Does the Seller Really Want to Sell

While the metro Denver market continues to hum along and there are a few “blockbuster” sales on the upper-end, anecdotally I am seeing signs of stress especially on the upper-end of the market. Some listings are coming on at inflated/fantasy prices and within 1-2 weeks a price reduction. Granted some reductions are more symbolic i.e. still priced above market and I never fault anyone for holding out hope of that blockbuster sale. However as an experienced broker I look for various signs showing that a seller is serious and motivated.

Yet first some signs advising the seller may not be so serious:

Will Not Close until Replacement Property Secured: In such a situation the seller is driving the transaction. You as buyer are in a holding pattern literally beholden to the seller and their timing and wish-list concerning finding a replacement property which in a hot market may not be so easy. In commercial transactions this can be a common occurrence and is a tactic used in 1031 Exchanges. Concerning traditional residential I would be more cautious. Not to dissimilar from a reverse contingency i.e. usually buyer will purchase contingent on the sale of their existing property. Instead here the seller will sell and close once their replacement residence is secured.

Holdover or Leaseback in Excess of 30 days: Holdover i.e. occupancy once the house is sold and closed is not so uncommon. I usually suggest 30 days or less; there is even a pre-printed Colorado Real Estate Commission Form known as the Post Closing Occupancy Agreement for such an event. For longer periods (and again if you are an investor the criteria may be different) I would be more cautious. Basically the seller is looking to cash out and lease their house back. I have been involved with situations concerning relocation when this is quite accepted. However barring a relocation situation my immediate concern is for the buyer. The seller is desiring to cash out and lease back. Again in commercial real-estate not uncommon, in residential may indicate seller may believe market is adjusting downward and desires to cash out at prevailing market conditions and assumes paying rent is safer than a mortgage associated with a downward trending asset. Yes the seller may need the cash out of the house; there are additional options from HELOC’s to Reserve Mortgages, thus a sale is more drastic.

Again the above are basic guidelines, not the gospel and each situation is truly unique.

The signs seller is truly serious:

Buy Me: Even in a hot market a property may go through multiple price reductions. Granted this could be an indicator the listing was over-priced to begin with. However when coupled with other indicators i.e. priced well-below market value, being offered “as-is” or desiring a cash transaction can possibly construe the seller is very serious.

Of note, be forewarned as some brokers will purposely list a property at below-market to instill excitement of prospective buyers and more importantly bids and offers. In a hot market such a tactic can be a benefit to the seller. However in a market trending downward such a strategy may place the seller in a losing situation i.e. full price offer at the below-market price and by not accepting barring contingencies the broker may demand a commission if seller does not sell.

Curb Appeal or Lack Thereof: Anyone who has owned a home knows landscaping takes time and money (even DIY’s i.e. materials, water, maintenance). While brokers usually advise an investment in curb appeal, a seller who may not have the time or capital to attend to the landscaping may be showing signs of motivation by their inaction and lack of investment. Such signs I look for include:

• Overgrown or dead lawn/shrubs/flower beds.
• Weeds and other decay i.e. trash, dead leaves, and overgrowth.
• Newspapers that have not been picked up and/or fliers in the door.

Such signs could also point to an absentee owner, landlord or similar situation. I have used such visual cues to procure listings by researching public records and other databases.

Interior is Half Lived In: Hey I am all for staging and a staged house usually suggests a motivated seller i.e. the investment in staging. However dig deeper especially if you believe the house continues to be owner/seller occupied. Are the closets ½ empty? Is the furniture mismatched or haphazardly placed? Are walls showing signs of art having been removed and not replaced? Such indicators may indicate divorce, destitution, already moved out or similar. Usually when a home is in such condition, the seller is motivated. Please note there is a difference between purging and having moved on.

Of note, in Japan in the 1980’s some listings were not only staged but also included a live multi-generational family pursuing their daily routine during open-houses to show how the home functions and meets the needs of a multigenerational family as buyer. Trust me somewhat disturbing seeing children doing their homework during an open house yet also true early adopters of the precursor to virtual reality.

Family Dynamics have Changed: I see this quite often; the signs may include a child’s crib in one of the social rooms i.e. living, dining, home office or similar. Or on other side of the spectrum oxygen tank or other medically oriented items. Such indicators may suggest a new addition(s) to the family from a child to an aging parent or illness. This may be a situation where the owners desire to move for more space to accommodate and thus at present a not optimum living situation.

Estate Sale: Usually estate sales are when the owner passes and/or the present sellers are by descent. Such sellers may be more motivated to unload the property for various motivations from estate tax liability to not desiring the upkeep and maintenance. In the Denver Multilist there is a check box for type of seller and one option is Estate. If your locale does not indicate such type of seller and it is a deed of trust state, investigate what type of deed is being offered. Is it a Personal Representative Deed or similar? May be an estate. Of course some experienced brokers review obituaries and similar to look for listings; an old pastime in New York City which is practiced to this day (not to mention treating estate lawyers to lunch).

Providing Too Much Unrequested Information: In Colorado we have what is known as the Seller Property Disclosure, a 7+ pages form executed by sellers to provide information to the best of their knowledge concerning the residences condition and state of repair. Of note I advise seller clients to be truthful and honest as its both a legal and ethical course of action not to mention most buyers will engage the services of a home inspector prior to closing.

However some clients can be more forthcoming and mention issues and potential remedies before being prompted. In general I usually caution sellers to be circumspect in what they mention i.e. “We were going to install an on-demand hot water heater but went with the conventional as it was cheaper and we did not want to invest any additional money into the house”. This tells a buyer the seller while preparing for sale went for near-term economics versus cost-savings over the long-term. I am guilty of this myself. In the sale of my house I advised the sellers concerning a secondary bathroom; if they ever plan to renovate to consider changing the dual knobs to a single-lever. Was I disclosing too much? Maybe; however I advised since we did not use that particular bathroom we never did the upgrade; something to consider for their larger household and lifestyle.

The House Is Empty: Rarely do homes show better when vacant (that is why we have staging as an image is worth 1,000 words). In reality an empty property may indicate the seller has moved on. Yet continuing to retain ownership the empty home does incur carrying costs even if there is no mortgage i.e. real estate taxes, upkeep, insurance and so forth. Thus the seller may be willing to be more flexible knowing their for-sale asset is depleting capital while on the market.

Granted some homes are staged and again this may be a sign the seller is serious as staging is not inexpensive. In some markets we are now witnessing virtual staging i.e. computer generated staging to the benefit of on-line marketing, again a picture is worth 1,000 words. One company has brought the cost of staging down with inflatable furniture; just don’t sit on the props. Of note, a broker trick to show the scale of a bedroom, set up four to six boxes for support, add a camping air mattress, cover with a bedspread and pillows. The result an instantly staged and scaled bedroom.

Happy House Hunting

Is the Spring Selling Season a Bygone Memory

Historically the selling season for residential real estate in the United States was the start of Spring usually mid to late March. The timing was traditionally due to various factors including:

• Post Spring Vacations (usually associated with families with school aged children).
• Gardens awakening from the winter doldrums.
• The opportunity to move and be settled prior to the school term starting in August and September.

The traditional selling season started to erode a few years ago with some markets moving to a year-round staggered school calendar, the desire of buyers to view inventory before others pounce and of course economics i.e. the most recent and severe recession forced sales regardless of season.

However it appears The Internet has upended another tradition (as it has with bricks and mortar department stores, travel agencies and others). Offering marketing and exposure 24/7 from the comfort of one’s own home; seasonal factors have suddenly become moot. Even the New York Times opined on the trend: The Right Time to Sell is Anytime.

In Denver I too have noticed this trend. One of my listings had been withdrawn from the market (and REColorado) due to the December holidays and the historical pattern of home buyers not wanting to tread through the cold and snow to look at homes.

During the holiday season and into early January I have received multiple inquiries to view the listing (of note, some sites never adjusted the asking price which was reduced). One was from a broker; their client had viewed previously. The other inquiries were what we term “buyer-direct”; prospective buyers who viewed the listing on one of various channels dedicated to real estate sales i.e. Zillow, Redfin, Movoto and others which link distribution to the REColorado service. Of interest, while the listing was technically withdrawn the distribution channels continued to promote (of note the listing is coming back on the market officially in a few days).

For buyers there may be an advantage including less competition concerning viewings and easier showing schedules. For sellers, the advantage is simply less inventory on the market. Granted the properties that will sell are those that are priced correctly for the market, show well and so forth. Thus some traditions do not change.

However if you are considering buying or selling, sooner than later may be prudent; as the saying goes “The early bird gets the worm” and avoids additional interest rate hikes.

 

 

Curb Appeal Beyond Paint and Clean Windows

Curb appeal is literally your home’s calling card. Any astute real estate broker will advise curb appeal’s importance esp. in todays connected world where the front image of your residence by way of the marketing and even Google Earth can be seen by thousands of eyeballs.

Landscaping is an important component of curb appeal especially during the spring and summer selling season. As I advise sellers, consider the visual of your residence as a 3-D magazine advertisement.

For those in single family and duplex homes, be sure rake and clear away debris off your lawn. While you may have always managed your lawn personally, if considering selling consider investing in a service to ensure your lawn is pristine. This includes seeding bare spots (including those areas of burnt grass where the dog urinates) and of course weeding.

If you have a sprinkler system consider replacing your older sprinkler heads with new, water-efficient heads for about $5 each. Replacing sprinkler heads is a pretty straightforward job and one we can promote in the marketing material. Even within Denver County where water rates are reasonable, buyers are looking for efficiency and cost savings.

Trees and shrubs should be pruned and trimmed to be attractive and showing the property has been well-maintained. Yet be aware some trees should not be pruned until they are dormant, thus before pulling out the shears, check with an tree specialist. If you have mature trees on your property, of course hire a professional who will not only trim but will shape as well. Be sure landscaping and trees do not impact the residence, always an issue in inspections.

Finally if you live in a condo or multifamily, yet the above applies to you as well. Make sure your HOA is on top of landscaping and maintenance. Condos too have curb appeal. While the downtown high-rise may have planters which constitute the landscaping, many condos in residential neighborhoods will have landscaping in keeping with the urban fabric and landscape design of the neighborhood. If buyers see a well-kept yard, they are more likely to have a positive impression of the overall building and HOA.