The 2015 real estate market continues along a strong stride, carrying-over near record-high sales volumes from last year in Sarasota County. In fact, the first seven months of 2015 clearly demonstrate a quite stable, but growing market. Should the pace last through the remaining months of the year, new record sales figures will be reached, making 2015 the most successful historically. That's a big feat, fighting-off fears of years past, when median prices and values deflated significantly.
In the latest statistics compiled by the Realtor Association of Sarasota and Manatee, median prices for single family homes reached $219,500 for Sarasota County, besting July 2014 by an impressive 9.2 percent. Conversely, median condo prices dropped to $190,000 from $205,000. Pending sales, or, transactions which have yet to close, increased 3 percent by comparison of the same month last year. Available inventory in July 2015 shrank 13.9 percent, with 3,373 active properties on the multiple listing service.
Distressed properties, comprised of foreclosures and short sales, represent less than 1/5 of all listings. However, pockets still remain in some areas where distressed sales make-up a significant portion of all real property active listings. This matters, because such homes can have an affect on other properties.
How Distressed Properties Affect Home Prices
Property appraisals are determined in three different ways: cost approach, income approach, and market value approach. The first, cost approach, is the cost to build, in addition to the value of the plot. The income approach is primarily used in multifamily housing. Most often the market value approach is used to calculate a residential home’s value, using recent comparable property sales. These are homes with nearly the same livable square footage, number of beds and baths, similar features, age, and location.
“Distressed sales within a homeowner’s association also means it’s unlikely that the owner paid that unit’s prorata share of the HOA dues. If the homeowner’s association fund runs low, it’s the other home owners who end up paying the tab in the form of higher association dues. Unfortunately, although many homeowner associations have the power to foreclosure if dues are in arrears, few have the money or means to do it, and those that do often forego the process when the mortgage amount is higher than the value of the unit.” --Homebuying, About.com
When a real estate professional conducts a comparable market analysis, comps represent market value, which can include distressed properties. However, this inclusion is not always used in the analysis. The reason is because there is so little impact on the neighborhood, only about a drop of 1 percent or less. Generally, real estate professionals will include comparable properties recently sold in adjacent neighborhoods in order to arrive at a target listing price.
How to Sell a Home Surrounded by Distressed Properties
Currently, there are approximately 500,000 foreclosures across the nation, and, about 20 percent are vacant. Unfortunately, the Sunshine State contains the highest number of foreclosure properties. If you are considering selling, but are unsure about doing so because there are distressed properties in your community, you should act now because those properties are going to become a really big problem as the months unfold. Here's how you can sell a home surrounded by distressed properties:
- Give your home more than a little curb appeal. Take a step back and look at your home from across the street. If the paint is faded and the front door looks worn, a fresh coat of paint and a new entry door will have a huge impact on your home's outward appearance. Understand that if a buyer is compelled by the listing photos to see a home, it demonstrates serious interest and that's what you want to capture.
- Pay attention to details. While the big picture is critical, details matter just as much. While the buyer's agent is retrieving the key from the lockbox, the buyers are eyeing every detail, from the doorknob to the welcome mat. So, make those details standout. You might replace the welcome mat, install a new exterior light, and/or, add colorful plants.
- Deep clean the interior. This literally means every corner of every room. Buyers come into a home with high expectations and critical eyes. They'll notice a little spot of mold in the bathroom or dust collected on a shelf. Any and all dirt, grime, or stain must be dealt with so it doesn't become a distraction.
- Stage your home. Spending just a few hundred dollars can bring back thousands in return. If you want to avoid incurring the cost, then stage your home DIY style. Declutter every room and every storage space, remove all family photos, let the sunlight shine inside, and, repair everything that's broken.
- Offer buyer incentives. One advantage distressed properties have is price. That discount might well evaporate in the rehab, but, it's what you're up against. Offer some buyer incentives, like paying HOA fees or chipping-in on closing costs.