Q: What is “turnover rate?”
A: One statistic frequently analyzed by real estate professionals and rarely discussed by buyers and sellers is the turnover rate of a neighborhood. Turnover rate is defined as the number of homes selling each year divided by the total number of homes.
For real estate professionals, this can be an excellent metric to determine the viability of establishing a brokerage in a particular area or for an individual agent marketing to a specific neighborhood, building, or community.
In the case of Royal Palm, we have approximately 700 homes, and on average 55 sell each year. Therefore, we have a neighborhood turnover rate of about 8%.
We can also measure how often somebody chooses to sell a home by taking the inverse of this turnover rate. So in the previous example (1/8%), the average length of home ownership would be 12.5 years. Nationally, the turnover rate hovers at about 7% with homeowners remaining in the same house for about 13 years.
In the case of Royal Palm, there is a strong bifurcation with many homeowners cycling in and out of a home in three years or less and on the other end of the spectrum, those who bought “new construction” from Arvida during our first building era and remain in their home to this day!
Q: What is absorption rate and how does this apply to Royal Palm?
A: The absorption rate is the rate at which available homes are sold in a specific real estate market during a given time. It is calculated by dividing the average number of sales per month by the total number of available homes (Investopedia). In short, the absorption rate is the number of months it would take to sell all of the currently listed homes in the market.
With over 15 years of successful residential real estate development, sales, and finance experience including multi-million dollar spec home and rental property investor syndication Rochelle is known by her clients as an exceptionally valuable resource on number of fronts. She has an understanding of global markets yet maintains a hyper-local, granular grasp of Boca Raton luxury Real Estate Market. For example, as of this writing, there are 71 homes actively listed on the market in Royal Palm. In the last year, there were 51 closed sales, an average of 4.25 closed sales per month. Therefore, we currently have nearly 17 months worth of inventory.
Q: What exactly is “earnest money” - isn’t it just a refundable deposit
A: The process of purchasing property in Florida begins with the buyer making an offer and the seller accepting. Unless otherwise negotiated, upon acceptance, an earnest money deposit is placed in trust with an escrow agent, the buyer’s attorney, or broker (never to the seller directly). The executed contract is sent to a closing attorney or title company to begin preparation of all work related to transferring the title to the new owners. During the first days of the contract having been executed, the buyer reviews and signs off on any disclosures and has the opportunity to perform inspections and complete due diligence as provided for in the contract. Inspections must be completed by a certain date, the inspection contingency date as indicated in the “Inspection Periods” section of Florida real estate contracts. Disclosures and inspections vary based on property type, but generally include disclosing and discovering flaws with the property, prior improvements and repairs, and potential environmental hazards. A form called a “Seller’s Real Property Disclosure Statement” is one disclosure form generally provided by the seller.
Based on the outcome of inspections, buyers may elect to ask the seller for re- pair work, a credit, or a reduction in the sale price due to flaws discovered. Sellers have three options: agree to all of the buyers’ requests, offer a modified solution back to the buyer, or decline to make any amends. In response, the buyer can continue to negotiate, accept the seller’s position, or as long as they’re within the due diligence period, end the transaction and recoup their earnest money without penalty. It is during this timeframe that the earnest money is fully refundable without penalty.
Once the initial period has expired (unless there are other contingencies in the contract), the contract is said at this point to “go hard” and the earnest money is non-refundable withfew exceptions.
Disclaimer: We are not offering legal advice. This information is provided for general information purposes only and we make no guarantee about the applicability to any specific situation. Should you have specific questions about any contract, we recommend you consult an attorney.
Q:What actually needs to be done to my house before putting it on the market?
A: Most sellers experience anxiety and/or dread at the thought of de-cluttering and paring down their belongings and (finally) taking care of all of the small repairs and fixes needed around the house. After all, these are the same chores they’ve been avoiding for years in most cases.
There’s no need to panic or to overshoot your goals. In general, there is far less to do than you may assume. With that said, homes that have been properly prepared for sale (especially in the competitive Royal Palm Yacht & Country Club neighbor- hood) tend to sell faster and for a higher price than those that are not.
There are some major renovations and repairs that sellers often consider such as updating a kitchen or bathroom, or updating flooring throughout. With rare exception, I recommend against making this level of investment as going to this level of expense is rarely fruitful.
The small-dollar, big impact preparations I always recommend are de-cluttering, paring down of personal items (closets, curio cabinets, tabletops), deep cleaning (including windows, grout, descale of showers, etc.), small repairs (caulking, patching, tightening of faucets, hardware, etc.) and in some cases, painting, a landscaping refresh, updating cabinet hardware or front door handles.
In the mind of a potential buyer, if there are little things that have been neglected over the years, it is easy for them to assume there are bigger issues lurking. Eliminate this concern (and potential negotiating tactic) completely by presenting a home free from small defects.
Should you be uncertain about what is prudent vs. overkill in your case, consult a trusted realtor or call in a professional home stager (or both!). These professionals have seen it all and will give you recommendations generally with no obligation or strings attached.
Q: In the months of November and December, is anyone shopping for a home this time of year??
There is a perception about the ideal season for home shopping (and resulting home sales) being the spring. This conventional “wisdom” is centered around a few assumptions that are not relevant to our market in Royal Palm. Primarily, the weather. Simply not a factor here - unless you count the week when it dipped below 60° and everyone donned parkas and boots. Without the complication of snow and ice to contend with, the weather factor is a major impact in many US real estate markets – just not ours.
Listing a home for sale during the holiday months comes with a few major advantages:
Because the spring selling season is so dramatically different in most US markets, local sellers have bought in to this myth. As a result, there are fewer homes on the market at this time of year. Studies have shown that homes listed and sold in the winter months sell faster and for a higher sum. The primary reason is the reduced inventory of homes available.
This time of year is busy for everyone. Regardless of faith, national origin, etc. November to January is busier than any other season with social events, parties, charity functions, family gatherings, visitors, and myriad holidays. Anyone making the time to look at homes this time of year is serious; those making time to visit homes now are ready to pull the trigger.
Late spring brings “tire kicking season” in Royal Palm when the season is winding down and part-time residents grow bored with the entertainment options. Open houses are flooded with curious neighbors and guests in town who have heard they can get a peek at luxury homes.
Q:Are open houses legitimately a good way to sell a house or do they just benefit the realtor?
A: Great question... in short: it depends.
When I moved to Boca Raton and set up shop as a Brokerage, I paid attention to what local agents were doing in an effort to understand what buyers and sellers in Boca Raton expect as well as to feel out what strategies would prove effective. The prevalence of open houses in the Boca Raton luxury market - especially in Royal Palm - astounded me.
In Royal Palm, open houses are very common - we see them every Sunday, often even on holiday weekends - and thus they are accepted by sellers and expected by our buyer pool. Open Houses are more effective in Boca Raton than in many South Florida markets. With that said, there is no silver bullet in real estate... During high season, we see a lot of open houses, broker’s open events, VIP open houses, progressive open houses – literally 100+ open houses occur in Royal Palm over the course of a season.
Not every open house results in a sale and sometime, we host open houses and see no legitimate buyers.
Last year in late March, there was one huge Sunday turnout with 46 open houses in Royal Palm with various listings held open hosted by five Brokerages. Interestingly, not one house in Royal Palm went under contract on that day or in the two weeks following that day. With that said, I have personally had a potential buyer come to an open with no plans to purchase ("just looking"), struck up a conversation starting a dialogue that ended with that person buying that home!
Q: What’s the going price for a teardown interior lot today?
A: First, it should be noted that whether a house “needs“ to be torn down or not has no bearing on whether someone will buy the property for that purpose. One example: the sale of 320 S. Maya Palm in May. The seller was more than halfway through an interior renovation (to make it more marketable) when a buyer paid $4,100,000 and sent in the demolition team shortly there after. Recent interior tear down properties (demolished after closing) have traded for between $1,300,000 and$1,425,000. I predict a sharp increase in interior tear down prices as demand continues to increase.
Q: Is price per square foot a reliable indicator of a property value?
A: Great question! And one I address frequently with buyers and sellers. The price per square foot of a sold property of a given property type is a great starting point and guideline. Each property in Royal Palm is unique and these numbers can create an upper and lower band within which most property
sales will fall. Caution: Beware using price per square foot of listed properties. With this said, this is a guideline only and while an excellent starting point, it is just that: a starting point to begin to
understand the price at which a property should sell.
To submit a potential “Question of the Month,”email: AskRo@pinkpalm.com