By Fred Roven of Martha’s Vineyard Buyer Agents
Awhile back I noticed a client was focused on properties that were priced under assessed value and had an extended number of days on market (DOM). I was fascinated by the concept in determining a good value and developed a list of properties that were then on the market and fit those characteristics. There was clearly a relationship of discount off asking price to assessed value and DOM.
Property assessment is a difficult number to use for comparison as each town on the Vineyard has their own criteria for determining that number. In a climbing market with every sale a bit higher than the one before, the ratio of the sale price of a property to its assessed value is going up, with assessments lagging values by years. For sales under $2.5M, the current average of listings is 28% over assessed value.
The extended days on market criteria I am using is properties that have been on the market over the current average of 275 days for single family homes priced under $2M. Properties priced over $2M have a different relationship to assessed value, often because of a water view or other very desirable characteristics.
There can be many reasons for properties not to sell in a reasonable amount of time. My personal favorite is the condition and/or color of the front door, a theory I will save for another time. Oftentimes the reasons for pricing under assessed value and staying on the market for extended periods of time are similar:
- Property is just priced too high even for a seller’s market.
- In a declining market, sellers are searching for the bottom of the market and never get low enough.
- A property that needs considerable “fixing up” may be too much work for most buyers.
- Property cannot be financed often because it’s in an unlivable condition.
- There might be rumors about tragedies, difficult neighbors or even ghosts.
- Even a well-priced home can be a difficult sell in areas with many homes in a run-down condition.
I took a look through current listings and quite a few stood out has being on the market longer than I would have expected. In the current market, most properties that stay on the market longer than average are well over assessed values and certainly the best opportunities are going to be in homes that are priced to sell, and they do sell quickly. If you are not quick to act, you still might find good values in this market by looking at desirable homes that have lingered.
A few stood out after quite a bit of subjective decision making and personal preferences. (Wouldn’t my probability professor love that?)
First is a Chilmark property where I have attended many parties on a beautiful piece of the Vineyard and dinners in a large dining room.
Next is a 4-BR, 2-Bath Cape about halfway between Alley’s and Quansoo Beach. I just do not understand why it has not sold.
Then there is an expansive house, a converted barn studio w/horse stalls, and a guest house (a great rental) between The Triangle and Bend in the Road Beach.
And last is a home that fits the criteria and I should buy.
The entire list is on Martha’s Vineyard Buyer Agents website. The point here is just make an offer; any offer.