Just when you thought it was safe to assume it’s a buyer’s market, something very interesting is beginning to happen: I’m seeing more and more sales frenzy–and I don’t use the word lightly. Two of my own listings sold their first day on the market. My colleagues are telling me about similar situations. And I’m hearing of properties that have been on the market for months and months suddenly selling with multiple offers. So, what has changed? It’s easy to point to the low inventory of available properties and the continuing low mortgage rates, but those conditions existed in the fall and we didn’t see this frenzy. There seems to have been an attitudinal shift on the part of the buyers. Maybe it’s our spring-like winter temperatures. Maybe it’s confidence that the world is making a slow economic recovery. Maybe it’s simply an anomaly. Whatever the reason, buyers, be prepared and don’t assume that you can wait to see that property, don’t assume it will still be around after the weekend. And sellers, if you have been thinking of selling your home, perhaps now is the time to do it.
Take a look around your home. You probably like what you see. Even if it’s messy or needs a vacuuming, you can easily look through all that to the warm, beautiful haven you love, full of good design, perfect decorating choices, and just the right furniture. If you plan to sell your home, your agent might suggest staging it, an idea that could seem extreme. How could staging improve your already perfect home? But give it some consideration. Remember that staging isn’t about creating perfection or beauty, and it has a much wider application that you might think.
When putting your home on the market, it’s important to recognize that no matter how much you love the buffet in the dining room, the color of your kitchen, or the artwork over your bed, not everyone will. Moreover, even when buyers have the same tastes as you, your choices can be a hindrance to the sale. Why? It’s simple: When buyers can’t imagine themselves living in your home, they’re less likely to buy it.
In general, it’s very difficult for anyone to project his or her own tastes and preferences into a physical space that’s dominated by someone else’s style. You may have the world’s greatest collection of Amish quilts, for example, but if a buyer is trying to picture how his collection of Modern art will look displayed in your home, the quilts will only make it more difficult. This is where staging comes in.
There are two goals in staging. The first is to present a home in the best possible light, to showcase the qualities that will be most appealing to the greatest number of potential buyers. The second goal is to create a space that’s inviting but essentially neutral, making it as easy as possible for your buyer to get excited about how perfect his Georges Braque would look by the window. The ideally staged home strikes buyers as lovely but, generally speaking, impersonal. They are invited to imagine it filled with the things they themselves love.
In considering staging, remember that it doesn’t have to be a comprehensive undertaking. Staging, in fact, is quite a la carte. I use staging often, and in many different ways, depending on the needs of the space and the preferences of the seller. In some cases, it’s as simple as recommending the rearrangement of existing furniture or suggesting how to declutter the home. Or it can be applied to a single space, like a client I had with an empty, extra room. I added a bed to demonstrate to potential buyers that it could make quite a serviceable third bedroom or guest room. In this case, staging helped buyers instantly understand the home’s possibilities.
In other instances, strong, specific taste in artwork has been swapped out for quieter alternatives—such as the clients I had with a wonderful collection of African and Aboriginal paintings and sculptures. African and Aboriginal art is not for everyone.
At other times, major staging has been enormously helpful. I had an elderly client whose decorating and furniture was reflective of her age and the amount of time she’d been in the home—in other words, it was beautiful but somewhat dated. I knew we were likely, because of the property’s location and price point, to attract a number of younger buyers, so I had the entire home refurnished with sleeker, more modern furniture. The tactic worked well—so well, in fact, that the new look caused my client to fall in love with her home all over again. She said she felt like she was living in a hotel.
I sometimes wonder if the suggestion of staging can feel to my clients like an insult. Be aware, though, that your agent is not criticizing your taste. Rather, when your agent suggests staging, he or she is seeing your home as what it is: a product to be sold. Your agent is simply using his or her expertise to position that product as well as possible. And that, after all, is what you pay an agent for.
When it comes time to put your home on the market, you’ll likely be concerned with one thing above all: selling price. More than the length of time the sale will take, more than the timing of the close, more than any other factor, sellers quite understandably want to get the most money they can. Obviously, it has enormous importance to them, and in most cases will be the thing that will determine their buying power in their next purchase.
Pricing is also the most frequently and easily misunderstood factor of home selling, because as counterintuitive as it may seem, pricing a home too high in this market is the surest way to wind up selling for the lowest possible amount. Most sellers think, at least fleetingly, that if they price their home above market value they might get lucky and find a buyer who impulsively makes an offer without asking a single questions of himself or his agent. Several years ago, when a buyer’s greatest fear was losing out on a desirable property in a highly competitive market, this sort of over-aggressiveness was not uncommon. In today’s market, however, the thing buyers worry most about is overpaying, and they are thus being much more cautious and much less emotional. It’s been quite some since I’ve seen the overpricing tactic work.
What I have seen countless times in recent years, however, is properties that sit on the market for months and months, ultimately selling for far less than the seller ever thought he or she would accept, all because the property’s price, upon entering the market, was simply too high. How does it work? It’s really very simple.
Buyers and consumers and are all very much influenced by the psychology of supply and demand (one of my clients refers to me as the “Real Estate Shrink;” I don’t deny this characterization). When a buyer sees a new listing that seems to offer a great buy, a sense of urgency begins to set it. “My goodness,” he or she thinks, “this could be the buy of a lifetime. I must see this property.” If the property is priced as well as it seemed to be, the buyer begins to realize that other buyers are having the same thought, and you have what you need: a buyer or multiple buyers who want your home—often quite badly. When a buyer walks into an open house and finds it crowded and people buzzing about it, the same thing happens.
During a time like this, potential buyers begin to feel that if they don’t make an offer quickly, someone else will—and if the property is priced well, they’re probably correct. They realize that a price reduction is unlikely, which means there’s really no reason to wait, anyway. A well-priced home under these circumstances begins to seem like a rare commodity, a chance for the buyer to get the most for his or her money.
Now, contrast this to the mindset of a buyer who comes across a high-priced home. (And don’t kid yourself: buyers do their research and know the difference; that impulsive buyer now comes armed with facts and figures and is no longer quite so overwrought.) There’s no sense of urgency at all. The perception is that overpriced properties are quite common. A buyer feels that if his or her instinct is correct, and the property is priced too high, it pays to wait. If his or her instinct is incorrect and the home has an average price, well, no matter: there are more homes just like it out there. All this is bad enough, but once the property has sat on the market for a while—and if you price it too high, it will—it’s nearly impossible to create a sense of urgency. The window of opportunity has passed. By the time it’s been out there for six months and gone through three price reductions, buyers may look at its history and reasonably think, “It’s come down $50,000 in six months—surely they’ll take still $20,000 less.”
So how does a seller price a home well? I’ll go into this more in future posts, but here are the basic considerations:
What have similar properties sold for recently?
This may seem very simple but it is often overlooked. The most important thing for you to be able to do is justify the price you put on your property. Sales data is public information, so if you price your property excessively higher than the recent comparable sales, buyers will know and simply wait for your first price reduction, or, worse, walk away and turn their attention to other, more reasonably priced properties. They may even leave in a huff, having already begun to form an opinion of what it would be like to negotiate with you.
What did you pay for your property, how long ago, and have you made any substantial improvements to your home in that time?
If you bought your property for $500,000 one-and-a-half years ago, and, other than repainting the bedroom and hanging drapes in the living room, you have not made any other improvements, you are going to have a very difficult time convincing a buyer that your home is now worth $700,000. They’ll admire your paintjob and your window dressings and leave, likely for good. Again, buyers have ready access to your home’s sales history, and are paying particularly close attention to these details right now.
What is the current supply and demand situation for properties similar to yours?
If there are 10 other properties, all very similar to yours, recently listed on the market, then consider very carefully how you position yourself amongst your competition. Don’t fall into the trap of pricing your property higher than all the competition because you think it’s better. It may be, but if you price your property well and more reasonably than your competition, the buyers will be more attracted to yours than the others. Now, more than ever, buyers are price sensitive and they are all looking for a good deal. Price yourself at the top, and, again, they will wait for what they consider to be the inevitable price reduction.
Selling a home, just like buying one, is a highly charged endeavor, and it’s easy to convince yourself that a magical buyer will walk through your door and hand you a blank check; that your home is worth more than the others because you love it so much; or that because you’ve heard a lot of inflated sales figures from friends or in news headlines, you can fairly ask for great deal more than you paid, regardless of circumstances. Indeed, it can sometimes seem impossible not to think these things. (This is part of the reason it’s so helpful to have an agent, as I’ve discussed before and will again.) You simply must do whatever you can to remain levelheaded and reasonable in the pricing of your home. So much depends upon it.
If you’ve been worried that the Internet didn’t have enough blogs, relax: here’s another one.
It took some convincing to get me to include a blog on my new website. After all, there are countless blogs out there, many of them dealing with real estate. I initially questioned what I might be able to add to the conversation. As I looked around at the other blogs available to buyers and sellers, though, I began to realize that despite the sheer numbers of blogging agents out there, there really was something missing, or at least in short supply: candor.
This isn’t to say that the blogs of other agents are dishonest. Far from it, many offer helpful hints and useful insights into the home buying and selling processes, as well as worth while observations about the market. However, in my opinion most agents’ blogs put promoting the agent ahead of informing the clients. This is understandable, but it isn’t what I have in mind for this blog. Do I hope you’ll come away from reading this blog with a glowing opinion of my skills and personality? Of course, but it won’t be my primary goal.
What I’ve always tried to bring to my interactions with my clients is frank analysis and opinions about what works, what doesn’t, how to know it’s time to sell, and how to know you should wait. I’ve always tried to truly be an agent for my clients, a representative putting all my years of experience to work for them, even when it isn’t the best thing for my bottom line. To put it another way, I’ve learned a lot in my considerable time as an agent, and I want to pass it along. I have a teaching background, and helping my clients understand the complex, fascinating realities of real estate sales has always been a passion. I realize now that my blog can be an invaluable tool for this.
On this blog, you can expect to find some of what you get from other blogs, at least superficially—a better understanding of the Boston real estate market, my thoughts on the buying and selling of homes generally and in Boston specifically, and notes from the trenches, so to speak. I hope, however, to do it with a frankness that will allow you to see and understand the Boston real estate market as well as agents do.
I hope to post weekly. Please be sure to check back for my thoughts on any number of topics. If you prefer, you can subscribe to my Twitter, which will alert you to new posts, and I would be delighted if you became a fan of my Facebook page, as well.
I’ve gone from highly skeptical to extremely excited about this blog in very short order. I hope you enjoy reading it as much as I already enjoy writing it.