In my last blog post, I wrote about how Connecticut's real estate market has diverged from the rest of the country's situation. There are many reasons for that, and they've been well documented. That begs the question, though, of what the real problems in the real estate arena are for professionals now. We are having trouble getting buyers and sellers on the same page.
There is definitely a market for well-priced homes, especially those that are within reach of first-time homebuyers. Although the strength of the recovery varies from town to town, and even from submarket to submarket, a compelling price will often result in multiple bids. This often confuses buyers, who have been led to believe that they are in a buyer's market, and can offer well below the asking price. They are happy to believe this, even though it is clear that most of the country is in a seller's market, due primarily to a lack of inventory.
Here, in many places, we have lots of inventory. However, it's not always in the same price categories or locations that buyers want first. And, sorry to say, much of what's been around a long time is overpriced. Sellers don't accept that in many cases, though, because they often paid more for the home that it is currently worth, and sometimes have also done work. They can also point to homes that sold for more, even if those properties may not be in the same condition as their own home. (A note here: Buyers today want perfection. They do not want to do any work to a home. What you may overlook as the current occupants, they will deduct from the value.)
What should sellers do? Listen carefully to what you are being told about value. Write it down, so you don't forget it. Don't ask "What shall I put my house on the market for?", but rather "At what price will my home sell within thirty days?". Don't assume that you need to leave room for negotiation. That's one tactic, but, in my opinion, a compelling price (at or slightly below the expected sales price within 30 days) will have the greatest likelihood of drawing multiple offers, which is your best chance of getting a higher price. Bidding wars work. They excite people, and increase a buyer's estimation of a home's value. Pay attention to early signs. If your home has been shown ten times, and you don't have an offer, it's the price. Period. If you don't sell your home in the first month (or even in the first two weeks), your chances of selling relatively quickly go way down. Period. This isn't rocket science. So why is it so hard for people to follow these rules?
One clear example, as we know from Freakonomics, is to look at what real estate agents do with their own properties. I heard yesterday that one shoreline agent just sold her own home for $200,000 less than she paid for it. That should ring a big bell for sellers there.
And for buyers? The market now is hyperlocal. You may find much more competition in some places than in others. If you love the home, bid what you would regret to hear that someone else paid for it. If it goes for more than you could afford, or if you didn't like it that much, you won't have regrets. Otherwise, don't play games. Understand that there are often back-up offers, and don't go crazy with the inspection requests, or consider them a second round of price negotiations on the property. Behave fairly. Tell the truth. Again, these rules are simple. And they yield big dividends.
Are we ever wrong? Of course we are. But not as often as you would think, since we see so much inventory, and have such a good pulse on market conditions. Please listen to us. It will be worth your while.