Fundamental principles of the real estate profession is for properties to achieve the ‘highest and best use.’ In residential real estate that translates to doing what’s necessary to ‘maximize the home price’.
The Best Time To Sell Your House Is When Others Aren’t Selling
If you’re thinking about selling your house, you should know the number of homes for sale right now is low. That’s because, this season, there are fewer sellers listing their houses for sale than the norm.
Looking back at every April since 2017, the only year when fewer sellers listed their homes was in April 2020, when the pandemic hit and stalled the housing market (shown in red in the graph below). In more typical years, roughly 500,000 sellers add their homes to the market in April. This year, we saw fewer than 400,000 sellers entering the market in April (see graph below):
While there are a number of factors contributing to this trend, one thing keeping inventory low right now is that some homeowners are reluctant to move when the mortgage rate they have on their current house is lower than the one they could get today on their next house. It’s called rate lock.
As a recent survey from Realtor.comexplains, 56% of people who are planning to sell in the next 12 months say they’re waiting for rates to come down.
While this wait-and-see approach is right for some sellers, it also creates an opening for more eager sellers to jump in now.
If your current house truly doesn’t fit your needs anymore and you’re ready to move, don’t miss this chance to stand out. When fewer sellers are putting their homes up for sale, buyers will have fewer options, so you set yourself up to get the most eyes possible on your house. That’s why your house could see multiple offers as buyers compete over the limited supply of homes for sale – especially if you price it right.
As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), says:
“Inventory levels are still at historic lows . . . Consequently, multiple offers are returning on a good number of properties.”
Bottom Line
If you’re ready to sell now, beat the competition before it comes onto the market. If you do, your house should stand out and could get multiple offers. Let’s connect to get you market ready.
There’s no doubt that the ever shifting real estate market is in a downward shift from being a seller’s market, to being a more neutral seller’s market. Thank God! Any experienced real estate professional can share stories of the insanity we’ve seen in the past 3 years. What once was a problem for buyer’s in some of the hottest areas in St. Louis suddenly became the norm throughout the St. Louis area.
So despite all the fear mongering about real estate, we’re still in a housing shortage, and home ownership is still more affordable than buying. Seller’s have nothing to fear IF they go about selling smartly. The problem with that is that most seller’s don’t understand how to sell smartly.
1. HIRE an Experienced PROFESSIONAL
Hire a Realtor based on their experience, skills and abilities. Conversely, we hear this type of logic all the time: “we knew our sisters’ friend was a Realtor so we just used her.” We call that ‘Gifting the job.’ If a human resources directors used the same logic when they reported to the company president, they’d be fired.
Confusion about how to hire a professional stems from people thinking all Realtors are alike, and not knowing how to identify between experienced professionals. Most Realtors work part-time and many provide limited service and spend less money on things like advertising and less time on things like contacting agents and buyers about your property. Seller should research and look for evidence of a full time, experienced professional. Christopher Reichert, CEO of Stifel Bank put it this way, “now, more than ever, your clients need the guidance of an experienced professional (Realtor).”
Bottom line: make a Realtor earn your trust & the opportunity! Don’t gift your listing!
2. Benefiting from Wisdom
Now that you’ve hired an experienced professional, it helps to use their experience and knowledge of real estate for your benefit. I’ve found it distubingly amusing when someone hires a Realtor to guide them, but want’s to argue about or disregard the guidance without exploring the logistics. Obviously the seller is always in charge regarding what they want to do. Sellers’ should do what they think is best, but before a suggestion is ruled out, find out the cost / benefit and why a professional is suggesting it. Ask questions! An experienced Realtor will be able to share experience and explain how their ideas will impact your sale. Things that seem costly, frivoulous, and unnecessary could help your home sell for more. There also could be options that make things easier for you.
Bottom Line: Use their experience to your benefit.
3. Prepare for a Target Buyer
The ultimate goal for home sellers’ is to get the most money. Experienced Realtors can usually determine the type of person a home would be appealing to (target buyer), and what is needed to prepare the home for that buyer.
In the past few years, younger buyers in the market have been paying more than other buyers, and they like homes move-in ready, walls painted with modern colors, and staged! Staging is the placement of furniture and decor with appropriate items so your home looks better. Staged homes can be done by a professional stager, who is usually and interior decorator. It cost money, but always pays off. Staged homes look better, especially in the pictures a listing agent uses to attract buyers online. Seller’s sometimes balk, and its usually because they don’t want to spend the money, they don’t see the return on investment, or they want the home the style THEY like it. Sometimes older people have homes that look like an old persons home, and don’t understand that some paint ,new fixtures and staging could transform it to a target buyer’s ideal home!
Often times stagers don’t require any money up front, but at closing. Disregarding the ideal home buyer means less $$ for the seller and more days on market for your home.
Bottom Line: Make the home attractive to buyers, not yourself!
4. Price AT Market Value
As the market shifts, homeowners looking to sell must realize that they are competing against other listings more than they were in the past. We’ve found that, with the advent of the internet, home buyers have more information at their finger tips than they did 30 years ago when it was more common to list high, then reduce as needed. Buyer’s are aware of things like Days on Market (DOM) than they were, and have access to other homes and their photos. Over pricing a home means that home buyers that look at your home won’t like it. They’ll find something that’s a better value. Buyer’s that like your home won’t look at it because its overpriced or outside of their price range. (old Realtor adage: looker’s won’t like, and liker’s won’t look). Additionally, the best price is almost always paid when a listing is new. Think of bannanas, after a few weeks interest is less and the price often reflects that.
In the world of real estate, the value of a home is not established by the seller, listing agent or even appraiser; those are all estimates. The actual value is determined by how much a buyer is willing to pay. The buyer determines the price. Finding the right price is something a Realtor is most skilled at, but even a Realtor can’t know for sure how the buyer’s in the market today will respond. Despite the shift, multiple offers are still happening and buyers pay more, but you HAVE to price it right!
Bottom Line: Conservative pricing means more buyers sooner!
5. Fix it First!
Homeowners often say things like, “I want to sell it ‘as-is’, then the buyer can do with it what they want.”
Putting off home repairs in hopes that they aren’t discovered can backfire. So can trying to sell “as is”. An experienced Realtor is more likely to bring a buyer, and they are likely to recognize the need for repairs on broken or badly worn items. Inspectors occasionally scare buyers when they encounter required repairs. Buyers see things and wonder if the home will be a money pit. As any experienced Realtor, and they have lots of stories about buyers walking away, not making an offer, and contractors charging more for urgent repairs that take place when the home is under contract. Sometimes a pre-inspection is recommended.
Updates should also be done so that the first buyers first impression is favorable. When sellers take the ‘wait and see’ approach, the listing might already benefit from the repair AND a price drop.
Bottom Line: Plan for success, not failure!
True wisdom comes from experiences. Experienced Realtors that sell homes every day know what will make sellers the most money and are hired to benefit you the most! The market is ever changing, which means buyers wants, needs, and expectiations are different than they were when you bought, even if it was last year! People working in the field keep up with trends and share them for the sellers benefit.
Prospective buyers saved, and often times purchased a ‘starter home.’ Interest rates were high. Internet was limited to colleges and there was no worldwide web. Homes were to live in, and there was only one home improvement show; This Old House. Styles were all over the board. We couldn’t rely on Pinterest to find and save our favorite styles. Hardware stores were just that. There was no Home Depot or Lowe’s, but buying a ‘fixer upper’ and ‘sweat equity’ were common expressions.
The “AS-IS” Sale Dilemma
Today things are different.
The generation buying their first home has been waiting. The grew up in the GREAT RECESSION and watched as older people saw their home values slide down in value. Living with parental units and renting was the norm. Realtor conferences had training sessions called, “What’s up with Millenials?” They weren’t buying homes, then, but today, they are.
Today’s home buyer has a mindset of ‘move-in ready.’ They value their time differently and certainly don’t want to become a slave to a drawn-out home improvement project. They’re professional, and know their worth. They value quality and style. They’re willing to pay more for a home that’s renovated and ready; designed for their tastes and staged to sell. “As Is” buyers that aren’t investors or rehabbers are few, and far between.
Some Sellers Do, Some Don’t
Some home seller’s get it. Some don’t. Baby-boomers and older generations, in many cases prepare homes based on what was important to them. This type of seller struggles to understand why they should invest money in homes they won’t be living in. We hear, “If the buyer wants that, they can do that themselves”. What they don’t get, is that most buyer’s aren’t going to.
Price Differential
Rehabbers want to make a profit. They want to sell a home at or above market value. They have to spend money to do that. The formula looks like this:
On a typical $250,000 home sale, a remodeler typically wants profit to be at least 15-20% of the sale, so they target for 25-30% of the projected sale price. With materials and labor costs rising, this places a downward pressure on home prices, even though prices overall have been rising.
The bottom line is just this, if you want to sell “as is,” you probably have to sell for less.
Our Philosophy….
We don’t have a problem with rehabbers, but we like our client to make as much money as possible. The sellers I met with in late 2019 listed their parents home and it sat on the market for 90 days with no purchase offers. Their Realtor met, snapped some pictures with a smart phone, and it was on the market. They had worked hard to clean it up, and remove belongings. It was clean and empty. Looking from the hallway, I counted 8 different conflicting patterns: floral wall paper, square pastel vinyl flooring, 1970’s wood paneling, faux red-brick backsplash, more different floral wall paper, and new floral border in the kitchen, plus beige carpet and a connected vine type of wallpaper in the bedroom. The ceilngs looked & smelled like a smoker lived there.
We met and they said they’d done enough, and weren’t going to do any more. They were angry at their Realtor and my comfort level was at an all time low. The home was over $100,000 below our average sale price, and we didn’t need an unsalable listing. I shared our philosophy and work ethic and reviewed the sales in the area. Eventually, I asked, “have you ever worn plaid pants and a striped shirt?” then showed them a full color 8″x10″ picture from the hallway. A lightbulb came on, and a little trust was earned.
We worked with them for 3 months and brought in painters, an electrician for estimates. We went room by room and made recommendations. We kept the beige carpet, kept the pastel vinyl but had wallpaper removed and most everything painted some shade of grey. Had it staged and fixed the obvious problems. After a reasonable amount of preparation, the professional photographer did his work, and the home was put on the market.
The home was far from a complete renovation, but the market responded. Instead of 90 days with few showings, we had many showings and 3 offers. Instead of having to negotiate downwards after 90 long days painfully slow days, the home sold for 20% over list price in 3 days.
The seller’s had this to say: “I am not sure even where to begin?? For starters, if I could shout their name from a mountain top I would!!My sisters and I had our childhood home for sale with another Realtor for 90 days and thankfully it was ONLY 90 days. I personally have never sold a home before just, bought (twice). I really didn’t know what to expect being a seller but, soon was met with disappointment. As soon as the contract ended we made the call to Chris and Lisa Grus. From the very first phone call we were WOWED. They took the reigns and ran with it. They know this business like no other. They walk with you and hold your hand through every phase. If I can share one piece of advice, it is LISTEN to them and TRUST their knowledge and experience.They worked sooo unbelievably hard for us! All days and hours. Lisa called me, Christmas Eve at 4:00 to share some ideas she had for the house, I said, “girl it is Christmas Eve”!! They literary did ALL the foot work for us. They met with contractors, got estimates, and kept the process moving. They are in constant contact with you. If you have a question, text or call within the hour, most of the time minutes your in contact with them. They held our hand until the very end. All I know is I will never use any other Realtor. The final result was the day the house went on the market we had a bidding war between 3 contracts. We will be forever be grateful, not just doing what they do best but, also for caring for us like family.”
We’ve had hundreds of similar experiences, but this one stands out. The point isn’t to shout any names from the mountain top, but a couple points need to be made. If you’re wanting to sell & get TOP DOLLAR:
Hire a Realtor with lots of sales and good reviews.
Ask the question: “What do you do to sell a home?”
Ask the question: “What do you think will prevent my home from selling?”
Lastly, our happy home seller said it best:
“LISTEN to them and TRUST their knowledge and experience.“
cgrus
STL Selling 