Wednesday, March 28, 2018

Greenwich Real Estate Agents Cheer the Wall Street Journal Expose

Greenwich real estate agents who happened upon last week’s Wall Street Journal feature may have been jolted by the headline, “How to Sell Your Home Without a Real-Estate Agent.” Why would the Journal—one of the most sophisticated observers of today’s business realities—possibly want to lead readers down the FSBO (For Sale by Owner) path? Don’t actual market results point to the opposite approach?

As it turned out, the shock turned out to be only headline deep. What seemed to be a how-to for homeowners intent on doing without the services of a Realtor® quickly proved to be the opposite. Greenwich readers who read on discovered the article was more like a how-not-to advisory for Greenwich sellers. Among the key points:

Only 8% of all homes marketed last year were FSBOs.
Real estate agents know best how to make the most of their huge selling edge: the cooperative use of the Multiple Listing Service: “Without use of the MLS, solo sellers have a tough time marketing their homes.” 
If FSBO sellers shell out for a service that lets them list in the MLS, any advantage is halved because they have to agree to pay the selling agent’s commission, typically 2.5% in Greenwich.
Lacking the resources of professional offices, “another hurdle is ensuring that a buyer has sufficient cash” to pay for a house. 
Even if they build a website for their property, FSBOs face an uphill battle when it comes to effective use of search engine optimization and social media tools.
The coup de grace is the bottom line. In 2017, even after factoring the commission, agent-assisted sales netted a median $45,000 more! 

I have been brought in to deals to represent buyers (acting as the buyers agent) when there is an FSBO.  I can tell you first-hand, that from negotiation to inspection process, not having an agent on the other side of the transaction has been difficult on a number of levels, and probably not saved the sellers any dollars in the long run.  The bottom line is that negotiating is an art, and knowing how to get through hurdles and surprises that undoubtedly come up during the sales process is something that a skilled agent can get sellers through and preserve the deal.

Since most FSBOs hope to avoid paying “the typical 5% commission,” it’s not surprising that, as one self-help service admitted, 70% of sellers who started out as FSBOs “ultimately hired a full-service real-estate agent to sell the house.”

So why did the Journal choose that headline for an article that goes into such detail about the pitfalls of selling your home yourself? It’s anyone’s guess—but I’d go with shock value. For the 92% of sellers who decide to hire a professional, it certainly would get attention. Speaking as one of Greenwich’s experienced real estate agents, I’m pleased that they did: it showcased many excellent reasons to use professionals.   

Monday, March 12, 2018

3 Strategies for Setting Your Greenwich House’s Asking Price

Selling your Greenwich house for the best price involves a certain amount of effective strategy and luck-- and how much of each varies, not the least of which is how many buyers for a home like your clients happen to be in the market at the same time.   The "luck" portion  is more likely when you’ve set out the welcome mat for it. In addition to strategic home preparation and a solid marketing launch and ongoing program, selling your Greenwich house for the best price also has to do with where that price starts out: that is, the asking price. 

Once you have a clear idea of the professional opinion of its market value—that is, a price that aligns with the latest comparable sales data for similar Greenwich homes—you have three strategies:
1. Price To The Current Market-- You can set an asking price as close as possible to what the comps suggest. After all, it’s reasonable and defensible—and lenders are likely to agree if a home loan becomes a contingency in the final sale. A possible downside is that it will be more difficult to stand out from the crowd since many comparable properties may be priced at the same level. It can also prove necessary to compromise with buyers who assume any asking price is an opening bargain position.
2. Price Above The Market-  Some sellers look at the comparatives but feel that their property stands out in some way and deserves a premium.  Occasionally, this is true.  But most of the time, it is tough for a seller to be objective and see what today's buyer is seeing and valuing.  Setting a bit of an aspirational price has a downside though--  if a sale fails to materialize in a reasonable timeframe, lowering the asking price later can be costly: those reductions (especially multiple reductions) are like properties that linger on the market for a long time: they suggest that something is wrong (even if the only problem was the asking price).
3. Price Below Rival Properties- The strategy here is clear enough: the expectation that serious house hunters will become interested. Very interested. Fascinated, in fact—especially if in a price range where supply is tight. The most serious prospects—the ones who know the market—will be expected to hurry to beat the others to your door. In the best case, this can result in a bidding war, resulting in higher-than-asking offers.

In the past four months, I have implemented all of the above pricing strategies with the strongest results being pricing below rivals.  That approach netted owners 5 offers within 2 weeks and a sale 22% above the list price.  Now that's results!

Saturday, March 3, 2018

Will Changes in Interest Rates Affect Home Prices?

New Price: $6,950,000 In the Premier Location of Mid Country Greenwich
If we start seeing an influx of Greenwich homes for sale ahead of this spring’s peak selling season, it’s not hard to guess why. There may not have been any conspicuous heads-up for homeowners, but thoughtful deductions based on the news might prompt just such an effect.

At point is the possibility of a coming “double squeeze” for homeowners on the move. If it happens, there could be a decrease in the total number of Greenwich homes for sale because of what sellers face after they have given up their current residence. 
The steady flow of good news about the national economy has clearly been the main culprit. Last week’s release of the Federal Reserve’s minutes from last month’s meeting revealed the Governors’ recognition of stronger growth than had been forecast. Per CNBC, that news “confirmed that a gradual increase in the Fed Funds rate would be appropriate...” MarketWatch agreed that the Fed was “on track for 3 rate hikes” this year—but placed a strategic question market about the possibility of 4.

When the experts’ only uncertainty is whether there will be a fourth rate hike this year, the likelihood that Greenwich homeowners could face a double squeeze becomes hard to ignore. A double squeeze forms when sellers’ Greenwich homes for sale draw fewer eligible buyers qualified to pay the higher mortgage payments. They will sell eventually, but then face the second part of the squeeze, when they, too, face stiffer terms for any new home’s mortgage payments.

One possible scenario leads to fewer homes being put on the market in the first place, which could actually help bring into balance our inventory levels.

 If Greenwich homeowners haven’t heard much about this phenomenon, my guess is that it’s because we’ve been swaddled in such a comfy interest rate cocoon for so long, the whole issue has migrated to the back pages. By some calculations, today’s typical mortgage payments are more than 36% lower than the all-time high reached in 2006.

Yet if prognostications prove to be correct, the reality for Greenwich homeowners with a hankering to move on is that when it comes to the bottom line, now is absolutely the best time to act—with later being next best, and still later next best after that—and so on. In any case, it should certainly be worthwhile to discuss possible courses of action.