by Michelle J. Lane
If you were reading my newsletters from last spring, you will recall that I spoke (ok maybe there was some whining in there) about the dearth of inventory. Overall in the spring of 2013, there was about two-thirds the inventory of previous years. Boston Magazine has come out with their Real Estate Issue. It is chock full of great information that supports what I will be sharing with you in this post, so I will link to it here. Boston Magazine Single-Family Home Prices.
In nearly every town, prices spiked in 2013. Largely due to limited inventory. This chart shows (in blue) the average number of houses on the market each month, and (in Green) the number of houses that went Under Agreement that month and follows the market from Jan 2012 through last month. Look at the difference between 2012 and 2013. The trend is continuing in 2014. Today there are 80 single-family homes on the market in Newton. This time last year there were 111.
This means Buyers are in for a spring market that is even more challenging than last year. But it means that Sellers are in a great position to get top dollar for their homes. So this brings up several questions for sellers – a couple of which I will answer here. The rest in follow on Blog posts.
What Should I Do to Prepare my Home for Sale?
In this market, it depends on who will be the audience for your home. Home Buyers fall into 3 categories.
- Investors – looking for a home they can improve and flip or rent out.
- Home Buyers – whose budgets are really tight so who are willing to do cosmetic work to get a home in their price range and are willing to put in sweat equity to bring the home to its former glory.
- Home Buyers – who have no time or inclination to improve a home and who often have a higher budget.
If your home needs a great deal of work – chipping paint, floors that need refinishing, kitchen and bathrooms that need updating, older roof, older furnace, etc. it does not make sense to try to bring the home up to the level of a home that is completely updated and renovated. Doing all that as you are leaving the home means you get no enjoyment of the improvements and you will not get greater than a 100% return on the investment. In the Remodeling Magazine’s 2014 Cost vs Value Report, no improvement gave greater than an 87% return except installing a new front door. Your ideal buyer will be an investor or a Home Buyer who cannot afford a higher priced home. If priced right, your home will still get into a bidding war. The best course of action is to pack everything up, give the place a good cleaning, fix only those things that are clearly broken, do some minor staging and get the place on the market.
If your home is in good condition overall (kitchen and bathrooms have been updated in the last 20 years), furnace, roof, electrical and plumbing are not near end-of-life, then making cosmetic changes to show the home in its best light may be worthwhile. However, don’t take so long to do these things that you miss the opportunity to get the home on the market when the inventory is tightest.
If you home is in great condition and on the high-end of the pricing spectrum for your town, then you are best off putting your home on the market in April when most of the buyers for the high-end will be out looking.
Beyond timing, there is so much more – are there permits to close out? Warranties and policies to dig up? This is where your Realtor comes in. You want to start early and work together on an preparedness strategy that makes sense for your home.
When Should I Put my Home on the Market?
As soon as you can! You might think – oh she is just saying that because she is a Realtor. I refer you back to the chart. Look how tight the difference is between homes On the Market vs Under Agreement in March, April, May for 2013. This year will is even tighter. It is especially tight for homes under $1M in value.
Here is an example for you – this home sold in 2010 for $350K. The owners did NOTHING to improve it and then put it on the market in February at $560K. We agents all thought they had lost their minds and the house was overpriced by about $120-$150K. Well, much to my surprise, it went under agreement – why? Because there was nothing else on the market in this price range. It will be interesting to see if the house appraises, but the point is someone was willing to pay that inflated price out of desperation.
When everyone starts dropping their homes on to the market in April, there may not be as much desperation for a run-down overpriced house. 🙂
Want to talk about selling your home? Feel free to contact me.