Is Using Miami Data Right For You And Your Investment?In this article, we will introduce you to the practice of compiling data and how it’s best applied to your personal situation.
The Five Most Useful Features On Miami Data.There are different metrics used to attach a value to real estate. Here we show you which are most important.
Build A Direct, Meaningful Connection With Your Agent.We seek to cultivate an equal terms partnership fueled by knowledge and transparency.
Frequently Asked Questions
What type of real estate market does Miami have?
Miami is a stratified market. What this means is our entire real estate area is naturally divided into meaningful groups that effectively form different markets. Pricing for non-waterfront and water front properties can vary greatly for example. The same for new construction and older properties. This is why Miami Data is the most useful tool for valuing properties. All other economic real estate evaluators in our region aggregate data for Miami as a whole.
Has Covid-19 affected the real estate market?
Yes, we are already seeing steep declines in transaction volume and values.
Where do you source the data from that is presented on your website?
The data processed and presented on miamidata.com is taken directly by hand, line by line, from the Miami-Dade MLS system. We also supplement other part of the website with data from the U.S. Census Bureau.
Are all sales and rentals entered into the MLS?
No, but the majority are. Off-market sales and off-market rentals will not be included in the data presented on miamidata.com. The data sourced from the MLS provides the most accurate representation of the real estate market.
Do you give valuations on both condos and houses?
Yes, we do both. There are a few fundamental differences to the formulas used when validating the price of house or condo. Condos for example are weighted by average and houses by median. This is a much more accurate representation for each type of asset. Very few people in real estate break down the metrics to be so precise, but this is the most correct way to evaluate property values. It’s also the most favorable view on the market for all parties; both buyer and seller. It also allows all parties to have a more precise target of value thus a greater likelihood of a deal taking place.
Why do you use average for condos and median for houses?
Average is the most commonly used and understood statistic. It is considered a better estimate of value if the data is symmetrically distributed. Formulating an average is the sum of all observation values divided by the number of sales. When pricing condos, the average figures tend to be more representative of sales on a per unit basis because the average is computed with a larger sample (more sales). If you have 50 condo sales in a neighborhood there might be a few outliers, but each is diluted by the volume of overall sales. With condos there always tends to me more concentration to a quadrant of pricing and using average tends to favor the higher side of all the figures we compute.
Median is considered better than average if the data set is known to have some extreme values (high or low). Single family house sales are much more likely to have a vast disparity with sales prices in areas where few sales take place. Because Miami is surrounded by water, there could be vastly different sale prices for two houses directly opposite one another. In such cases, median gives a more realistic estimate of central value. Example: Five houses sell in one neighborhood. They each sell for $800k, $1.5M, $2M, $3.7M and $10M respectively. The middle price is $2M which is the central value (Median). You now know that two houses sold for more than $2M, one sold for $2M and two for less than $2M. For a potential buyer looking in this neighborhood this is the correct way to budget and assess value. If using the same data set above, and processing it as an average, it will produce a price of $3.6M. What happens is the $10M sale now carries more weight giving a false impression of values in the neighborhood. It we suggest that five houses sold in a neighborhood for an average of $3.6M it might totally eliminate someones interest in considering living there. It also gives sellers a false impression of value and this is one of the most critical points with selling property in Miami as not to overprice a property using the wrong data set when first going to market.
Why has my property been on the market for so long?
Most likely the reason you have not produced a sale is the price. Price is the biggest motivator when transacting real estate. Please use my price validator and understand the correct value of your property.
Should I price my home high, so I have wiggle room for negotiations?
This is one of the most common questions and really how the Miami Data business was conceived. Defining truer values on properties. Leaving room for negotiations is one of the biggest home pricing myths in real estate. There is a lot of unnecessary risk that come from pricing a home too high. While you may think that you are giving yourself room to negotiate, too high a price is more likely to drive off potential buyers. The longer you have the home on the market due to a high price, the more of a stigma that home develops. If the price is too high, you may not get any offers and be forced to re-list the house for a lower price. When this happens, your home will certainly be viewed as a problem home by many buyers. Why else did you have to lower the price? We can reference one case where a house in Miami Beach was on the market for 2 years and it ultimately sold for about $200k less than we feel the house was worth had it sold just one year earlier. This does happen in Miami and “chasing the market” is a very real threat when you do not employ the right pricing strategy from the start. In a sellers markets, mis-pricing can be more forgiving, but in markets with lower demand or favor buyers only, too high a price from the start can create a ripple effect of financial issues for a property owner, as we’ve seen so many times. Our goal is to not have that happen.
What is escrow and how does the process go?
Escrow is the actual process wherein the buyer and the seller deposit funds and relevant documentation with a neutral third party, usually a real estate attorney or title agent, which holds the funds in trust until all the conditions of the sale are fulfilled. This allows for a more seamless sale and minimizes risk for both parties. Escrow opens once both parties have signed the purchase agreement and delivered it to their escrow holder along with the escrow instructions. A good faith deposit (earnest money) or initial down payment is typically delivered at the same time.
What is an earnest money deposit?
Also considered a good faith deposit. This is made by a buyer at the time of signing a contract when purchasing a home. The use of a good faith deposit is often the same in most markets, but in South Florida there is also a rescission period that goes along with any deposit. In South Florida, a good faith deposit is generally provided within 3 days of endorsing a contract and there is usually an additional 10-15 days of rescission that allows a buyer to perform due diligence on the property. This includes inspections, title search, appraisal, etc. This allows a buyer to identify potential issues with a property and cancel a contract during this period. If a contract is canceled during this period, a buyer will be returned their earnest money deposit.
Should I order an inspection?
Yes! In South Florida it is customary to have a unit/property inspection - even if you’re buying a studio. South Florida has issues such as mold and termites as well as air conditioning units working full time and often having shorter life spans. These are just a few examples of why inspections are always recommended. They can range from a few hundred dollars to a couple thousand dollars depending on the size and scope of the inspection. Inspections are valuable in all scenarios, however they carry more weight when a seller transfers a finished home selling at market rate. It is implied that a seller deliver a home in fully functioning order. In comparison, when purchasing a fixer upper, usually at a discount, some inspection issues should be absorbed into the pre-factored renovation budget you set as a buyer.
I've identified a problem during my inspection. What do I do now?
The first step will be organizing the facts of the issue and assessing a value to the issue. At the end of the day, an inspection issue is only monetary and not a personal matter. Example: If the compressor on the AC is bad and needs replacement at a cost of $2K, then you request the seller replace the compressor prior to closing (with a licensed vendor) or provide a credit at closing. The seller is welcome to turn down the request, but per the terms of the initial contract agreement and having a 10-15 rescission period, you’re welcome to cancel the contract.
What happens if a home in contract doesn’t appraise?
In cases like these, you’ll need to know how to contest the appraisal and this is where Miami Data comes in very handy. There are usually a couple of scenarios that rectify a low appraisal including the following:
- You challenge the appraisal with new facts, and it’s adjusted.
- The buyer makes up the difference by coming up with additional deposit funds.
- The seller has to lower the contract price.
- A compromise – the seller will lower the price some, and the buyer comes up with a larger down payment satisfying the lender.
- The buyer has the ability to cancel the contract provided they have a financing contingency and have met all requirements per the original agreement.
Should I do a walk-through before closing?
Yes! It is recommended that you or a representative walk the property no more than 36 hours before closing. The day of closing or the afternoon before is generally recommended. You’re looking for any last minute issues or changes to the material use of the property. Any issues not affecting the habitably of the property can be addressed at the time of closing.
What is the average amount for closing costs on a property in Miami?
Typically it’s in the range of 2% to 5% with a conservative average of about 3%. There are some different costs for single family homes and condos, so we always suggest you contact a local real estate attorney to learn more about closing expenses. As a rough estimate, if you’re purchasing a $500k home you should expect to budget between $10k-$15k for closing costs.
Why does the title have to be cleared before I can get a mortgage?
When a lender makes a mortgage loan (other than a home equity loan), the lender typically requires a first lien position. This means there can be no other outstanding liens against the property that are superior to the new mortgage. Liens can result from a variety of sources, such as home equity loans or lines of credit, child support judgments, divorce settlements, delinquent taxes, and special assessments. Most realtors, mortgage companies, title companies, and escrow companies will assist the seller and/or borrower in clearing title. The ultimate responsibility, however, lies with the sellers of the property who are warranting clear title to the buyers. It is important the buyers receive clear title from the sellers so there are no future claims against their property ownership rights.
What is the number one question I should ask a real estate agent?
Where do you live. This is the most important piece of information you need to know when hiring a real estate agent. Especially in our Covid-19 environment. I implore anyone hiring a real estate agent to not hire agents across markets. While a real estate license in the State of Florida is intended to practice real estate anywhere in Florida, it’s not a very good idea. This is not helpful to the community nor does it really serve the interests best of either client - buyer or seller.
How long does a listing agreement last?
It's almost universally used that listing agreements are for a year in Miami. It’s a bit too long if you ask us. We would not personally make such a long commitment to hire someone who may or may not be able to perform the job. In NYC for example, listing agreements across the board are for 6 months. In some cases less. This is the same in other larger markets. This is perhaps one of the most valuable aspects of our Miami Data business - better pricing, more true to the actual market and cutting down days on the market. It shouldn’t take a year to sell a property and in some cases two years or more, which it quite common. The average DOM for many neighborhoods exceeds 6 months in some cases the average DOM for properties can be 9 or 10 months. We feel a property should always sell within 3 months of listing and price will always dictate if that’s possible. We are available to discuss different listing periods with you.
How many real estate agents are in Miami?
As of the most recent reporting in 2018, the Miami Association of Realtors has approximately 50,000 members. We are considered to be the 4th largest real estate board in the country.
My friend has their real estate license, but they don’t practice selling real estate full-time. I want to have them list my property, but I’m concerned they don’t have the experience or ability to communicate the facts of the property effectively. What should I do?
This is perhaps the most pressing issue in the South Florida real estate community. People in Miami are more likely to contract individuals for jobs based on relationship only - this is across many industries. Michael Carioti sold real estate in NYC for 15 years and it was more merit based interviewing whereas in Miami the “value” of the real estate agent is greatly diminished. It is extremely common for agents to sell real estate part-time in Miami, which often affects the standards the entire community abides by. We are currently working on a solution to this issue, because we realize that despite the lack of availability or knowledge of a property, people still want to work with who they know and are more likely to hire that person regardless of these short comings. Perhaps there is a good marriage of “who you know” and someone else that has the “what you know” and everyone arrives at the same goal. We are working on this daily and hope to have a community oriented solution in the coming year!
Who Uses Miami Data?
Anyone interested in real estate in Miami. Do you find yourself looking at real estate online and wonder what exactly is the right price for that house or condo? Are you thinking of selling your home and have basic questions about its value? Are you relocating to Miami and consider renting before buying? We help walk you through these questions using our proprietary and insightful analysis.
If you’re ready to redefine how you approach your real estate transaction in our market, Miami Data is for you.
We are available and open for clients and real estate agents.
Real Estate Agent