Whether you are buying or selling a home in Howard County (or both), here are some real estate terms that can be useful in pricing your home (if a seller), pricing  your offer (if a buyer) and in negotiating (both).  (By the way, you can request either a print or online version of our free negotiating guide, Hot Tips For Today’s Market, which can be very useful to Howard County home buyers or sellers, by clicking here).

MRIS

The Metropolitan Regional Information Service, is the house “listing” network owned by state and local Realtor® associations in Maryland, DC, and Virginia.  As of October 2008 there are 53,686 Realtor® members of MRIS across Maryland, DC and Virginia.  When any Realtor®member posts or “lists” a home for sale in the MRIS, it is accessible through the MRIS to every other Realtor®member in the MRIS network, as well as to consumers through various online portals such as HomesDataBase.com, Realtor.com, and different individual Realtor®websites through IDX information sharing agreements.

DOM

DOM, or “D.O.M.”, means days on market. It measures the length of time between when a home is “listed” for sale on the MRIS until the day a buyer contracts to buy it.  (The length of time between contract date and actual, final “settlement” is not a measured statistic, but typically is about 30- 45 days from date of contract).

Note: days on market can be “manipulated.”  A Realtor® member of MRIS can essentially “reboot” a home listing, creating a “fresh” MRIS I.D. number, and reset the DOM “clock” back to zero.  To counteract this, the MRIS system typically posts two DOM numbers, one for the DOM of the current listing and another for the total DOM under all listings for that home.  However, if a home is completely “off” the system for 91 days or more and is then re-listed, then both DOM numbers will be re-set to zero.

“Inventory” Levels

The total number of homes “for sale” divided by the current rate of home sales per month (or, how long would it take to sell all homes currently on the market, at today’s sales rate, assuming no new homes came on the market).  Example: if there are 450 homes currently for sale, and average rate of sales is 50 homes per month, the “level of home inventory” would be 9.0 months (450 homes divided by 50 sales per month = 9.0 “months of inventory”).  Supposedly a six month inventory level = a “balanced” market, less than six months is a “seller’s” market, and more than six months is a “buyer’s” market.  But these are approximate measuring sticks and other factors, of course, apply.

Also, when looking at inventory levels, pay attention not only to “general” levels but also to the inventory level for your specific target home. For example, in September 2008 Howard County had a county-wide total inventory level of 8.0 months (1933 homes for sale divided by 241 sales/month). However, in the million dollar plus category the inventory level was a whopping 43 months (172 homes for sale divided by 4 sales/month).

The Standard & Poor’s/Case-Shiller home price index tracks price trends and inventory levels in the top 20 U.S. cities.  However, real estate is an extremely localized sport and buyers/sellers in Howard County would do well to obtain local stats, either county-wide or zip-code/neighborhood specific stats, which can be requested here.

 List-2-Sale Ratio

The list-to-sale ratio measures a home’s final, actual sale price as compared to its asking price. For example, is a seller’s asking price is $500,000 but the home actually sells for $475,000, then the list-to-sale ratio would be 95.0%  ($475,000 sale price divided by $500,000 asking price).  Each month MRIS releases statistics for home sales in all of Howard County, including the average list-to-sale ratio for all sales in the prior month.

“Subsidy” or “Cash Credit” 

When a seller gives a cash credit to a buyer, whether for buyer’s closing costs, a repair credit, or otherwise, it is posted on the MRIS system as a seller “subsidy”, meaning the seller was “subsidizing” the buyer’s closing costs.  The common term in practice, however, is “cash credit”.

Note: the amount of a subsidy, or cash credit, on individual sales is posted on individual MRIS listings that have sold. However, there is no source of data for the average cash credit paid in the county.  Why not?  Honestly, I have no clue. I guess it would just be too darned useful, and the powers that be want buyers, sellers and agents to just have to work that much harder!

Putting It All Together

In the next post on negotiating we’ll discuss how to use the types of information listed above in pricing your home (sellers), your offer (buyers), and in negotiating (both). 

Questions? Comments?

Please post any questions or comments on this blog, or email me at john@JohnAndAngela.com.