One of the questions I’m frequently asked by home buyers is “if the market favors sellers so much, why aren’t more people selling their homes?”
That’s a great question and unfortunately I just don’t have a great answer. The theory (and hope if you represent buyers) in our area over the past 2 years is that if values go up high enough sellers will be compelled to list their houses.
The problem is we are there….and they’re still not putting their homes on the market. We have exceeded peak prices in our higher end markets such as Manhattan Beach and Hermosa Beach, yet home inventory is almost non-existant.
I realize I’m going to sound like a realtor here, but home sellers…….NOW IS AN IDEAL TIME TO SELL!!!
…Shouldn’t you work with a realtor that’s tech savvy?
With the internet and social media becoming an ever larger presence in real estate, it seems critical that home sellers would use agents that know how to reach those buyers and specialize in marketing homes online. Strangely enough that’s often not the case and many Manhattan Beach home sellers work with agents that no little, to nothing, about the power of online marketing. The local audience and MLS are obviously great ways to market a home, but to reach national and international buyers, it takes a bit more effort and a great deal of expertise. The difference can mean significant amount of interest and that can lead to a significant amount of money. Before sellers hire a realtor they should make sure that they know the intricacies of the local market, are well connected, and have a top notch marketing strategy that not only uses, but embraces technology.
Regardless of market conditions sellers frequently think that their home is worth more than it really is. Most sellers think their home is nicer than the one that just sold down the street and offer various details that make their home the most valuable one in the area. That will never change.
But this market is different. The luxury market of Manhattan Beach real estate really is hot and prices are going up, but are sellers taking those expected increases to unrealistic levels? As Realtors we see what values, why, and try to use the latest sales information to see where things are going and how quickly. In this market, however, sellers often seem to think that regardless of how their home compares with the latest home sale….theirs is better….and worth far more.
It seems in this local market that we’re starting to see homes sit on the market for longer and it may soon no longer be a “make me move” or “name your price” type of market. As homes sit longer, inventory will rise and once the perception is created that buyers may be able to get a better price if they wait….they’ll likely wait.
Sellers need to be cautious not to overprice their homes and use the expert opinions of local real estate specialists to explain what the home is worth and why it may not be worth what the seller thinks it worth.
Affordability doesn’t seem to be a challenge in this slice of the luxury market, but overpricing may just lead to a slow down of this hot market and a flattening of prices.
Every Monday I get together with some other agents and discuss the latest happenings in real estate and each week the news seems to become more discouraging for home buyers in Manhattan Beach. Homes are selling well over asking, almost all sales involve multiple offers, often buyers are competing with all cash buyers or with builders, and not much that’s remotely priced close to market value lasts longer than a few days.
So how is a “regular” home buyer supposed to compete in this high end market.
The answer, unfortunately, is that until a significant increase in inventory starts to lessen the demand, a regular buyer with conventional financing just may have to wait it out. What’s driving this is clear….absolutely record low inventory. As of this article there are only 37 active homes for sale in Manhattan Beach. Contrast that with the near peak of 284 homes for sale in February of 2009 and it’s not hard to see why each and every new listing is receiving so much interest. The chart below shows the active homes for sale in Manhattan Beach over the last 5 years and at this point…nobody is selling.
Why sellers aren’t listing their home in this market is an entirely different issue as everything from prices, to demand to terms, to interest rates favor them but that doesn’t seem to be making a difference.
There are several factors to consider when deciding whether to sell your home. There are times when you may need to sell, such as when your job location or lifestyle change, or you have serious money problems. You may have outgrown your current home or are now able to afford a better place and are ready to move up. When the economic forecast is good, you may want to sell and take advantage of the strong market. Additionally, if you have inherited a home, it wouldn’t make sense to continue making payments if it will be empty.
What if I owe more than the home is worth?
As the market has seen the values of homes drop, many homeowners find themselves owing more than the current value. If your circumstances dictate you needing to sell your home it is what’s called a short sale in which you’re asking the bank to forgive some of your current debt on the home. It can be a complicating and time consuming process but one that often is the best solution.
What is the most important factor in deciding to sell?
Be certain the timing is right and that you really want to sell your home! If you are not sure you want to sell, you won’t put forth the required effort or negotiate in good faith. Beyond wasting your time an being inconvenienced during the showing and open house periods, in many instances a buyer can force you to honor a signed contract even if you change your mind.
How do I determine the sales potential of my home?
The basic influencing factors include location, appearance of house and neighborhood, size, condition, upgrades, lot size, view, schools, and age. Contact us if you would like an in depth analysis of the value of your home in todays market.
What are the steps once I’ve decided to sell?
First, choose a REALTOR¨ and ask for a comparative market analysis. This will help you determine a fair asking price–high enough so you get what your home is worth and realistic enough so you interest buyers. Secondly, look into the current mortgage interest rates. It will affect what potential buyers can afford, and what you can afford if you move up. Also, consider the time of year. The most popular time of year for families to move is in the summer, when children are out of school and the holidays are a long way off. Early spring is usually the best time to list and receive the maximum exposure. Fix up the overall appearance of your home, with an eye for the little, easy things like cobwebs in the corner. More on this below.
How can I best work with my REALTOR?
Ask about and understand what marketing steps he or she will take and when they will occur. Define your expectations of the transaction and communicate them. Disclose problems, keep your house in good condition and let the REALTOR® take the lead with buyers. Keep your house clean, the yard neat, and be ready at any time. Let your REALTOR¨® show the house, but if you are at home during a showing, look neat and stay inconspicuous. You probably have less experience, may make buyers uncomfortable, and may want to avoid hearing any negative comments buyers may have. Finally, you must allow inspections, fix anything necessary, and show up at the closing.
What should I do to get my home ready for showing?
Start by taking a look from the street. This is the first impression potential buyers will get. Remember what you liked when you first saw the house. Have you improved on it or let anything go? Next, walk slowly through the interior. Eliminate odors, especially pet and smoke. Clean the windows and pull back the drapes to maximize light, bright rooms.
We’ve found a great house at a good price. Should we buy?
You have three basic options. You can wait until you sell your current home. With this option you risk losing the new home to another buyer, but you may find one later you like even more. Secondly, you may add a contingency clause to your offer, stating that you must sell your current house before closing on the new one. Third, if you are having trouble selling your current house, you may consider renting it out or refinancing it for cash to help you buy. The problems associated with this third option include finding and managing tenants, trying to sell the house with tenants, and closing costs and higher mortgage payments with a refinance.
What are the important factors when considering an offer?
Consider all of the following: price, terms, clauses, personal property requested, and the amount and who holds the earnest money. We will guide you through this process step by step.
What can I do to help get potential buyers financed?
You may offer to pay points (although exceedingly rare in this market), which will reduce the rate and interest on the loan. If the buyers have adequate income but are a little short on cash, you may pay the non-recurring closing costs at the settlement. Another option, which should never be taken without fully understanding the risks, is to hold a second mortgage for buyers who cannot qualify for thefull amount.
Are there any special considerations when selling a condo?
The most obvious difference is the maintenance fees. You may want to remind buyers that maintenance fees can often work out to less money than single-family home maintenance costs because condo fees are shared by all owners.