Filed under: Selling
By Lisa Gibbs
Given everything they knew about the lackluster housing market, Meghann and Cort Battles didn’t expect much when they listed their four-bedroom home in Centennial, a Denver suburb, for sale in January. So they were taken aback by the onslaught of interest.
Meghann, at home on maternity leave with their two sons, juggled 32 showings in the first month. “It’s so exhausting trying to find somewhere to go for an hour two or three times a day,” she says. The Battles even installed a special front-door handle to text them when buyers enter and exit so that they can return as soon as possible. “It’s just crazy,” she says.
Wait, isn’t the real estate market still supposed to stink after five straight years of falling prices?
Turns out that while analysts debate when the market will hit bottom, for a surprising number of cities the turnaround has already begun. In December, prices rose in 109 of the 384 metro areas tracked by the data firm CoreLogic. Scrub out foreclosures, and that figure climbs to 169.
If you think that recovery means a return to the boom’s double-digit price increases, forget about it. “The market won’t suddenly snap back,” warns CoreLogic economist Sam Khater, who has studied past housing busts.
And for harder-hit areas such as central Florida and the Rustbelt, improving may simply mean things are less bad than they were two years ago.
No matter where you live, though — or where you want to live next — the strategies you employ to sell your home must change to reflect the realities of what’s now a healing market.
1. The higher your price, the more patient you must be.
Cheaper homes are affordable to more buyers and appealing to investors, so recoveries usually start there. Two years ago Denver properties above $ 210,000 were still falling. At the end of 2011 it was homes above $ 315,000. Also, jumbo mortgages that aren’t government-guaranteed — loans above $ 417,000 and up to $ 625,500 in high-cost areas like New York — not only charge higher rates, they come with tougher underwriting standards, further slowing things down.
2. Screen your buyers.
Working only with buyers pre-approved for a sufficient mortgage has long been standard advice. But with more offers rolling in, a good agent will call loan officers for more information. There’s an incentive for borrowers to grant their loan officer permission to talk. “If I’m going to speak with a listing agent to advocate on my borrower’s behalf, I clear it with the borrower first,” says mortgage consultant Kym Poladsky. “Most borrowers who are competing want you to help get their offer accepted.”
3. Strike the right balance on pricing.
While you don’t have to placate low-ballers anymore, you can’t shoot for the moon either.
Adele Work and Jennifer Caldwell can attest to that. The couple have lived in their 1910 home in the desirable Washington Park neighborhood near downtown Denver for the past 12 years. They weren’t thinking of selling their place, until they happened upon a farm in northern Colorado last August while visiting their son in college.
They wound up buying that property and put their Washington Park “baby” on the market in October for $ 734,999 — even though their agent lobbied for a lower price. Sure enough, the buyers’ feedback started to come in: “Love the house, but slightly overpriced.” So they cut the price tag to $ 714,000. In February they dropped it again, to $ 699,000. “If we had priced our house lower to begin with we maybe would have sold it before the end of the year,” Caldwell says. Adds Work: “We’ve let our heart lead us a bit.”
4. Get it right the first time.
Set a realistic price from the get-go so your house doesn’t look like a throwback to lousy price-slashing times. To do that, think like an appraiser. Analyze comparable sales for price-per-square-foot and see how long competing homes have been on the market.
Scouting active listings is also crucial, says appraiser Matthew George. “You have to know what you’re competing against,” he says. Arm yourself with a simplified evaluation of your home, called a summary or restricted-use appraisal, before listing ($ 150 to $ 200). To find professionals in your area, go to appraisalinstitute.org.
5. If you think you erred in pricing, act quickly and decisively.
Are you getting lots of showings but still no offers after 30 days on the market? Cut the price by at least $ 10,000, says Justin Knoll, chairman of the Denver Realtors organization. At that point, you can hold firm on price and try to negotiate offers up.
6. Let your home’s value dictate the price.
This advice may seem self-evident, but owners may have lost sight of it during the bust. On the one hand, some sellers clung to the false hope of a return to boom prices, so they set prices unrealistically high. Others may have gone too far the other way — by setting the price on their higher-end home below jumbo loan levels simply to draw more interest. In an improving market, that type of thinking isn’t really necessary.
7. Understand that you’re no long competing with gutted foreclosures.
Buyers are tired of looking at worn-down, neglected, distressed properties and often don’t have much extra money to do a lot of fixing up. “Clients tell me all the time, ‘I’ll spend a little more for something that’s ready to move into,’ ” says Knoll. “Sellers need to take advantage of that.”
8. Take care of structural and cosmetic necessities — but not much more.
In lean times, forking over $ 50,000 on a new kitchen may have seemed like a necessary move to stand out. That’s probably the wrong thing to do now, says George, the appraiser. Instead, stick with basics like paint and flooring. And fix things that will come up in inspection. For instance, Kathy and Bruce Frank, of Golden, Colo., recently spent $ 1,600 to repair a sunken driveway before they put their house on the market.
In their 28 years there, the Franks — she’s a retired elementary school principal; he works at the University of Colorado — have done a little of this and a lot of that. “Finished the basement, popped the top on the garage and added a master suite, new hardwood floors, moved the laundry room to the top floor, new roof,” she says.
When the empty nesters listed their home, they focused on small stuff, like decluttering and packing up their personal stuff. They also brought in a stager to set the kitchen and dining room tables. The Franks’ agent, Buss, says the house is shipshape but admits it reflects the longtime owners’ tastes. “Blue,” he says. “The house is very blue.”
9. Respond quickly to feedback.
If an issue arises over and over in buyers’ reactions, it needs to be addressed immediately. Buss, for instance, planned on giving the Franks 10 days or 10 showings. If buyers complained about the blue, he was going to have them paint. It turned out not to be necessary. Just three days after listing, the Franks had a full-price offer: $ 375,000. They’re under contract.
Things aren’t moving quite as fast back in Centennial, where Meghann Battles sits in her car, e-mailing on her iPad and playing the waiting game. Meghann is waiting for lots of things — for her 32nd showing to end, for would-be buyers to realize how few homes are for sale in the neighborhood, and for families hoping to move in the summer to start searching. As husband Cort reminds her, though, “It takes only one showing for it not to be a waste of time.”