Monday, November 12, 2018

The Importance of Staging

I've been doing a little research in our office, to try to determine the factors that make some properties fly off the shelf, while others linger.  Price is, of course, the biggest determinant, and location follows at a close second place.  Sometimes, though, it's hard to judge why a house in a desirable location doesn't sell as quickly as another.

That's where it comes down to presentation.  Homes that have "curb appeal", and where buyers can imagine living, sell faster than homes that lack those qualities.  In many cases, that's where staging comes in.  All staging means is that you and your Realtor, with or without using a professional stager, put your house in the best condition to attract buyers.  Decluttering is the most important component of that, of course, since all houses look better--and bigger--when they contain fewer belongings.

Beyond that first step, making the house look neutral is the next most important factor.  To achieve that, stagers will often move out furniture, and replace it with their own, to make the rooms look bigger, cleaner, and less clearly belonging to someone of a given age group.  All buyers have to be able to see their own possessions fitting in well, and even to be able to imagine what work could easily be done to achieve their own particular objectives.  Maybe that involves redoing the kitchen, but it could also be moving walls, changing traffic patterns, or adding on.  Very few people can project what those changes will look like, unless the bones of the house are readily apparent.

We're about to start filming some "before and after" videos, so that you can visualize the process and the results more clearly.  We want your home to show at its best, and to get the highest offer it can, in the shortest amount of time.  We hope that you are open to the possibilities for getting to that point, and we can help.

Friday, November 2, 2018

Explanation of absorption rate: The rate at which available homes are sold in a specific real estate market during a given time period. If you look at the number for Cheshire you can say “If market conditions do not change and if no new listings come on the market it will take 5.4 months for the current inventory to sell at the current pace of the market. A balanced market’s absorption rate is typically between 5 - 7 months.”

Wednesday, October 31, 2018

Here We Are Again at the Sweet Spot for Buying

Every year, I write the same thing at Halloween:  The period between now and Thanksgiving is the best time to buy a house!  People who want to sell before the end of the year for tax reasons, people who have already moved (or are about to move), people who are trying to avoid the increased maintenance and expense that winter brings, and others who may just want to check a sale off their to do list, are all itching to sell before the true cold weather sets in and the calendar turns to another year.

Buyers who have been waiting should gear up when they read this, because it can often be easier to reach agreement when the clock is ticking, even if it's only a psychological clock.  In addition, rates tend to drop around this time (though we may not see that this year, even a pause would help) and go up in the spring season, so there's another reason to buy now.

Even something as mundane as the inspection can be simpler in the time of  year when the heat is on and the hot water is flowing often.  And, since many workers look to earn extra money during the holidays, it may even result in a faster repair or maintenance appointment.  Mortgage brokers as well want to close before the end of December, as results are usually compared by quarter, and bonuses accrued for that period as well.

So what are you waiting for?  Ready, set, BUY.

Wednesday, October 24, 2018

Handling Multiple Offers

The first thing buyers probably want to know is why we have so many multiple offers, when the real estate market doesn't seem overheated?  The answer is that consumers today know the market very well, often as well as their agents do.  They have been to many open houses and/or showings, and they have a sense of how quickly a home will sell.  We advise sellers, in the pursuit of a high selling price, to price their homes in the sweet spot--i.e., where the buyers will perceive that they need to make a good offer right away, if they want to get that house.  Since many properties on the market are overpriced, those homes priced aggressively stand out, and buyers know that.

So, here we are.  We have a new listing, priced to sell, and three different sets of buyers have made offers.  What do we do now?  The most important realization for most people is that the seller is in control.  The agent advises, but there is no law on how to handle multiple offers, so s/he can accept any of them, ask for each of them to present a new offer, or simply state what they would take, and sign with the first party who agrees.  If I am allowed to give advice, I tell people to negotiate with one party at a time (especially since the only real danger in multiple offers is that the seller might inadvertently accept more than one, or the buyer might have offers accepted on more than one home, if they are not paying attention to the details).  It might be the highest price, but it's also possible that it's the cleanest offer with the fewest contingencies, an offer without a mortgage requirement, or an early closing date.  If you are the buyer, then, you should make the cleanest offer that you possibly can.

Many times the agent asks each of the bidders to come in with their "highest and best" offer.  In that case, I tell people to offer the highest price that they would be sorry not to have bid, if someone else got it for that amount.  That means, of course, that buyers shouldn't be sorry if they went as high as they could afford to go.  In a multiple offer situation, buyers should not expect, however, to be able to renegotiate much, if at all, after inspections.  When there's another buyer, or buyers, in the picture, the advantage here goes to the seller.  Also, in a multiple bidding environment, you should not count on a Hubbard clause to win the bid, since a clean offer will almost always beat it. 

The last important note to strike is that it's very common for buyers to doubt that other offers exist, or that they are being treated fairly.  Agents, in my experience, don't lie about other bidders, nor do they do anything that would interfere with the seller getting the best offer (which may, of course, not be the highest in dollar terms).  Most Realtors are very careful to give the same information and opportunity to all parties, since we are bound by the Code of Ethics to treat all parties fairly, and to act in the best interest of our client.  No one is happy to lose a bid, but it can happen under the best of circumstances, and buyers should learn from any mistakes (like delaying), and move on. 

For Sellers:  Price to sell, and be fair to everyone.  Don't be greedy.
For Buyers:  Do your homework ahead of time--know your limits and your preferences.  Act quickly!

Tuesday, October 9, 2018

What's an Escalator Clause?

When a property receives multiple offers, some motivated buyers may try to make sure that they are the successful bidders, by putting in an "escalator" clause.  This is a new development, that sometimes replaces the old standard system of going back to all bidders, and urging them to put in their highest and best offers.  That can go on for more than one round, when more than one buyer is still interested, or can be stopped at any time by the sellers selecting one buyer with whom to negotiate further.

The escalator clause circumvents the old system, by including future bids in an addendum to the sales contract.  For example, let's say that the home is on the market for $400,000.  A buyer who expects, or is told, that there will be multiple offers may choose to offer full price, but add an escalator clause, offering to pay, say, $2000 more than the highest bidder.  So, if s/he offered $400,000, and someone else offered $410,000, his/her bid will automatically adjust to $412,000.  There should be, and usually is, a cap above which the buyer will not go; in this case, let's say that it's $415,000.  If the cap had been $410,000, then it wouldn't be triggered, because the buyer didn't consent to go above that, and there is already a bid at that amount.  If the other offer had been lower, then $410,000 might have gotten this buyer the property.  Most clauses require the seller to prove the other offer, which can be done with a copy, from which the names have been redacted (crossed out).

The above paragraph may be a little hard to follow,  without a specific example to plug in.  The basic premise, though, is simple:  you as the buyer offer to go above other offers, up to an amount named.  If that offer is not triggered, you can buy for the amount on the original sales contract.  If it is triggered, the amount offered under the formula stated will be inserted into the addendum, along with a copy of the other offer.  In either case, the seller should get more money, and without the back and forth of multiple offers.  The downside is that, when there are no other offers, the buyer who offered the escalator may feel that s/he overpaid, causing buyer's remorse.  There's no perfect system, but buyers and sellers should be aware of the possibilities that are out there, and know to talk to their agents about the options they have.