The Real Estate Broker's Corner

I like "validation" of my opinions. I like to bounce my opinions about pricing against something that can temper them, set a ceiling or a floor. One of those validation tools used to be assessments. I used to be able to say with a great degree of confidence that a house in Westport, would sell for somewhere between 1.3-1.45 times assessed value. That was in 2004, 2005. In 2006, that factor came down to about 1.15-1.25. I could say, I think that house is worth 500k,  and because it is assessed at 435k, I figured I wasn't that far off.

Now, the factor is shaky. The injection of large numbers of foreclosures, and the absence of buyers, has really made the assessment less relevant as a predictive statistic. To what effect? Now, I have to feel around on pricing a little more to find a something that works. What is "pricing that works"? That is the price where the phone rings, where people want to see the house. I had to make 4 price changes on a listing in the first 30 days recently. I used to not even consider price for 45 days.

I am not alone looking for good metrics. Banks like to look a scores, FICO scores in particular, when making loan decisions. Recently, we are hearing horror stories about people who have really good credit scores walking away from their mortgages. To what effect? Well, if the banks can't rely on credit data scores as a reliable indicator of risk, they will either go back to the old days of lengthy committee meetings, and lengthen transaction time accordingly, or they will just stop making loans. Neither is a particulary great scenario for the markets today.

Anyway, let's all hope for a great summer.