April 30, 2013

Hatteras Island Real Estate:
Conversations with property owners


These days, my Realtor colleagues and I are receiving quite a few calls from Hatteras Island property owners.  The conversations usually center around two questions – “Can you tell me what my property is worth?” and “Should I sell my property?”

In response to an owner’s inquiry about the value of their property, real estate brokers will generally prepare a report known as a probable sale price or comparative market analysis.

To determine the most likely range for the sale price of a property, the agent will study the selling prices of similar properties over the past year.  Similarities for residential properties might include such features as location, square footage, the year the home was built, the number of bedrooms and baths, amenities such as private pools and game rooms, and rental income.  Whether the home was a short sale or a foreclosure is also taken into account.  Sold statistics tell us what buyers have been willing to pay for equivalent properties.

Next, the agent will review the properties that are under contract to be sold.  Properties under contract are considered to be an indicator of what the selling prices of similar properties are likely to be 45 to 60 days in the future.

Then, properties that are currently for sale will be evaluated to provide a picture of the competitive environment within which the home or lot will be marketed.

As a cross-check, the agent may also take into consideration the results of a recent appraisal if one is available and the tax value reported in the 2013 Dare County Property Revaluation.

In the end, it will be the buyer and the owner who will determine the actual market value of a property.  The results of the agent’s analysis provide an informed estimate of the most probable sale price of the property.

The second question that owners often ask is, “Should I sell my property?”  The response to this inquiry is much more subjective in nature than the analysis of a property’s probable sale price.  In order to respond appropriately, the agent has to understand the owner’s motivation and sense of urgency.  As you might expect, there are a variety of reasons why an owner may be considering the sale of their home or lot.

If the owner is concerned about how much profit or loss they can expect from the sale of their property, the answer will depend to a large extent on when they purchased the property and the refinancing history.

The average sale price of a residential property in 2012 was about the same as it was in 2002.  The average selling price of undeveloped lots was close to the level last seen in 1999.  Therefore, if an owner purchased the property during the boom years or during the subsequent buyer’s market, it is unlikely that they will be able to sell at a gain.  I also tell owners that the recovery in prices will probably proceed at a moderate pace, rather than at the growth rates the real estate market experienced during the height of the seller’s market.  For some, this can be an eye-opening revelation.

In my opinion, the financial aspects of a potential sale are best understood and evaluated in light of the fundamental reason that someone is considering the sale of their property.

The principal motivations for selling that I hear most often are:
  • The property has served the purpose for which it was originally purchased. The owners are not using the house as frequently as they once did when their children were younger.
  • The owners are retiring or are in the process of downsizing and simplifying their lives.
  • The owners want to be close to where their grandchildren live.
  • The owners would like to purchase a larger home.
  • The owners would like to reallocate the funds that they are committing to their vacation home into different investments.
  • There has been a change in the owner’s financial, medical, or marital circumstances.
As you can see, the basic theme of all of these motivations is change in one form or another.  So, when all is said and done, the real estate agent cannot answer the question, “Should I sell my property?” 

It is the owner who must ultimately consider the strength of his or her underlying motivations to sell and weigh that against the financial outcome of a sale.  The value added by the real estate professional to the owner’s decision making process is the probable sale price information and market perspectives that the agent provides, the interpretation of trends, marketing expertise, and administrative support.

There is a saying in the real estate business “There is no such thing as a good or bad market.  The current market is the only market that we have!”  The selling prices of properties are almost always the result of negotiations between the buyers and the sellers.  Sometimes conditions favor sellers, and at other times conditions favor buyers.

Therefore, the focal point of my advice to the owners with whom I speak is to spend their time and energy identifying and crystallizing their essential reason for considering the sale of their property.  The market is what the market is.  The strength of their motivation to sell, and the benefits that the sale of their property will provide toward the achievement of their personal goals are the keys to the owner's decision.

(Tom Hranicka is an associate broker with Outer Beaches Realty. Questions, comments, or suggestions for future articles may be sent to Tom Hranicka at P.O. Box 237, Avon, NC  27915, or e-mail to [email protected] )
Copyright 2012 Tom & Louise Hranicka.  All rights reserved.


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