Heard any good real estate stats lately? There's been a healthy surge in sales this spring, but according to a report by the real-estate Web site Zillow, compared to a year ago, prices for homes in the Richmond area were down by 5.15 percent in March. Which makes broker Jim Napier's take on selling in our current real-estate market something less than a surprise.
"It's a price war and a beauty contest," he observes, with a somewhat weary chuckle. "I would say this is the toughest cycle of my 34-year career."
a Back Seat
the Local Market
Karen Tilson Smith of RE/MAX Commonwealth, president of the Richmond Association of Realtors, says, "If you have a list of 10 things for selling a house in this market, the first nine would be price. The 10th is condition." As you'll see on the following pages, we managed to come up with a few more tips to help sellers manage the market, along with success stories from people who sold their homes or found another way to survive the current conditions. Speaking of those conditions, turn to Page 80 for information on home prices in 130 neighborhoods dating back to 2000. The news isn't all bad — far from it — and if you're looking to sell, this is the very definition of news you can use.
1. Price it right.
Lacy Williams of Joyner Fine Properties recently sold three Richmond-area homes the day they went on the market.
The secret, in large part, is a "compelling" price.
"The sellers listened to me. ... The home needs to be perfect and a bargain," Williams says. "Three years ago, people didn't mind buying a house and fixing it up. Now they don't have to."
The glut of homes for sale — about twice the norm — as well as foreclosures and short sales, leaves the housing market firmly in control of buyers. That's true even after the traditional spring flock of Richmond-metro area buyers boosted the sales of single-family homes 13 percent above levels for the first quarter of 2009.
Convincing sellers that regional real-estate values have declined an average of 20 percent on a square-footage basis — from $145 at the peak in July 2007 to $115 in April, according to Williams — isn't always easy. Informing them that many forecasts predict continued price declines makes it no less difficult.
Pricing has never been more important, says Laura Lafayette, the chief executive of the Richmond Association of Realtors. Street appeal, general sprucing up and decluttering are important, but "price is the first thing."
The trick to pricing for motivated sellers who have equity in their home, industry officials say, is to find that spot where buyers feel they might lose the home if they don't act right away. Associate broker Danita Jackson of Jackson & Associates Group at Long & Foster Real Estate puts it this way to house hunters: "If you sleep on it, you may not sleep in it."
While the seller wants a sales price that provides the necessary equity for the next home or a figure that will satisfy an existing note, buyers start with a purchase figure that equates to a comfortable monthly payment, experts say.
Someone hunting for a home around $225,000 may dismiss a listing at $250,000, even though that seller might plan to lower the price to $225,000 in two months if no contract appears. After eight weeks, even if the price is reduced, potential buyers may avoid the property. Stale listings can be seen as projects, not pearls.
"If within the first 30 days you find a buyer, the price was right," Jackson says. "If not, be afraid. Be very afraid."
Williams advises sellers that "if they're not getting any showings, the price is 10 percent too high. If they're getting showings but no offers, it's 5 percent too high."
Sellers have a choice, Lafayette says. "They can be patient or get the sale done." The family of five that needs to keep the house in show condition can plan to do that for three weeks or three months.
Of homes sold in the four primary Richmond metro localities in the first three months of this year, the purchase price wound up about 96 percent of the list price. The median price, where half the homes sold for more and half sold for less, was $194,400, according to the local Realtor association.
The local and national housing market benefited from an extension of tax credits for qualified new and move-up home buyers. Because of the credit for first-time home buyers, more than half the sales activity early this year was centered around homes at $200,000 and less. Qualifying purchases must close by June 30.
Kenna Rash of St. Clair Homes, a family-owned homebuilder, says some move-up buyers have found it easier to sell their houses and may have qualified for tax credits themselves. The builder's homes in several Chesterfield County neighborhoods range in price from about $199,000 to the low $300,000s. Rash says the biggest recent success is Colony Pointe off Bailey Bridge Road, where four-bedroom homes from 2,000 to 2,700 square feet on up to half-acre lots cost about $300,000.
Move-up buyers, while selling at a discount compared to what their house was worth in 2007, gain from buying a larger house for 20 percent off the peak price, Williams says. As home prices appreciate, move-up buyers earn greater equity.
Acting now also locks in the buying power of low interest rates. A $200,000 loan with a 5 percent interest rate means a monthly payment of $1,074. For the same monthly payment at 6 percent interest, the buyer could only afford a home selling at 10 percent less, or $180,000.
In real estate, as with many areas, exceptions exist if you have enough money, says Re/Max Commonwealth owner Tom Innes. "The premium houses with architectural elements in premium locations with lots of amenities? Even in a declining market, there's still demand."
—Marilyn J. Shaw
2. Throw discretion out the window.
Mary K. McDonald of Virginia Properties remembers growing up in Windsor Farms, when houses sold without any public indication of their availability. "Putting up a sign wasn't something you did."
Gauche is now "got to."
These days, according to the National Association of Realtors, yard signs attracted 58 percent of first-time home buyers.
McDonald explains, "The seller should have an imaginary neon sign on top of their house that says, ‘BUY ME.' " If you want the house to sell, you can't be shy.
Joyner Fine Properties Realtor Linda Turner knows of an agent elsewhere who prints up business cards for the seller to pass out in their daily rounds, whether at the grocery store or PTA.
"Go tell everyone that you know that you're selling," Turner says. "They know and like you, they know you take care of things. And people just love to talk about real estate."
3. Eliminate the mess — but not the charm.
Make no mistake. Competition is tight. Not only are new houses clogging the inventory, but foreclosed and short-sale properties are also in the mix. And some of those houses are well cared for. "Unfortunately, some high-level businesspeople, CEOs and such, are leaving their houses," explains Kurt Negaard of Hometown Realty. "And with that quality of surplus on the market, it's tough for sellers."
Making your place pristine is necessary — paint over bright colors in favor of quality neutrals, clean the windows, etc. — but not to the point where a buyer cannot imagine how their Sunday brunches or Christmas mornings will look there. Kenna Rash of St. Clair Homes, urges sellers to consider that a house is the structure, but home is what you put in it. "Make sure the home smells good," she adds.
This is seconded by broker Raven Sickal of Cottage and Loft Realty. "Odor elimination! There is nothing worse then going into a home that smells like last night's dinner."
When addressing this issue, choose your weapon: fresh flowers, plug-ins, air fresheners. During an open house, light scented candles, bake cookies or prepare mulled cider.
John McClung of Zip Realty recalls coming to a house five minutes after the seller left, without a light on and the blinds down. Every light should be on, every shade open, he says.
Light music helps, too. "If you go through a house and there's no sound at all, it's like you're disturbing something," McClung says. "People feel uncomfortable. Putting on some quiet music relaxes the mood."
Linda Turner of Joyner Fine Properties says that the buyer wants to know that the owner's caring for the house. "If you have repair receipts, home manuals, warranties for appliances — all that puts the buyer at ease, knowing you've taken care of your home. It conveys a sense of responsibility."
4. Check out the competition.
"Sellers need to be aware how much inventory is out there," says Chris Small, principal broker of Small & Associates Real Estate. "And they need to understand what inventory is. Some sellers go, ‘Oh, well, we want to get a zillion dollars or our house.' But how does this house compare to others on the market?"
If there are similar properties on the market, or, a year's worth of similar properties on the market, then the seller may want to adjust the price and make it the best in its bracket.
If, for example, yours is the only house in the neighborhood in which the kitchen dates from 1985, perhaps this is something you may need to consider before plunging into the rigors of selling.
Jason A. Hester of Keller Williams Realty notes that in the counties — especially during the boom years — sellers were up against spec houses, and that's where buyers tended to gravitate. "In that particular case," he counsels, "your only advantages are being able to accommodate on price more quickly and ensuring move in-ready condition."
5. Remember that you are not your house.
Though you've lived there, loved in it, celebrated and deliberated around the kitchen table, finally, when you're selling your home, it's not yours anymore. This is a business decision.
"Your house is a product now," Realtor Linda Turner says.
John McClung of Zip Realty says that persuading someone of the best way to sell their house is among his hardest jobs. "When it goes on the market, however, at that point, it's merchandise," he says. "You're leaving it behind. You need to consider: When you go into a store, they make you feel good, everything looks good. That's what you need to consider when you're selling your house."
It isn't just sentiment but money that is of concern to most sellers, especially in this market, when every dollar matters. There is a tendency to use as a sales marker what a comparable house may have sold for two years ago or what a buddy got for his place down the street.
In the present market, none of that matters.
What's important, if the seller is really in need of moving on, is that the place sells, and soon as possible.
That said, it can feel like a personal affront if an offer doesn't seem to place enough value on a home you've loved. "When low-ball offers come in, take a breath and react professionally," Carter Snipes, principal broker of Snipes Properties, says. "You don't want to lose a deal over frayed feelings. Keep your cool."
There is the possibility that you won't make as much selling the house as you wanted, or even expected. But the other side is, when you're buying, you probably won't be paying as much, either.
6. YouTube can help you sell.
Thousands of people in Richmond or thinking about coming here look at "Homes for Sale" on YouTube.
"This is not some slideshow ‘virtual tour' idea from the '90s, this is a live video walking through your home," says broker Carter Snipes. "It can even be narrated!" Snipes cites a house hunter from Chicago who used YouTube to scout out properties before going in them. And the buyer purchased one he'd first viewed on YouTube.
John McClung recalls one video that was made by the seller of a higher-end house located on a golf course. The protagonist jumped the fence to pursue an errant golf ball and in this way presented a tour of the house.
"If you're going to do YouTube, it probably needs to be over the top to get somebody to look at it," McClung says. "But I'm not sure a YouTube video can be linked from the MLS. You have to go to an agent's channel."
7. Don't blow it in negotiations.
ZipRealty's McClung observes that for the past couple years, the buyers have had the upper hand. Thanks to abundant housing stock, they've had the luxury of being picky about what they buy — and the price at which they buy it.
More recently, that advantage went to the seller while the now-expired federal tax credit for homebuyers was in effect. "Particularly in lower price ranges," McClung says, adding that the shift remains in effect at some levels even after the expiration of the tax credit. "In the first-time home-buyer range, under $200,000, the seller has the advantage if the house is in move-in condition."
Still, Jason Hester of Keller Williams sees negotiations as more important than ever because so many sellers are finding themselves in such tight spots. For the most part, gone are the days when sellers could choose among several bids. "Now it's not as much ‘get everything I can,' but more give-and-take." Flexibility is also important: A rigid focus on hitting a certain number might mean losing a viable offer.
Your thinking during negotiations is very important, says Chris Small of Small & Associates. "You'll get the guy who looks at the price of $300,000, and even though it maybe a very, very fair price, he'll just say, ‘I'll offer you $240,000,' to see if he can get it, and they'll arbitrarily chop away at it. You have to be realistic in negotiations."
8. Attract buyers via social media.
According to the National Association of Realtors, 93 percent of first-time homebuyers — and 90 percent of all buyers — used the Internet to search for a new house.
The most common approach remains online listings, but social media — Facebook, Twitter, you name it — can be an excellent tool for housing sales.
"We use Facebook ads and Google Adwords to supply targeted ads for a particular demo," Carter Snipes of Snipes Properties says. "That way, we know our target buyer is seeing our listings."
Some Realtors favor Postlets.com and their utility for use on Facebook. A Postlet is a micro website that can be embedded into other sites — a virtual Post-it note.
Jason Hester began going this route about six months ago versus Craigslist, which, he says, garnered him inquiries from people selling Realtor-related materials. "You can put it on a variety of social sites. You can embed the HTML code into Craigslist. Instead of writing a bland, generic Cragislist ad with four photos, I can embed the whole thing into a listing, with six to eight photos."
If the client has their own Facebook page, then they can repost the Postlet listings. Trusted friends can repost it, creating a viral impact for the seller. "I cannot say that we've sold any houses as a direct result," Hester says. "I can say that it increases views."
Jim Napier says that a listing can end up on 25 or 30 sites. "If your Realtor is part of a brand or franchise, they syndicate out. If you stage it right in the pictures and put in the details of what people want to know, you really enhance your chances."
The key for Internet listings is pictures galore — and not only the house but also the yard and the surrounding neighborhood. Keep them up to date, too. A house hunter in July may not be impressed by the picturesque qualities of a residence with snow on the roof. Unless, of course, you're working the four-seasons angle.
9. Pre-inspect and avoid surprises.
Carter Snipes of Snipes Properties thinks it's a mistake not to undergo a property inspection at the beginning of the sales process.
He views it as both a third-party opinion that can add value and as a marketing tool. The seller can present a list of repairs made to the house.
"You want to be the most informed and pro-active in this market," Snipes says. "The strategy is to not get into the middle of escrow and have something blow up in your face. Buyers are nervous."
This strategy does come with a risk, though: If the inspection turns up something the seller didn't know about and can't fix, then the buyer must be made aware of the issue.
Jason Hester of Keller Williams doesn't necessarily think pre-inspection is a must — you can use your own inspection when you were buying — but he notes that fixing the little things prevents any creeping doubt in a buyer's mind.
Hester explains, "If you have a three-way light switch where one of the clicks doesn't work, just because you've chosen to live with that, the buyer may not. The way you live in a house and the way you sell a house are two different things."
10. Think about sweetening the deal .
If you're a stuck seller, you may be tempted to encourage buyers by offering up some incentives.
"You see it often in condominium sales," says Chris Small of Small and Associates. " ‘I'll leave the flat-screen HDTV if you come in at this price.' "
The seller needs to find out what the buyer needs most. Does the buyer have to have a concession on closing costs? Would some flexibility on the move-in date be appreciated? Or do they need their overall monthly payment to come down?
"A good agent should ask the other agent that in the course of doing business," Jason Hester says. "We can't discount the price to $10,000 and give you $10,000 in closing-cost concessions, too."
A seller working with a first-time buyer is probably going to get asked about closing costs; help in this area is most useful for people who don't have as much cash on hand. Hester recalls a recent transaction in which closing costs were offered up front, "Because it was a short sale."