CALCULATING DC REAL ESTATE VALUES
Whether you’re in the market for a condominium, single family home, co-op or townhouse, understanding the metrics used to estimate DC real estate values will empower you to make better decisions when buying or selling Washington DC real estate.
Washington DC Real Estate Values
Whether you’re in the market for a condominium, single family home, co-op or townhouse, understanding the metrics used to estimate DC real estate values will empower you to make better decisions when buying or selling Washington DC real estate.
As the saying goes, real estate is “local” and values vary by neighborhood, home type, market saturation time of year and other factors. Hyper-local data, market and neighborhood knowledge are essential tools when determining DC real estate values.
Related to this
INVENTORY AND ABSORPTION RATES
LISTING PRICE TRENDS
MEDIAN AND AVERAGE DATA SETS
NUMBER OF HOMES SOLD
AVERAGE SOLD TO LIST PRICE RATIO
PRICE PER SQUARE FOOT
OTHER VALUE MARKERS
BROKER COMMISSION
This is an evolving consideration. With the class action lawsuits against the NAR, MLS providers and brokerages, along with DOJ scrutiny, comes a new wrinkle in determining the market value of a DC home.
Traditionally, the cost of selling broker commission has been rolled into listing prices. Commissions of 2.5% to 3% are baked into our value history.
Should all brokerages silmultaneously cease this practice, home prices would (theoretically) drop across the board by 2.5% to 3%. Value history would need to reset, appraisers would need to institute an adjustment for commission, and a new valuation history would begin.
Should brokerages randomly and sporadically extract selling commissions from listings, it would become very difficult to determine market values, as each listing would need to be evaluated for commission inclusion.
Starting Aug. 9 2023, Bright MLS–our area MLS and the nation’s 2nd-largest MLS–broke with NAR rules to allow listing brokers to offer buyer brokers zero compensation. It remains to be seen how brokerages, agents and sellers will react. A chaotic marketplace, or an orderly transition awaits.
RELATIVE PROPERTY CONDITION
This metric is the value of a home’s location, condition, features, finishes and other attributes relative to similar properties currently on the market at that particular time.
Relative Property Condition is one of the most difficult values to compute because it is somewhat subjective. We can all discern difference between a derelict property and one in average condition, but what about differentiating between two similar properties with different floor plans, fixtures and finishes? Buyers often do not have the knowledge, experience or objectivity to accurately assess the condition of competing properties as it relates to market value rather than their personal interests.
Relative property condition is a valid tool in structuring your negotiating strategy if you have physically inspected the competing listings and understand the value of their differences. Photos and old listing descriptions are not an accurate measure of this metric, nor is price per square foot. Buyers should seek expert advice when using this metric in formulating offers.
LISTED VS SOLD COMPS
The list price is the point from which the negotiation begins, but not all list prices are based on comparables and data.
While it may be tempting to adopt values from listed properties that have not yet sold (and thereby offer demonstrated value), this should be the least-employed value marker in deetermining a subject property’s price. List prices can begin anywhere, and are not necessarily based on real market value.
Weigh all metrics for Washington DC real estate values against your desire and that of others’to secure the property. In the end, the old saying is true; “A property is worth what someone is willing and able to pay for it at any given point in time.”
UNIQUE VALUES | LOCATION
THAT THING EVERYONE WANTS
At any given time, there’s a home type, style or location trending in the DC real estate market that has buyers bidding fiercely against one another.
Sometimes a home just has all the right stuff to prompt target buyers to compete. That’s why we encourage our sellers to define their target buyer and tailor their home’s presentation to that buyer’s needs. It translates to top dollar. When you’re pricing “hot homes,” allow for that ‘it factor” and don’t make the misteake of valuing other properties similarly if they don’t have “it.”
Market Update
Local & National
Market Data
Stats in the District
Market Values
Determining Market Values
Market Timeline
2023 Market Events