One of the best tools we have available to us as real estate agents is the Total Market Overview report, or TMO. You may have read our post about why Zillow doesn’t work very well in a non-disclosure state. Well, the TMO report is one answer to that problem. Along with statistics provided by the Multiple Listing Service, the TMO gives buyers and sellers valuable information about the market. If you’d rather watch the video on this topic, click the film icon.
What is a Total Market Overview Report?
The Total Market Overview is a report that tells us what our local market is doing in various segments. The report breaks up our local real estate market by city and home type. Each report is then further divided by price point.
How to Read a TMO
Take a look at this snippet of a TMO, pulled for the Coeur d’Alene area. This report focuses on single-family homes. For this example, we’re going to look at homes in the $250,000 – $274,999 price range (highlighted in photo).
As we follow along the column headings at the top of the report, we see there are 11 homes for sale in this price range. Of those, 9 have accepted offers. That means the percentage of available homes that are already under contract is 81.8%. Skip the next column for a moment. Continuing along, you see 3 homes expired without selling in the last 6 months, while 45 homes sold in the same time. The next part is the good part: the average original asking price was $270,364, but the average final asking price was $262,244, showing that sellers brought their prices down just a bit from where they started. The next number shows the average sale price of the homes that sold. The average sales price compared to the final asking price indicates sellers are getting 99.1% of their asking price at the end of the day.
What does it all Mean?
Well, to dig into all this, let’s go back to that column we skipped. The Months of Inventory is an indicator of market health. A healthy, balanced level of inventory in a real estate market is between 5-7 months. When you get below 6 months of current inventory, that’s what we call a “Seller’s Market.” It stands to follow, then, that more than 6 months of inventory would be a “Buyer’s Market.” You can see what we mean when you hear us talk about how low inventory is right now. We only have a 1.2 month supply of homes in the $250,000 price range!
When there are not many homes for sale, the ones that are available sell FAST! Take a look at the last two columns of the report. The average days on market for homes that sold was 62 days. However, that includes the typical 30-45 day escrow, so really, they sold in about a month. The average days on market for currently active homes is 36 days. If the property is not yet sold, chances are it either just came on the market, or it’s been out there for a little bit, possibly indicating that it may be overpriced.
Knowing these numbers helps develop strategies. Sellers in this price range know a few things: Be prepared for a quick sale; know your numbers to get the best price with the least negotiation. Buyers also know a few things: Low ball offers in this range probably won’t go over well when sellers are getting 99% of asking price. If you see something you like, be prepared to move, because homes don’t stay “for sale” for very long.
At the end of the day, your real estate agent is going to help you navigate all of this. The aim of this post is to show you how we use all this information to the best use of our clients. In non-disclosure states where final sales prices aren’t made available to county assessors or third party websites, the professionals working in the market are your best resource to make informed decisions. These reports are just one way that we do that. To see more TMO reports for North Idaho updated each week, follow the link.