the 782 sq ft that the assessors database shows. I have also estimated the living area over the garage as 624 sq ft. If you do decide to come on the market, once we have a floor plan done we will have an accurate measurement of living area instead of estimates. This market analysis is done using the estimates and assumes paint where discussed.
Given the current market dynamics in Lexington, I would suggest listing your home at the lower end of this price range to attract more interest and potentially multiple offers. If the market deems your home to be worth more than the list price, then the price will be pushed over the market value of your home, and sometimes well over when we get multiple offers. When homes are overpriced they end up sitting on the market and ultimately selling for less than market value, whereas homes priced realistically can often sell for well over market value. Competition is what will get us the highest sales price. As we see time and time again, if the buyers consider the market value of your home to be realistic in relation to the asking price, then competition will push the price up higher and often over the market value of the home. The challenge with overpricing is that the buyers are very educated – they go week after week to see homes in their price range so they KNOW what the prices are and what ‘feels’ right.
What we are currently seeing in this 2019 market is buyer reluctance to make an offer on homes, and we are seeing less 'stickiness' of buyers when they do have an accepted offer. It is becoming clearer as the 2019 market progresses that if a home doesn't get an offer on it after the first weekend of it being on the market, the buyer traffic dramatically slows down and the only way to get serious buyers back in again is to adjust the price of the home. What we have identified as happening is that typically in prior years there are also buyers in the market who are 'thinking about buying' in the near future, but are not serious now. These buyers have all but disappeared this year, and we only have the buyers who are serious buyers who will see your home in the first weekend. Subsequent Open Houses will only get 1 or 2 buyer groups through and very few private showings. Because of this, it is even more important in the market we are currently in, to price realistically and generate competition.
I have to stress that these are recommendations. We would bring your home on the market at whatever price you deem to be appropriate.
When determining the right price - it all depends on your motivation and your risk tolerance level. We know that homes that are priced at the 'strike price' will sell quicker and may generate more than one offer. I’m an excellent negotiator and know how to push a price up if we have the market activity. I also know that some sellers want to put their home on for a higher price than I might recommend, which I’m willing to do, so long as it is understood that putting the home on for more than the majority of buyers perceive its value, could mean that your home will have a much longer market time and sell for less than it should have had it been priced properly out of the gate.
I DO NOT DETERMINE THE PRICE - the market dictates the value - what a buyer is willing to pay. My job is to make sure that you have the best market exposure and that your home is positioned well in the market. I do not believe in projecting more money than I think your home will sell for just to get your business.
My team and I know how to stage and market your home, and I understand its value, but I can only sell it for what the market or a buyer will pay. I strongly believe that a home should be priced compared to the current competition, not just on what has sold in the last six months. At the end of the day, you will be competing for the buyers looking for a home like yours and in the same price range.
It is important to stress the value of marketing your home to capture the highest price. In times of low inventory, we know your home will sell by doing the bare minimum to market it, BUT that is not going to get you the maximum price for your home. Key to getting the maximum price for your home is to prepare a comprehensive marketing plan that incorporates all avenues available to us to expose your home to the maximum number of buyers out there looking. Exposure, and feet in the door, is what will get you the highest price for your home. Basic ratios help explain this. If 10% of the buyers who walk in your door fall in love with your home, then if you only have 10 buyers walking in, then potentially there is only 1 buyer - if you have 100 buyers walking in your door then using the same ratios, you will potentially have 10 buyers falling in love with your home. 10 buyers will push the price up versus only one buyer.
New statistics state that over 100% of potential buyers search the web as their primary search vehicle. Thankfully, your home will show fabulously in photos. With historically low interest rates likely to increase and inventory rising, there are homes that do not sell in this market. I’m making my recommendations to ensure that you are one of the sellers who will have success in the first month of being on the market, but optimally the first weekend.