September 15, 2021
It’s no secret that the housing market is booming in today’s age.
In 2012, a modest 1,876-square-foot home in suburban Chicago was valued at $322,000. Nine years later, in the summer of 2021, this same three-bedroom, three-bathroom ranch sold for $715,000 in cash to the first people who walked through the door.
A few blocks away, another homeowner asked what she thought was a high price for her home –$499,000 – and got $530,000 in a bidding war among 10 buyers.
Closer to home, folks in Glenn Mills, PA, recently sold their home for a whopping $68,000 over asking price, according to their realtor, Chris Holt, with the Steve Laret Team in West Chester.
In an August webinar for the Barclay Friends community, Holt shared valuable insight on the current post-COVID housing market. Let’s explore some key takeaways from his presentation, “Selling Your Home in Today’s Market.”
Three major shifts in the housing market post-COVID
For the past five years, homeowners have enjoyed a hyper sellers’ market, due predominantly to low mortgage loan interest rates (the national average is 2.69%, as of this writing) and double income, family minded millennials with strong purchasing power. In fact, millennials make up 60 percent of the buying pool, according to Holt.
Rising home values due to low supply and high demand is just basic economics, but the pandemic has uniquely changed the housing market. “It’s a moving target,” said Holt, who identified three major paradigm shifts in the housing market in the wake of COVID-19:
- Buyers are purchasing homes site unseen. Photos and videos are proving to be sufficient in today’s market.
- Buyers are waiving all inspections to win a bidding war (not recommended, says Holt).
- Buyers are meeting the appraisal gap. For example, a home is purchased for $500,000, it appraises at $475,000, and buyers pay the extra $25,000 at closing.
“Sellers have all the leverage and can dictate all the terms,” says Holt. For many, this makes selling their home particularly tempting. “Strike while the iron’s hot,” as the saying goes, because a skyrocketing housing market is not sustainable over the long haul.
What should I ask for my home?
Once you’ve determined that now is the right time to sell your home, the next step is to figure out how to price it. Who sets the market value of your home? The seller? The realtor? The bank appraiser?
None of the above.
“The person who shows up with the money to buy it” determines the price, says Holt. Essentially, what the market will bear. This is not an exact science, as buying (and selling) a home is a very emotional process, especially when there is competition for it.
Such competition is what creates an auction mentality, according to Holt. As such, he advises underpricing your home by about 2-3%.
You wouldn’t begin an auction by pricing an item higher than buyers would reasonably pay. The same psychology works in selling your home. “Asking price is your best marketing tool,” said Holt. Underpricing your home creates a heightened demand for it, and the rest is human nature. Potential buyers are not negotiating with you, the seller, but with one another.
Going back to the example at the beginning of this blog, one of Holt’s clients was adamant that they weren’t going to sell their Glenn Mills home for under $600,000. Their ideal number was $625,000. Holt advised them to price it right at $600k, a strategy to which they agreed. The bidding war began, and the sellers garnered $668,000 for their home!
Time on the market – friend or foe?
For the seller, longer time on the market is definitely a disadvantage. Often, said Holt, a home sits because it is overpriced. “People will begin to wonder what’s wrong with your home,” said Holt. “You can end up stigmatizing your own property by pricing it too high.”
How long should it take to sell?
In today’s market, not long, unless there are negative issues with your home (see First impressions are lasting impressions below). Says Holt, an attractive home should sell within 7-15 days, 30 at most. A quick settlement (closing) is approximately 35 days; medium is about 45, and long is about 60.
While quick relocation may seem daunting to some sellers, many are able to rent back from their buyers to afford them more time in the moving process.
To fix or not to fix?
That really is the question, as every home is different. What to fix and what not to fix can also lead one down the proverbial rabbit hole. However, Holt offers some rules of thumb that will almost always get sellers their money back:
- New interior paint. A fresh coat of paint does wonders for appearances, but take care to choose neutral colors. Now is not the time to get experimental.
- New carpet in small areas. Larger areas are not worth the expense because your choice of
carpet may not be your buyer’s choice. It’s better to clean and re-stretch large areas of carpet.
- Professional whole house cleaning. The importance of a sparkling clean home, top to bottom, cannot be overstated, and the price of professional cleaning is money very well spent.
If you’re “going big,” meaning that you’re planning to make major renovations or changes to your home before selling…
- Adding a bedroom or bathroom will gain you considerable money back. Bedroom and bathroom space is crucial to buyers, especially millennials planning to have families.
- A patio or outdoor space is paramount these days of COVID, as more people are working from home and craving an outdoor area. Outdoor spaces are the new kitchens!
- Take a conservative approach to kitchens. If you go all-out and spend several thousands on a renovated kitchen, you may not get a good return on your investment. What if your buyer doesn’t like your choices? Even if your kitchen is outdated, if it’s clean and uncluttered and everything goes together for the period and style, it may be best to leave it for your buyers to update with their own choices. New appliances, however, are a good investment if yours are old or not in good working order.
- A consultation with your realtor about what changes to make pre-sale is essential.
First Impressions are lasting impressions
In the housing market, the old saying “you never get a second chance to make a first impression” is especially profound.
At most, a first viewing of your home lasts 30-45 minutes. Proper staging feeds directly into the psychology of that all-important first impression. Done well, it can make a sale; done poorly, it can break one – and fast.
Here are some useful tricks of the home staging trade:
- Keep it neat and clean. Nothing is more important than an immaculate home. As noted above, professional cleaning is a must.
- De-clutter. Even if you have to move your belongings (knick-knacks especially) to a storage unit or your garage to clear things out, it’s well worth the time, effort and expense. Clutter induces anxiety, and while you may be comfortable with your stuff scattered everywhere, potential buyers will likely want to flee, never to return.
- Banish bad smells. The “nose knows,” as they say, and lingering odors of cigarette or cigar smoke, pets, strong foods, etc. will turn prospects off and away, no matter how beautiful your home is. Employ whatever products or services necessary to rid your home of stank.
- Leave anchor pieces. If practical and not too much work, clear your home of everything but anchor pieces in its rooms (beds in bedrooms, couches in living areas, etc.). According to Holt, this will help buyers envision themselves in your home and also hide any imperfections on empty walls and floors.
How do I market my home?
First and foremost, don’t try to sell you home on your own, even in this hot sellers’ market. For sale by owner (FSBO) homes make 17% less than homes sold with the help of a realtor. Compare that to the 6% cut of your home sale realtors charge.
What specifically can your realtor do for you?
- List your home on the Multiple Listing Service (MLS), with syndicates to over 300 realty websites and viewed by serious, pre-qualified buyers
- Wear the buyer’s hat. Realtors are in and out of homes every day; they know what buyers want…what needs to change, what can remain, and everything in between. Their expertise, recommendations, and impartial eye are critical to the process of selling your home.
- Produce professional marketing material, such as photos of your home and engaging video tours of your property (as noted above, in this market, such material often replaces in-person visits)
- Employ social media marketing, where many buyers spend their time
- Conduct traditional open houses
- Manage and finance all your marketing to reach the most relevant audiences
The time is ripe for seniors
Perhaps you’ve been thinking about downsizing or moving to a senior living community. Perhaps the current hyper sellers’ market has you even more inclined to sell your home. Whatever you ultimately choose to do, we at Barclay Friends are here to answer your questions about senior living, show you our beautiful communities, and help you contemplate a new chapter in life.
Preston is open and accepting applications
Contact us today and discover the possibilities!