Ask the REALTOR

“How long will this house be on the market?” – many buyers

The short, honest, answer to that question is, “I don’t know.” No one likes to hear that- but it’s the truth. At any given time someone can be interested in any house on the market and it could sell tomorrow. As a stat-driven-REALTOR I think numbers can lead you on the right path to educated choices. They will never guarantee anything, of course, but they will give you an inkling as to how long something should take. Take this chart of Will and Grundy County properties to close in the last three months (9.28.14 to 12.28.14); 2558 bits of data (closed sales of any type $20,000 or higher) comparing listing market time to percentage of  original list price sold for. I’m on record as preaching that houses generally sell for 94-96% of last list price. I think this shows that I’m not wring.

How do I use this fancy chart to tell me what I asked, smart guy?

Well, you DO need the help of a market expert (I’m one, but there are others). If a house you’re selling or one you’re interested in buying is priced correctly (ie: within 4-6% of where the professional tells you it is likely to sell for), you can surmise that it won’t be on the market very long. If your pro thinks that its value is about 80% of where it is listed, it has just a good of a chance at selling in 120 days as it does 30. PLEASE NOTE: This date is for the FINAL list price. So if that house you have your eye on drops its price, it’s odds of selling sooner will very likely increase. Of these 2558 properties, 1864 (72.9%) had NO price drops in its listing time.

Will/ Grundy County closed sales 9.28.14 to 12.28.14, of better than 70% list price to sales price and 365 days or fewer on the market.

Does this help or make it more unclear?

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A good friend of mine, and Lockport resident, posed to me the question, “What is the full value resale percentage rate of a two bedroom vs a 3+ bedroom?”

I’m not even sure what the question really wants to know and didn’t get a chance to ask before jumping on research. So I looked at three different metrics. Total number sold, median sales prices and median sales times. The first shows how many sold properties of this type there were in the year span looked at. The next, what the median value of those sold was and finally, how long it took to put said houses under contract.

The above chart will show that in Lockport, IL, the market is back in a big way. In terms of units sold, it’s up. In terms of sales price, it’s up. In terms how long it takes to sell….they’ve cut time in like half.  But that’s not really what we’re looking for (I mean, yay for Lockport, though).

The thing to note is that 2 bedroom houses are always going to be worth less than 3 bedrooms if that’s the only search parameters that differ. Why? There are very few 2 bedroom houses that are 3,000 square feet and gorgeous; that’s almost always a 3+ bedroom type of thing. We should note, sales of 3+ bedroom single family homes in Lockport are up 5.5%. Sales of 2 bedroom single family homes are up 100%!!!

Simplest answer to the question might have been, “I think an appraiser will give you $5-7,000 for a 3rd bedroom as opposed to two.” But why be simple?

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Someone asked me the other day what the percentages were in Morris, IL of folks who listed their home for sale WITH a brokerage located in Morris as opposed to those who listed with an out-of-town brokerage. Here you go:

In Morris, IL in the last 12 months (from 5.20.14), 67.2% of listings (single family and attached housing) to close was listed by an in-town brokerage. Currently, 68.9% of listings are listed with Morris brokerages.

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I was skimming an article on Trulia’s Pro Blog that was emailed to me this morning titled, “5 Ridiculous Things Sellers Say (and how you can deal with it).” I don’t care about how they plan for me to deal with it, I’ve been doing this long enough to not need that advice. I was only interested in the 5 seller statements deemed ridiculous by someone. I’m not sure I would call these things ridiculous. I think I would describe them as in need of more education. Here they are and the rest of my thoughts:

  1. “But I spent X years or $XX on that.” This is true. Sellers will frequently tell me how much money they’ve put into something. ‘I bought my house for $160,000 eight years ago and have put $20,000 into it since I did.’ Totally fair, Mr. Seller. In some cases, that might be worth something (depending on what that 20k was for, but in many cases you’re just keeping the house in shape.
  2. “We just need to find a buyer who understands my tastes.” While this can happen and does, it really depends on your taste. If you’re into wild, bright colors and no furniture it might be a little bit (see: WAY) harder to find that match than it would be with subtle colors and Pinteresty decorating.
  3. “I want to price it high so I have room to come down.” This isn’t ridiculous. I hear it at more listing appointments than not. It is however, ore often than not a flawed logic. As buyers are more and more educated with the Internet, it’s harder and harder to trick one into overpaying for a house (tighter appraisals hurt that ability too). Sure, there’s a sucker born every minute….but even a sucker has access to see that the house 2 doors down from yours, that’s nicer, sold for $20,000 less than you’re asking three months ago. Anyone who has listed with me in the last 8 or 9 years has heard the, “I like to list houses like Carmax prices cars” speech from me. Such is to say, a good market analysis tells us a price range in which the house should sell for given the current state of the market (which is always fluctuating to a degree). An appraiser probably won’t go over my high end price, so to list too much higher than that would usually be a mistake.I can count on one hand the number of times in 11 years that listing significantly higher than my suggestion (see: more than 3%) was a good idea.
  4. “That offer is an insult- I won’t even dignify it with a response.” This one- probably ridiculous, if I’m being honest. A house is worth what a buyer is willing to pay for it. ALL offers should be given at very minimum a counter-offer. Even if you come down a tiny amount with a message that the opening offer isn’t even close to where you want to end up- it’s better than losing a potential buyer. If that buyer doesn’t want to meet the price you are willing to sell at, make that his/her/their choice and not of your own doing.
  5. “I need to get $X for my home I want to take my Australia trip- let’s list the place for that.” Unfortunately, the market does not care what you want or need to sell your house for. It only cares what your house is worth. Your local grocer might need to make more profits this month because the owner’s kid needs $6,000 in braces, but if he jacked up the price of milk to $6 on everyone for three weeks what do you think would happen? A) people will pay $6 for milk or B) they’ll buy milk elsewhere?  If you said B, you’re right….. and they’ll buy someone else’s house too.

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I was talking about a property in Morris today that has multiple offers on it. “What does that mean?” Multiple offers are when two or more parties have submitted an offer to buy a property. This is often a great position for a seller to be in….and a not-so-enviable position for a buyer.

The seller benefits because contract terms are often increased to their favor in a potential deal. When the market was at it’s peak, I did a lot of these- often for over list price. It still happens- it’s just more rare. As an agent, I like to employ the “highest and best” strategy to the purchase offers. This means that each potential buyer has until a given time to get in its, you guessed it, best offer. It’s the most fair and quickest way to resolution in my eyes. Of course, the seller’s my boss so I, ultimately, do what they want. What’s the best way to get multiple offers? Price very well and offer an excellent house. If it seems simple, that’s because it is.

The buyer won’t get as good of a bargain, potentially, if there is/are other offer(s). It doesn’t guarantee that he/she/they will not, but often times that is the case. It’s like the old ebay slogan: “Bid Victoriously.” My advice to buyers in this situation is not to let emotion cloud judgment. Make the offer for what you think a house is worth/ what is comfortable for you to pay for the home….NOT what you think it will take to own it. There are other houses available to be purchased and even if you’re not in love with one of those, we’ll find one soon that you are!

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Question: What is the highest we could price the house with the hope to sell it quickly?

Answer: My general rule of thumb is no more than 4% above it’s fair market price. Sometimes people get away with having their house priced high and someone making what amounts to a low ball offer on it and settling at a percentage a lot less than they were asking for. That’s somewhat rare, however. Usually a potential buyer won’t make what they feel is an insulting/low ball offer. In fact, most buyers won’t even come see your house if they feel that it’s overpriced. I always talk to sellers about the Carmax way of pricing. Carmax, unlike a typical dealership, is said to price its vehicles to sell. There is a no haggle policy where you pay the price on the sticker because the price on said sticker isn’t as inflated as it is at other dealerships. Price it right and people will come in and buy it for what you ask. I had a LOT of success doing this when the market was booming. Many sales at or above asking price, and even a handful of bidding wars. Obviously, since the down turn in the market, sellers don’t like doing that as much; they want the wiggle room (and most didn’t like doing that to begin with). But that’s where my 4% rule of thumb comes in. It also translates to price drops. Drops at less than 3 or 4% don’t really do much for me. When I see them come up onto our hot sheets (the lists of changes in market status among houses listed on the Multiple Listing Service) “Oh you dropped your house from $200,000 to $198,000? Surely there are many buyers out there that were willing to go to $198,000 on your place but just wouldn’t make an offer because you were at $200,000. That extra 2 grand was just the thing keeping them away.”
To show this isn’t much of an opinion and is based in some fact, I’m including the Braidwood 100 to 200k last 24 months of closed single family houses. The average closed price to last list price percentage is 95.7%. 30 of the 51 houses were at or above that. That’s why I always say we (any sellers and myself) need to be within that 4% if you want wiggle room.

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Temporarily Off the Market

August 25, 2011

I get inquiries every so often about a property that is listed as temporarily off the market. Often times this is due to an illness, remodeling, vacation or something that will make the house unshowable (or owners unreachable) for a week or two. In general, these properties are off the market for a short time…..or [...]

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Ask the REALTOR

July 6, 2011

Finally, someone has asked a question and sparked some (hopefully) conversation in the blogosphere here. Amy K. wants to know: So here’s my question: Where are the people that ARE selling their houses going? Apparently, they aren’t buying another home, right? Is the number of people renting taking a big upswing? Or is everyone moving [...]

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