Buyer's Market: A Definition
If you are about to put your house on the market, or are currently listing, get ready for a rude awakening. Many still have lingering memories of the past seller's market and would be shooting themselves in the foot but not understanding the current climate. A buyer's market really means that seller's have to do way more to get their home sold with the amount of competition there is out there. Let me break it down for you.


Pricing.
Don't think for a moment that the ploy of asking for a dream amount is going to bring a reasonable amount of people through your home or an offer. It's not a plausible scenario in this market and a real long shot. You have to have a very sharp price to get noticed and to garner offers. Many make the mistake of pricing their home based on what they want out after expenses, what they feel they should recover from improvements made to the home, and the like and ignore the sales data that's presented thinking they can do better than the historical fact. WRONG. It will not get a nickel more in the end, will extend your marketing time, and many priced this way see no prospects and thus no offers anyway. If you're lucky enough to get an offer it would be viewed as "insulting" as the buyer agent, if their performing their fiduciary responsibility, will present the comps that support offer presented. We all tend to think our bricks and mortar are worth more than the next, but that's an emotional not factual thing here. Some think or the neighborhood will carry the extra dollars they want for their home but at the end of the day the home is worth what a bank will commit a mortgage to or a cash buyer will write a check. Most cash buyers have the home appraised to make sure they're not over paying. Our advice is, and has always been since the market became a buyers market, is to price your home just above the bottom line you're able to accept and hopefully that is within what the comparables and current active listings will support.
Pricing barometer for most
If you're getting little or no showings, you're really overpriced. Because the majority of buyers today use the net to scope out the inventory they pass right by overpriced listings. The showings one does get are from the higher price bracket shoppers and after the showing will peg you as overpriced and then they're gone forever. Its way easier for buyers to negotiate from a lower than higher point to get the home they want for the price they're willing to pay. If you're getting an ample number of showings and no offers or a couple of low balls, you're still too high. This means that after seeing your home in person and visiting your competition, they offer on something else. So in fact your overpriced listing helps drive the sales of the homes that are priced right. If you price your home right, you'll get very close to your asking price and it will be done in a reasonable time in the majority of cases.
One of our recent sales showed us that even a $5K reduction can make the difference in the sub-$300K category. We were getting a luke warm turn-out on a home we listed at $284,900. The feedback would say we were priced right but our precious buyers were buying elsewhere. We suggested to our sellers to lower the price $5K and they agreed. We began showing the home a dozen times per week and a month later went under contract very close to asking. So in the end if we put the house up at $299K fishing for a higher price it would have just extended the market time, perhaps garnered a "market rot" reputation of "what's wrong with that house" and in the end wouldn't have fetched a higher priced. If the sellers had gotten lucky in this case, the sale price to listing price would have simply been a larger spread and days on the market longer.

Appraisals
Bank appraisals are caving a lot of deals. Sometimes a contract is put together where everyone agrees is the price except for the bank. We recently produced a fabulous offer that was at the top of what our comps said the home was worth and it was rejected by the seller. We even asked the opinion of a licensed appraiser to make sure we were offer the right advice in accepting the offer. We sold our hearts out to get this offer and it was rejected. The buyer came back a couple more times with offers over the homes value but now carried a condition that it appraised. It was still rejected because our sellers thought the home was worth still $10K more. Even if the deal did go together at their dream price, the bank would have come in at market and the buyer would have expected an adjustment to the market value. The home is now on the market waiting for another offer and the prospect of bettering the offer they had is dim. If another offer ever comes. So our advice is when you get the first offer on your home in over a year and its at or near your homes total value...TAKE IT. Its not a market where you're likely to see many offers given the selection one has and consider getting an appraisal before hand to help you get used to the idea what you're house is worth in this market. We even offer to reimburse our sellers at closing for this appraisal so its a net zero act with us. If you learn you can't sell because there's not enough of a bottom line for you then stay put until things improve. That could be a very long time, however, it beats preparing your house for showings and going through the pain without hope of really selling.

Prepare to do more and be asked for more
We received an offer on a home that was at top value for the house, but the buyer decided to ask for items not included as real estate. He asked for a chandelier that was excluded, riding mower, washer and dryer. The sellers were extremely annoyed and even thought we weren't advocating for them because the buyer was asking for what was not included in the listing. Don't take this kind of thing personally. Buyer's expect, and in many cases, are getting more in a sale because qualified buyers without something to sell are in short supply. If you like the chandelier you don't want to part with or a special cabinet door or a sink or anything else that's screwed down, change out in advance. In CT anything screwed down or installed like a light fixture considered real estate and the buyer expects those items to be included. It will go easier for you, trust me. Your selling agent cannot control what is asked for and not negotiating some personal items away may cost the best deal you're likely to see in this market. We've witnessed this and hope our readers will take heed. Once that precious buyer is gone...they're gone.

Detach and Depersonalize
It goes without saying that each of us has created memories in the home we may to have sell. However, when it comes time to sell, its time to look at the home as wood, bricks and mortar. Its an asset. If you buy with emotion or remain emotionally attached during the selling process you'll find yourself in trouble. You'll be insulted by even the smallest things. The buyer doesn't care if you built the home with your own hands, designed it, had your first born there or anything else. Its an asset worth X on the market at any given time. Have a home stager help you prepare your home which means it will be depersonalized, become more neutral, and at times seem like no one lives there. If you can wrap your arms around this concept you won't get emotional during the negotiation and blow it for yourself. Ask yourself if your really want to sell before you engage a REALTOR to sell your home.

Prep your Home
We as a team supply a free two hour consult from a licensed and accredited home staging professional. If we didn't believe in it we would not pay for it up front out of our own pockets. This consult helps you get your home into shape. It may cost you time and money, but in the end you're home will be memorable, appeal to the widest cross-section of the buyers in your price range, and make the best first impressions. As a result you're more likely to sell in a shorter time for more money in any market.

Is the water beginning to boil?
You know how you see a few small bubbles rising to the surface when the water in the pot is just coming to temperature? Well that seems to be a fitting metaphor for what we see in current buyer prospects. I am not kidding when I told you at the start that the reason we're so behind writing our newsletter is how busy we've been with servicing our listings. We're now getting more and more busy with buyers. In the lower CT River Valley and CT Shoreline, our team has been out straight every day the past couple of weeks with buyers. I think there's a sense of this is pretty much near the bottom and its time to act before it turns and heads north. Even though energy and the lending crisis adds a bit of a wild card in calling a real turn, things are brisk and deals are going together. Two this week, two last week, and many in the works simultaneously. Negotiations are indeed tougher but we're up to the task in facilitating win-win deals in a majority of cases. If you're a buyer reading this, now is a great time to get to it.

Blood in the Water?
Low ball offers are routine these days as there is a class of buyer whom think they smell blood in the water and that every home has 25% or more movement in it. We cannot prevent a buyer like this from showing up at your listing, so prepare yourself for those kinds of offers. It does NOT mean everyone will tender an unfair offer. I was working with a first time home buyer whom I had to part ways with. They had read somewhere that 10 or 15% off the ask was the generic place to start offering on a home regardless if it were fairly priced. When I tried to explain what reaction they'd get from sellers who already made major adjustments to the asking price they had me charge in. Those sellers were resentful, countered with $100 off the ask or simply told them to go away and come back with a realistic offer. I as a listing agent would definitely support a seller in no counter response or one that just as unrealistic as the offer tendered. The point is that as a seller, don't be discouraged as they weren't your buyers anyway and another will happen along that is. Buyers, listen to your agents advice and look at the comps. There's plenty of pre-foreclosure and foreclosure product out there for the bottom feeder. Its not that you can't find an exception deal, they're out there.

Before we sign off, is there any particular topic you'd like me to research and write about? If so, drop us a line and we'll do next time out.

All the best,

Mick, Gigi, and Tina

 

PS: Check the blog soon. I am going to write about the new iPhone and how its helping us serve you better.