Systems, methods, and computer program product for real estate value analysis

• US 8,650,067 B1
• Filed: 02/26/2008
• Issued: 02/11/2014
• Est. Priority Date: 02/27/2007
• Status: Active Grant

• Current Assignee: Richard Moss
• Original Assignee: Richard Moss
• Inventors: Moss, Richard
• Primary Examiner(s): Sterrett, Jonathan G
• Assistant Examiner(s): Swartz, Stephen S
• Application Number:
  US12/037,168
• Time in Patent Office: 2,177 Days
• Field of Search: 705/7.35, 705/7.28, 705/7.29, 705/7.31, 705/306, 705/313
• US Class Current: 705/7.35
• CPC Class Codes: G06Q 30/0201 Market modelling; Market analysis; Collecting market data

Abstract

Methods, apparatus, and computer-readable media are described for generating a credible market value that is utilized to produce a listing price for a property with reduced risk of a substantial reduction in the listing price before selling the property and for assessing risk of incorrectly pricing a property. A subject property, selected comparables, and selected comparables having multiple sales are imported from one or more databases for analysis. Information that is imported may include, for example, property features, original listing prices, record of days on the market, and a final listing price and sales price for each property that was sold. A market analysis process is run to produce relative market assessments and a residential value process is run including appreciation calculations based on the comparable properties having multiple sales to produce the credible market value. Graphs are plotted and other computer outputs are provided to identify the risk of incorrectly pricing a property and to illustrate that risk to a potential seller. Additionally, tools are provided to readily illustrate how changes in underlying assumptions affect the analysis.

Claims

1. A method for generating a credible market value that is utilized to produce a listing price for a property with a reduced risk of pricing too high and having to make a reduction in the listing price exceeding a predetermined amount before selling the property, the method comprising:

importing a first set of property data by a processor from one or more databases having a plurality of properties for sale and that have been sold which includes a subject property and selected comparable properties that have been sold in a specified area within a recent time period;

importing a second set of property data by the processor from the one or more databases including the selected comparable properties and additional properties similar to the subject property that have been sold in the specified area within an extended time period greater than the recent time period, wherein the second set of property data includes similar properties that reduced an original listing price to a reduced listing price prior to sale and a first associated sales price, a date the original listing price was reduced, similar properties that did not reduce an original listing price prior to sale and a second associated sales price, and for each property a listing date, a sales date, and a number of days on the market (DOM) for each property that was sold and wherein the second set of property data is larger than the first set of property data;

analyzing by the processor an average difference between the original listing price and the first associated sales price at a price change start date when two or more of the similar properties that reduced an original listing price prior to sale sold at a reduced sales price, compared to an average difference between the original listing price and the second associated sales price for each of the similar properties that did not reduce the original listing price to determine consequences of originally pricing a property too high and a list-to-sale-price percentage of a listing price based on the average difference between the original listing price and the second associated sales price for the similar properties that did not reduce an original listing price prior to sale, wherein the consequences include an extension on the DOM and a financial penalty;

running a market analysis process on the second set of property data by the processor to produce relative market assessments;

running residential value processes including appreciation calculations by the processor based on similar properties having multiple sales to produce a credible market value for the subject property; and

running a price sensitivity analysis process to generate a listing price of the subject property that takes into account the credible market value, the relative market assessments, and the consequences of originally pricing the property too high and thereby reduce the risk of having to make a reduction greater than the list-to-sale-price percentage of the listing price before selling the subject property, avoid an extended DOM, avoid being forced to reduce the listing price of the subject property, and avoid a reduction in return to the seller.

2. The method of claim 1 wherein the appreciation calculations comprise:

calculating a price change between sales for each of the similar properties having multiple sales;

calculating yearly price appreciation for each of the similar properties having multiple sales; and

calculating the mean and median appreciation value for the similar properties having multiple sales, as representing the mean and median values of appreciation for the second set of property data.

3. The method of claim 1 further comprising:

correlating by the processor days on the market to a start of price reductions for each property of the similar properties that reduced an original listing price prior to sale;

calculating by the processor the differences to actual sales prices for listing prices that were changed and for listing prices that were unchanged; and

calculating by the processor a time on market difference between properties for which prices were changed and those properties whose prices were not changed.

4. The method of claim 3 further comprising:

calculating by the processor a received value difference before and after the price reductions have started; and

calculating by the processor a financial penalty resulting from an extended market time.

5. The method of claim 1 further comprises:

calculating by the processor an adjusted value for each property of the selected comparable properties based on stored factors and values associated with the various features of the selected comparable properties to account for differences between a selected comparable property and the subject property, wherein the adjusted value approximates a value for the subject property and wherein the use of stored factors and values facilitates data entry; and

calculating by the processor an average of the adjusted values for the selected comparable properties to generate a final adjusted value for the selected comparable properties.

6. The method of claim 1 further comprising:

calculating a relative replacement value by the processor for the subject property and each property of the selected comparable properties, based on land values, a construction factor, a feature factor, and a construction value per square foot, wherein the construction value per square foot is based on relevant new home sales figures.

7. The method of claim 6 wherein the step of calculating a relative replacement value comprises:

calculating a percent difference between the relative replacement value and the actual price sold for each of the selected comparable properties;

calculating an average percent difference of the selected comparable properties; and

applying the average percent difference to the replacement value of the subject property to derive an estimated selling price for the subject property.

8. The method of claim 7 further comprising:

weighting the comparable properties to adjust the average percent difference before applying the average percent difference to the replacement value of the subject property.

9. The method of claim 1 further comprising:

calculating by the processor an adjusted square footage value for each of the selected comparable properties based on factors associated with features of the comparable property.

10. The method of claim 9 further comprising:

calculating by the processor an average adjusted square footage value for the selected comparable properties; and

applying by the processor the average square footage value to the subject property to derive an estimated selling price for the subject property.

11. The method of claim 1 further comprising:

calculating by the processor an average adjusted value for each of the selected comparable properties based on factors associated with features of the comparable properties to account for differences between a selected comparable property and the subject property and to derive a final adjusted value for each of the selected comparable properties;

calculating by the processor yearly price appreciation value for each of the similar properties having multiple sales;

calculating by the processor a relative replacement value for the subject property and each property of the selected comparable properties to derive a first estimated selling price for the subject property based on the relative replacement value;

calculating by the processor an average adjusted square footage value for each of the selected comparable properties based on associated factors to derive a second estimated selling price for the subject property based on the adjusted square footage of the selected comparable properties; and

deriving by the processor the credible market value based on a combination of one or more values selected from the final adjusted value for each of the selected comparable properties, the yearly price appreciation value, the first estimated selling price, and the second estimated selling price.

12. The method of claim 11 wherein the factors include one or more selected factors representing a value of main area square footage, a value of below grade square footage, a value of unheated space, a value of storage space, a value of lot size, a value of splitable lots, a value of one or more upgrades to a property, a value of construction materials used in the construction of the property, a value of one or more capital improvements, a value of the land, a value of a swimming pool or hot tub, value of a seller defined feature, and a value of detached housing or storage space located on the property.

13. The method of claim 1 further comprising:

preparing sales information by the processor for the properties that have been sold from which a DOM to price change start is selected when two or more of the similar properties that reduced the original listing price prior to sale sold at reduced sales prices; and

performing a price sensitivity analysis by the processor for properties in the second set of property data based on a difference between a properties original listing price and the properties sales price for the properties that did not change the original listing price and for the similar properties that reduced the original listing price prior to sale to produce a financial consequences of originally pricing a property too high.

14. A computer-readable medium storing a non-transitory computer program which causes a computer system to perform a method for generating a credible market value that is utilized to produce a listing price for a property with a reduced risk of pricing too high and having to make a reduction in the listing price exceeding a predetermined amount before selling the property, the method comprising:

importing a first set of property data from one or more databases having a plurality of properties for sale and that have been sold which includes a subject property and selected comparable properties that have been sold in a specified area within a recent time period;

importing a second set of property data from the one or more databases including the selected comparable properties and additional properties similar to the subject property that have been sold in the specified area within an extended time period greater than the recent time period, wherein the second set of property data includes similar properties that reduced an original listing price to a reduced listing price prior to sale and a first associated sales price, a date the original listing price was reduced, similar properties that did not reduce the original listing price prior to sale and a second associated sales price, and for each property a listing date, a sales date, and a number of days on the market (DOM) for each property that was sold and wherein the second set of property data is larger than the first set of property data;

analyzing an average difference between the original listing price and the first associated sales price at a price change start date when two or more of the similar properties that reduced an original listing price prior to sale sold at a reduced sales price, compared to an average difference between the original listing price and the second associated sales price for each of the similar properties that did not reduce the original listing price to determine consequences of originally pricing a property too high and a list-to-sale-price percentage of a listing price based on the average difference between the original listing price and the second associated sales price for the similar properties that did not reduce an original listing price prior to sale, wherein the consequences include an extension on the DOM and a financial penalty;

running a market analysis process on the second set of property data to produce relative market assessments;

running residential value processes including appreciation calculations based on similar properties having multiple sales to produce a credible market value for the subject property; and

running a price sensitivity analysis process to generate a listing price of the subject property that takes into account the credible market value, the relative market assessments, and the consequences of originally pricing the property too high and thereby reduce the risk of having to make a reduction greater than the list-to-sale-price percentage of the listing price before selling the subject property, avoid an extended DOM, avoid being forced to reduce the listing price of the subject property, and avoid a reduction in return to the seller.

15. The computer-readable medium of claim 14 further comprising:

calculating a received value difference before and after the price reductions have started; and

calculating a financial penalty that results from extended market time.

16. The computer-readable medium of claim 14 further comprising:

calculating an average adjusted value for each of the selected comparable properties based on factors associated with features of the comparable properties to account for differences between a selected comparable property and the subject property and to derive a final adjusted value for each of the selected comparable properties;

calculating yearly price appreciation value for each of the similar properties having multiple sales;

calculating a relative replacement value for the subject property and each property of the selected comparable properties to derive a first estimated selling price for the subject property based on the relative replacement value;

calculating an average adjusted square footage value for each of the selected comparable properties based on associated factors to derive a second estimated selling price for the subject property based on the adjusted square footage of the selected comparable properties; and

deriving a recommended listing price based on a combination of one or more values selected from the final adjusted value for each of the selected comparable properties, the yearly price appreciation value, the first estimated selling price, and the second estimated selling price.

17. The computer-readable medium of claim 14 further comprising:

preparing sales information for the properties that have been sold from which a DOM to price change start is selected when two or more of the similar properties that reduced the original listing price prior to sale sold at reduced sales prices; and

performing a price sensitivity analysis for properties in the second set of property data based on a difference between a properties original listing price and the properties sales price for the properties that did not change the original listing price and for the similar properties that reduced the original listing price prior to sale to produce a financial consequence of originally pricing a property too high.

18. A method for generating a listing price for a property with an increased probability of selling the property and a reduced risk of having to lower the listing price before selling the property, the method comprising:

analyzing a selected set of properties by a processor that have been sold within a recent time period in a specified area and that are comparable to a subject property to determine a credible market value for the subject property, wherein the specified area includes the subject property;

analyzing a historical set of properties by the processor including the selected comparable properties and additional properties similar to the subject property that have been sold in the specified area within an extended time period greater than the recent time period, wherein the historical set of properties includes similar properties that reduced an original listing price to a reduced listing price prior to sale, a date the original listing price was reduced, similar properties that did not reduce the original listing price, and for each property a listing date, a sales price, and a sales date

to determine days on the market (DOM) to a price change start date when two or more of the similar properties that reduced the original listing price sold at reduced sales prices and wherein the historical set of properties is larger than the selected set of comparable properties; and

performing a price sensitivity analysis by the processor for properties in the historical set of properties to produce a first empirical limit based on an average difference between an original listing price and the sales price for the similar properties that did not change the original listing price, to produce a second empirical limit based on an average difference between an original listing price and the sales price for the similar properties that reduced the original listing price, and to produce a financial consequence of originally pricing a property too high that shows average sales prices for the similar properties that were originally priced too high and reduced the original listing price were at values below average sales prices before the price change start date for the similar properties that did not change the original listing price, wherein a listing price of the subject property is generated based on the credible market value, the empirical limits, and the financial consequences of originally pricing the subject property too high to thereby increase the probability of a sale and reduce the risk associated with pricing the subject property too high which would have the effect of both an increased DOM to a sale and a reduced monetary return for the subject property.

19. The method of claim 18 further comprising:

running by the processor a market analysis process on the processor to produce relative market assessments, including an inventory analysis of similar properties sold in the past year compared to similar properties currently on the market to determine whether the market favors buyers or sellers; and

running by the processor a residential value process including appreciation calculations on the processor based on the similar properties having multiple sales to produce a credible market value for the subject property, wherein the listing price takes into account the credible market value and the relative market assessments.

20. The method of claim 18 further comprising:

calculating by the processor, for similar properties sold in the period before the price change start, a first average price per square foot and for the similar properties sold after the price change start, a second average price per square foot; and

calculating by the processor a difference between the first average price per square foot and the second average price per square foot as a value lost that is multiplied by the number of square feet in the subject property to represent a financial risk included in the financial consequences of originally pricing the property too high.

21. The method of claim 18 further comprising:

running residential value processes including calculating a preliminary listing price for the subject property based on individual weighting of relative replacement values for each of the selected comparable properties;

running a market position analysis process by the processor that includes a comparison of the preliminary listing price of the subject property relative to properties in the second set of property data which have sold in the last twelve months and properties in the second set of property data that are currently active on the market as competitive properties; and

deriving by the processor the listing price of the subject property based on the market position analysis.