By Chuck Fister
Special to The Citizen

A December real estate column in The Citizen reported that so far in 2007 Fayette County single family homes sold on average for 97% of their listing price. Furthermore, the market time for those sold listings was about 97 days or little more than three months. That’s great news! And it was factual in that the Georgia MLS offers agents a “Market Statistics Report” that will give exactly those very metrics.

However, those metrics don’t conform or comport with what I know, what I see, and what is conveyed to me by my peers, sellers, and other observers. My own research using the same data source indicates that the best overall month in 2007 for seller expectations was July, with an average of 10 months of inventory on the market. That is a far cry from the three months reported above. My data analysis typically does not utilize the MLS reported ratio of sales prices to listing prices (the source of the 97% factor above), primarily because I find the MLS reporting methodology to be simplistic and misleading.

For convenience, it appears the MLS divides the gross “Sales Price” by the final “Listing Price” to determine the sales price to listing price ratio. Since a home may go through a number of listing events and change price a number of times, using the last listing price can often grossly overstate the true ratio between sales price and listing price. The same can also be observed with market time metrics. It is not unusual for a home to go through four or more listing-iterations totaling hundreds of days, and yet sell within one week of its final listing date. Because of these factors I decided to take an inconvenient look at November 2007 sales and report on the market troubles and annoyances that it uncovers for single family home owners.

Ninety-one single family homes were sold in Fayette County during November. Of that, 16 were builder-owned new construction, for 17.6% of the total. 13 were identified as bank-owned or corporate-owned foreclosed properties, for 14.3% of the total. Five were identified as agent-owned or investor-owned, for 5.5% of the total. Four were estate sales, for 4.4% of the total. Three were corporate relocations, for 3.3% of the total. The subtotal of these five categories is 41 sales or 45.1% of the total. All of these listing were identified as being vacant at the time of sale.

Only 20 of the sold listings were clearly identified as being owner occupied, for 22.0% of the total. Add to those 20 another seven listings that identified a vacant owner, then the number of homes actually listing a homeowner was 27, for 29.7% of the total. The remaining 23 homes, or 25.3% of the total, were not identified with an owner. Furthermore, these 23 listings directed the users to “Call Agent Only” and most identified the properties as vacant.

There are lots of reasons why an owner may direct the listing agent to not list the owner and have buyers and buyer agents call the listing agent only. One reason that is particularly troubling is that the listing may be a foreclosure and the corporate owner wants to de-stigmatize the listing simply by obscuring that fact. As I noted above, most of these listings were reported as vacant so it is highly plausible that some were also foreclosures. I did not call the listing agents to determine the actual status.

As I noted above, homes may go through multiple listing-iterations prior to selling. Out of this group of 91 sales, only 62 or 68% of the total sold during their first listing. 17 or 19% sold during their second listing. Nine or 10% sold during their third listing, and three or 3% sold during their fourth and final listing. New home listings were the least likely to go through multiple listing-iterations. Foreclosures were the most likely to go through multiple listing-iterations. With foreclosures some of the reported multiple listings are due to changes in home ownership status. That is, some homes will suffer a pre-foreclosure or short-sale period with the homeowner in possession. When that fails, the mortgage holder will acquire the property and re-list it. Failure to sell by the home-owner is usually due to extreme over-pricing for the market.

I caution readers to know that the date a listing is reported “sold” is the date the sale closes. In the MLS system, market time or days-on-market is the time between the Listing Date of the most recent listing and the date it goes “under contract” (not the date sold). The average days-on-market for all listings from the first listing date to the off-market date was 210 days. For all listings the average time between under contract and sold (the closing period) was 40 days. The average total time from first listing date to closing date was 250 days.

In contrast, utilizing only the dates of the most recent listing (ignoring multiple listings) yields an average days-on-market of 120 days. This illustrates the observation I made above about market time metrics reported in the MLS data base being misleading.

The average first listing price for all 91 listings equaled $331,210. The average final listing price equaled $311,390 yielding an average listing price reduction of $19,820 or 6.0%. However, these metrics are misleading to homeowners, because builder-owned new homes differ markedly in total listing times, as well as listing price revisions. For example, if the home is pre-construction or under construction the days-on-market may be very low with very long closing periods due to construction schedules. Final listing prices for new homes will often be significantly higher than first listing prices as builders capitalize carrying costs, change house features and accommodate buyer upgrades.

As noted above, 16 of the sold listings were for new homes. The average first listing price of these new homes was $553,320. The average sales price was $540,640 with the builder/owner contributing an average $1,330 in buyer cost paid by the seller. Only six of these homes sold for less than $400,000. The remaining 10 homes sold for up to $1.15 million.

As may be expected, the 13 foreclosure homes sold at large discounts from their first listing prices. The average first listing price of these foreclosed homes was $289,380. The average gross sales price was $204,630 with the corporate/bank owner contributing an average $7,380 in buyer cost paid by the seller for an average net sales price of $197,240. The average net sales price was 31.8% less than the average first listing price. Indicative of some of the problems regarding foreclosed homes is one example that first listed at $1.1 million and sold net for $505,976 a 54% discount from the first listing price after three listings.
Factoring out the high value metrics of the 16 builder-owned new homes and the 13 corporate/bank owned foreclosed homes gives homeowners a clearer view as to how listings similar to theirs might be faring. The remaining 62 sold listings are more closely allied, each to the other, as comparable properties for comparison purposes.

For these 62 listings the average days-on-market from the first listing date to the off-market date was 190 days. The average time between under contract and sold (the closing period) was 30 days. The average total time from first listing date to closing date was 220 days. The average first listing price of these homes was $282,650. The average gross sales price was $254,990 with the owner contributing an average $2,350 in buyer cost paid by the seller for an average net sales price of $252,640. The average net sales price was 10.6% less than the average first listing price.

As noted above, the builder-owned houses were all high value homes. This was not the case for the 62 listings of interest to homeowners. These homes ranged in first listing price from $65,000 to $738,900. The median first listing price was $228,900 with only 14 homes list priced at over $400,000. The median sold price was $215,000 with only nine homes selling for more than $400,000. The highest price home sold in this grouping was for $665,000.

If you have any questions or comments about this article or would like a copy of my data analysis and listing performance evaluations for Fayette County, Coweta County, Clayton County or Henry County, please call or email me. If you need specific market information, please call and I will attempt to accommodate you. All of my articles are available on request.

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