Calling All Real Estate Listings

Who thought that prices would actually get stronger during a pandemic?  It's not that surprising, when you realize that life goes on, jobs change, and people retire.  They all need to buy and sell, and there just isn't much out there for them to choose.  We have adapted to the post-COVID world as best we can, and are still selling; however, we need more product in order to sell more houses.

The beginning of May has always been a busy time in real estate.  This year is no exception, except that we haven't seen the burst of listings that usually accompany the first flowers of spring.  With little product coming on, some older listings have even gotten multiple offers, even after long periods on the market.  It's clear that, if we had more to sell, we could sell more.

So, if you've been on the fence, now is the time to get off.  The coronavirus restrictions are not going to go away completely for some time to come, and the spring season should give a boost to thoughts of moving.  In addition, good weather makes it easier to social distance, when the outside of a property can be used for parts of showings.  It's also a good time to do home repairs or sprucing up and painting.  Life goes on, and real estate is going on too.  Don't be left behind--act now!

Bidding in a Market with Tight Inventory

Currently, the Greater New Haven market is experiencing a shortage of inventory in some price ranges.  Although most of the country has been like this for a while, it has been a long time since it has occurred in Connecticut.  Many local buyers are not accustomed to needing to, or may not even believe that they need to, compete with other offers.  Some people that real estate agents mislead potential buyers about other buyers, in order to encourage interested parties to act quickly, or bid higher.  We are amazed now at how often a house that has been on the market for months, without any interest, suddenly may have two or even three parties competing to buy it.  Once a certain point in the spring has been reached, people feel that they have seen most of what might be coming on, so that they no longer feel that they should wait. Of course, homes that are well-priced and desirable attract interest, and usually these days multiple offers, almost right away.

So my advice to buyers is simple, and fairly obvious.  First, make a list of what you require in a house.  Keep a running preference order for what you’ve already seen, with your first three choices clear.  If those choices don’t change every time you go out, it’s probably time to stop looking. Be honest with yourself, and your agent, about your limits.  It’s amazing how often people tell us their upper price range, and then exceed it. Then, make the cleanest offer you can, with the fewest contingencies and for the shortest amount of time.  Assume that there is other interest in the property,  and follow this important rule:  Bid the highest amount that you would be sorry to hear that someone else paid.  If your reaction to a later record of the sales price is that you couldn’t, or wouldn’t, have matched it, then you did the right thing.  If your immediate thought (never mind what you told your agent about the highest you would go) is that you would have paid that price, then you should have bid more.

Showings and Sales

One of our colleagues has determined a linear relationship between showings in the first week of a listing, and eventual sales price.  While we all know that overpriced listings eventually sell for less than properties priced "correctly", we know now that you can tell that right away, by the interest at the very start of the listing period.  When a listing goes live, it needs to start having showings right away, in order to be statistically likely to sell quickly and at a good price.  If people notified or searching see something that they believe is uncompetitive, relative to other listings that they've seen, they won't rush to see it.  And it won't sell for as much, then or ever.  So pay lots of attention to what you list your property at, and be very wary of the argument that "it's worth trying it first, at the higher price".  You may regret it later.

Preparing Your Home to Show

Since we are in the busiest time of year, it's important to talk about getting your home ready for sale.  If you haven't started yet,  you are really behind the eight ball.  You need to have your home available when the most buyers are looking, and that can conflict with having everything done.  I remember selling a home where the floors needed to be polished, and the people doing it came a week later than they said, and then took longer.  I missed the window of one week, where all the cherry trees in front of the house were blooming, and I think in the end we got less and it took longer.  The moral of the story?  I should have started sooner.

I made another mistake, but maybe it wasn't one.  I didn't let someone in who couldn't wait until the home was ready.  In retrospect, an eager buyer may be too good to send away, even if your home isn't at its best.  That's for you to decide.  Basic decluttering can get done pretty quickly, if you are motivated, but moving furniture, painting, and repairs can take much longer.  Again? I should have started sooner, and so should you.  If you haven't, get a yard service and declutter, paint if you have time, and fix what's broken.

We are often asked whether to undertake major repairs, or change kitchens and bathrooms.  Generally, the answer is no.  You won't have the same taste as the buyers, and you may waste your money.  Only fix what's broken, just like the old adage.  Save your money, and lower the price instead.  Remember that the average seller is 57, and the average buyer is 42, so tastes won't be the same.  White walls are out, gray is in.  Granite is out, soapstone is in.  I could go on, but you get the idea.  Do what you can with what you have.  And don't overprice!

Listing Inventory

We spent some time this week going over our listings, to get a sense of what inventory we have for current buyers to see.  While we have more listings than we had six months ago, we found that we had the same distribution--a few new listings that are being shown a lot, a few short sales where the banks are taking so long to approve offers, or simply rejecting all offers, that they won't sell at all, and a bunch of listings that we know are overpriced, and are usually not even being shown.

In addition, we have recent anecdotal evidence matching what we have always known--houses that sell quickly for the highest prices are those that are perceived of as well-priced and likely to disappear if not bought right away.  We just sold a home in four days that had been listed twice before without success.  What was the difference?  This time the owners took the Realtors' pricing recommendation, had a lot of showings right away, started a bidding war, and ended up getting over the asking price.  One more notable fact about this house is that it is in pristine, move-in condition.  That's what buyers want now.  No more DIY projects, or deferred plans for upgrading.  What sells is what's perfect, or close to it.

So the bimodal distribution of inventory continues--a little bit of choice on great, well-priced, new listings, and a lot of signs on properties that aren't going to sell quickly.  Sellers, take note!

Learning from Ebay

I'm not an Ebay person, but I have lots of friends who are, and I've certainly read enough about the philosophy to get the idea.  You go on looking for something, and then you watch the bidding over a period of time.  In the end, if you want to get something, you pay the price that it takes to get it.  If you can't stand watching others bid, you take the "Buy It Now" option.

There's a real estate theory along the same lines.  When a house is listed, potential buyers look, and note the price.  They often sit back and watch the action, sometimes bidding, but often waiting.  If they really, really want just that house, they will go in early and strong, and close the deal.  If not, they wait and see.  At the end of their search, if that's the house they want, they need to outbid others to get it.

The idea is that things will sell, in most cases, for what they're worth.  There may be times when sellers get lucky, or buyers do, because of circumstances not created by them, but by the other party.  Most of the time, property goes for its fair value, because bidders will eventually come in and pay what they know it's worth. The moral?  It's not the listing price, it's the inherent value.  Put your property on low, and let buyers bid it up.  Just as in Ebay, if you can create a feeding frenzy, you will get more, and much more quickly, than if you list it too high.