Compare Sales In Listing Service
Most multiple listing services offer monthly statistical reports to their service members. The statistical reports represent the market conditions as well as sales trends.
Multiple Listing Service is a private resource where licensed Real Estate representatives can list and look up houses and properties that are available for sale. In the recent past Multiple Listing Service has become available to the public through Websites like MLS.com or Realtor.com.
Multiple Listing Service
Multiple Listing Service was a service that was created and operated by Real Estate professional; it was designed to organize all the Real Estate property listings into a search engines that would correspond to a county, state or province or particular neighborhood area where lands and properties were up for sale.
A prospective buyer and MLS user can specify the area that they're interested in as well as house price range, the type of house they're looking for, the area as well as the number of bedrooms and bathrooms, land size as well as any other special features such as studio in the house or near-town location. Once all the specifications are entered in appropriate boxes the Multiple Listing Service system, the search engine will locate listings that will answer to all these specifications. If the specifications are too broad or too narrow, MLS will indicate that and ask the user to adjust their demands.
When the Real Estate property gets sold and the financial transaction goes through the selling price of the property is posted on the Multiple Listing Service website. The Real Estate professionals not only have access to the basic property for sale posting but also to its records about past sales and other professional information. As a buyer you should have right to ask and be given information on this data - this should be provided by your Real Estate agent -- when you decide to come up with your offer price.
Providing the right offer is one of the most critical decisions a house buyer has to make - make the offer too little and you'll loose the house to a higher bidder, make it bigger and you won't be able to spend money on repairs. This is exactly why you need services like Multiple Listing Service to make the right decision about your offer price. You need to have at least basic knowledge about the trends on the market and how the prices change based on economic fluctuations as well as societal trends.
Comparables
What you need is to have access to comparables. Comparables are houses that have recently sold or are up for sale currently and that you can compare to what you're interested in buying. The best way to find the houses that are similar to yours is through Classifieds as well as through local municipal offices that would have information about the sales price. Some Real Estate agents suggest getting address of a house that resembles yours in the closes and obtaining public record on its sale to get an idea.
The easiest way to start with doing your comparisons is through looking at Multiple Listing Service. It is through MLS that Real Estate professionals are able to establish the value of the property. This value is based on what other buyers have recently paid for other homes in that area as well as statistical records of sales over the period of months and sometimes years. This method of comparison is also used by appraisers when they perform an appraisal for mortgage purposes.
The information available to Real Estate professionals, through Multiple Listing Service gives them something called Comparative Market Analysis (CMA) which illustrates where the house you're after fits in the Real Estate market.
The typical Multiple Listing Service reports give an idea about the most recent market trends and conditions but without actual explanation the user has to come up with their own interpretation of how the sales compare in Multiple Listing Service and what they mean exactly.
There are some indicators that make the records easier to interpret; to see how active is the market, what should the houses sell for or what areas are the best:
The easiest way to figure out market activity is through looking at the number of properties that have closed each moth. This number is also a good indicator of Real Estate demand - the number is usually determined not by how many houses are available but rather how many buyers are out there. The demand and sales show the activity of the market and its current state. For example, the prices may be going down even when the sales are rising - this could be a combination of different economical factors such as sudden upturn in sales.
In order for the sales to mean anything they have to be related to something. The easiest way to interpret and compare sales in Multiple Listing Service is to relate them to something such as sales for the previous month or the sales for the same month a year ago. One thing to remember is that sales are dependent on a season; for example spring months are more active than the winter season.
By figuring out the difference rates of change from one month to the other, a seasonal trend becomes identifiable - this however shows a little about where the Real Estate market is going exactly. This is why the monthly Real Estate sales for each given year need to be compared to the sales from previous years. The numbers are never just numbers - there's always a story behind statistical data. For example, most Real Estate sale statistics for the last quarter of the year 2001 will indicated low sales activity - this is due to September 11 terrorist attacks.
Compare Sales
Sometimes, in order to compare sales in Multiple Listing Services, a 12-month moving average will be used - this is when the sales totals of the current month combined with last 11 months give a full year's total sales. These can be compared with previous years- but it is almost impossible to figure out a short-term trend with this sort of indication.
If there's a long series of sales data a Real Estate agent can figure out a seasonally adjustable number to get an idea about national and regional sales. This number can be used in the future to determine trends if the previous numbers show consistent trend.
The average sales price indicates the value of a typical house. However, since housing prices are often distributed unevenly and there are usually no upper limits on prices, typically a Real Estate market analysis prefers the median price to indicate sales trends. This is the number that exceeds the price of half the sales and is still smaller than the other half - the extreme prices at either end of this scale don't affect the level of the median. When median sales figures are compared over a period of time, a trend of where the prices are headed emerges.
One problem with this sort of comparison is that there's no control on the sample of homes sold in any single period. If lots of single-family houses sell in later period of the year the median price would increase - this doesn't mean that the average value of single-family houses has increased over that particular period of time.
Multiple Listing Services usually provide median sales price, of value per square foot - the issue of comparing sales of differently-sized homes is not as important in this case. The MLS measure is a better determinant of price change despite the fact that it doesn't always control quality or location changes.
The changes in house prices are a good indication of how expensive homes are currently. Rising prices can be a big difficulty for first-time house buyers and people moving to the new area. It is because of these types of buyers that the Real Estate market keeps going and growing - the new buyers buy the houses of people who buy their next Real Estate because they want to upgrade or move to a new area. The new buyers should be able to afford houses, otherwise the whole Real Estate market won't be able to function properly and the house prices won't reflect actual economical trends.
Even though the prices have been on the rise, in the last couple of years the interest rates are going down - this means that the buyer still has the same monthly principal and interest payment and the houses are still affordable for the first-time buyers.
Some Multiple Listing Services have area indicators for each Real Estate subdivision that is popular on the market - these areas are good sales trends indicators and can serve as a comparable figures in MLS. Such subdivision will show pending sales as percentage of available property inventory. Usually, a listing is obtained from the active listing inventory when a sales contract is signed - until it is signed the sale is considered pending.
The popularity ratio on MLS indicates the importance of the most recent sales - the ones that are still considered pending - and through comparing the ratio for different areas one gets an idea which areas are popular and can serve as sales indicators. Because these numbers are based on sales that are not completed but are still in the process, they also indicate the most current trends.
