Home Values

Pricing Your Montclair Home: What's the Sweet Spot?

5-back-iconWhen you're pricing your home, it's always tempting to ask for a bit more than you expect - to leave a little room for negotiating. But this strategy actually doesn't work.

According to industry experts, houses priced 10% over their ultimate selling price typically receive no offers. In fact, even houses priced a mere 5% too high will typically get showings, but no offers. If you start too high, you'll have to gradually lower your price over time until you find someone willing to buy.

In real estate, "gradually" is not great.

No one wants their house to sit on the market. Not you. Not your agent. The DOM (Days On Market) of a home is the leading indicator as to whether it is priced appropriately.

In Montclair, the average DOM is 50.

Examples of homes priced too high: 363 Park Street - Original price: $1,450,000; DOM-370 Offers started when price was dropped to $1,199,000

18 Capron Lane - Original price: $1,200,000; DOM-170 It sold when the price was lowered to $989,000

Even a house listed at its "correct" price - that is, the price it is likely to sell for - may not be ideal for the seller. Studies show that the market responds most enthusiastically when houses are priced just below their true value.

When a home is listed at about 5% under its ideal sales price, the property nearly always sells for more than asking, and often substantially more. This doesn't make complete logical sense, so it requires a leap of faith on the part of the homeowner. As a seller, you need a strong stomach and a good realtor who knows the market and how to price at that sweet spot.

Here's what happens when houses are priced to sell:

117 Haddon - Listed $699,000; Sold $826,000; DOM-11 19 Windsor - Listed $699,000; Sold $838,000; DOM-9 131 Wildwood - Listed $899,000; Sold $111,0000; DOM-10

When clients ask me how much negotiating room there should be when pricing their Montclair home, the answer is none.

If you'd like to talk about home pricing, or get a better sense of the market, call me. I love to talk real estate! 973.809.5277

*Studies performed by Jeffery Otteau of the Otteau Valuation Group www.otteau.com

4 Ways to Avoid Paying Too Much for a House in Montclair

Version 2Right now in Montclair, houses are selling for 103% of asking price. Meaning: on average, most sellers are getting 3 percent more than they list their home for. This is great for sellers! But how do buyers protect themselves from considerably overpaying for a house?

I tell my clients there are four things to seriously consider when buying.

1 - Understand the Market Conditions Most of us are familiar with the concept of supply and demand: The fewer there are of something, coupled with the more people who want the thing, the more expensive the thing is likely to be. In housing, this can be a function of many variables, but I advise buyers to become familiar with the Buyer to Seller Ratio and the Absorption Rate.

The current Buyer to Seller Ratio in Montclair is 37/100, or for every 100 sellers, there are 37 buyers. That's a lot of buyers for not much housing selection, which means the prices of "desirable" properties are likely to be bid way up.

The Absorption Rate right now is 2.7 months, which means that if no new houses come on the market, the current number of homes will sell out in less than 3 months. An Absorption Rate of under 6 months means that home prices are appreciating; under 3 months means that prices are escalating at approximately half a percent per month. In practical terms: if you bid on a house and lose it, by the time you put in a bid for the next house, it could be 1-2 percent more than it would have sold for a couple of months ago.

The lesson here is, if you find a great house in a rising market, don't underbid. You may end up paying more in the long run.

2 - It's Not Only About Price When you have to compete for a house, you can make your offer stronger by adjusting some of the terms in your contract. If you are savvy about home systems or have family who are in the trades, you might consider waiving your inspection contingency. This can be attractive to sellers for two reasons. 1. They know they won't be nickel-and-dimed for multiple repairs, and 2. They do not have to be bothered with estimates and scheduling contractors.

If you have the liquidity and you don't need a mortgage, you can make a cash offer, and waive you mortgage contingency, but you will likely have to show "proof of funds." Be mindful, however, that in the absence of a mortgage you will not need a bank appraisal, a measure that ensures that the bank is not loaning on a house for far more money than it's worth.

You can also increase the chances of your offer being accepted by writing a letter to the owners - sometimes an emotional appeal for a beloved house makes you a more popular candidate, especially if the seller has a home that's been in the family for years and is looking for just the right steward.

3 - Be Aware of Escalation Clauses and Buyer Fatigue Obviously, if you significantly overbid, you may get the house, but you'll be stuck with a big price tag. Some buyers include an Escalation Clause in their offer - agreeing to pay, say, $5,000 over the highest bidder. This can work well for some, but it wrests a lot of control from the buyer and often results in Buyer's Remorse, so most seller's agents advise against it.

If you underbid consistently, you put yourself at risk for Buyer Fatigue. You've lost 10 houses and a contender comes along and, no matter what, you will NOT lose this house. I don't have to tell you what happens in this scenario. Suffice it to say: you get your house, but at what cost?

4 - Make Your Offer Based on Your Expected Residency If you pay a bit more for a home than it's technically worth, you will feel it much more acutely if you're planning to put it back on the market in 5 years. However, if you're planning to stay for the long haul, and can ride out market conditions and amortize your investment, most consider the extra money far less of a "real" concern.

One of the things my clients seem to like about me is my interest in educating them about the housing market - in addition to finding them a great home. If you'd like to learn more or have questions about Absorption Rates and Buyer/Seller ratios in other towns- call me! 973.809.5277

5 Home Staging "Rules of Thumb"

living roomHome Staging has become one of the biggest buzzwords in world of selling real estate, yet many sellers are still perplexed by the concept. "Why do you want me to dismantle my photograph wall?" a client will ask. "It's one of my favorites parts of the house!"

Plain and simple: staging a home allows a buyer to more easily envision himself living in the space. And the more of "your" stuff that's around, the less of "his" stuff he can imagine there.

There are many suggestions I make when I meet with a client about getting ready to sell, but a few are worth noting as Staging Rules of Thumb - small changes you can make that will make your home show better and sell faster.

  1. Don't Overdo It. Many people think of staging as bringing things in - furniture, rugs, accent pieces - but most of the "work" of staging is taking pieces out. The more "available" square footage in a room, the more easily the buyer will be able to see her own furniture there.
  2. Create Conversation Spaces. Sofas and chairs do not need to line the perimeter of the room. Consider furniture arrangements that allow people to easily converse and socialize. Let the buyer to imagine all the lovely entertaining that she can do in your home.
  3. Keep Accessories Tasteful. Small, thoughtful additions can go a long way in making a space feel homey and inviting, especially gentle smells like potpourri in the bathrooms. Best, though, to keep additions neutral; controversial material - like political or religious books - is better off out of plain sight.
  4. Focus on the Main Rooms. Staging is crucial for the Big 4: Living Room, Kitchen, Master Bedroom and all Bathrooms. The other rooms - kids bedrooms, guest rooms, den - can simply be pared down and filled in by the buyer's imagination.
  5. Let a "Blank Slate" Be Your Guide. Your personal photographs and children's artwork is no doubt amazing, but they are just going to muddy the waters when it comes to helping a buyer visualize herself in your home. Put away your personal effects, but please, don't take it personally.

These rules are general so if you're in need of a personal staging consult, don't hesitate to call me. 973-809-5277

How Accurate is Your "Zestimate" ?

This LA Times article about Zillow estimates is from a year ago, but it recently resurfaced on my social media pages and seems worth sharing. For homeowners, Zillow seems like the best thing since sliced bread. A do-it-yourself tool to determine home values. Unfortunately, it's not the last word in valuation and is often controversial.

Zillow uses an Automated Valuation Model  (AVM), which is an algorithm that takes into account location, price per sqft, lot size, etc by relying on publicly available data from comparable properties. Sometimes this data is old or just simply wrong.  It's not a bad system for very general ideas about home value, but it doesn't account for anything unusual (good or bad) about your home.  AVMs tend to overstate the value of homes that are in poor condition or in an awkward location (like next to a gas station).  Similarly, they understate the value of homes that have fabulous recent renovations or are walkable to the NYC train.  It's a little like the real estate equivalent of an automated telephone customer service system. It's good for only the most basic information gathering.

And, as this article points out, "Zestimates" aren't even especially accurate - on average they are off by 8%.

Working with an experienced agent (i.e., me!), you'll have access to all the same type of automated information available through Zillow AND the expertise of someone who knows what the inside of the comp homes look like.  So, together, we can make a smart marketing plan if you're a seller, and realistic decisions about bidding if you're a buyer.

I'm happy to come over and tell you what your home is worth. Buying and selling homes is nuanced and subjective. It's not about algorithms. It's about lifestyles and dreams.

To Stage or Not To Stage?

Bessida Before 2 Bessida After

In my opinion, this should not even be a question. According to the Real Estate Staging Association, "Professionally listed staged properties look better, spend 73 percent less time on the market, typically sell for more money, end up on buyers' 'must see' lists, are perceived as 'well-maintained,' and have fewer concessions requested of the seller."

Plus, who doesn't love a good make-over?

Staging is not decorating. In fact, in many ways it's actually un-decorating. It usually involves decluttering, repairing and (unfortunately) depersonalizing a home so that a prospective buyer can easily envision themselves living there.

Sometimes it requires eliminating odors from pets, cooking, or mothballs. Or freshening up the landscape - trimming or removing overgrown bushes (especially important in a walkable suburb!). Also, although not really staging, there are "fixes" that are best done before putting a house on the market, such as removing underground oil tanks or removing asbestos pipe-wrap.

Some homes can be staged in a day but others take weeks or months of planning, sorting, storing and executing.

I consider staging an activity with few downsides and huge potential returns. Probably the worst you can say about staging is that it can be a little sad to make your home look its very best only to pack up and leave it. I had one client who didn't want to spend money refinishing floors when they moved in and only went to the trouble to do it when they put the house on the market. "I can't believe how much better our house looks now!" I remember her saying.

So if you're thinking of selling in a few years, you may want to start in on some of those repairs or touch ups now, while you have time to enjoy them.

(And now for a moment of shameless self-promotion: The before and after photo above is a home that sat on the market with two different agents for a combined 728 days. Neither bothered to stage the house. When I took over the listing and staged it, the house sold in 45 days.)

No Wal-Mart in Montclair

valley roadAccording to a blog post on Inman.com this past spring, these six things that have been shown to increase home value:

Living Near Parks, Golf Courses and Open Spaces Living Near a Wal-Mart Walkability (!!!) Additional Dwelling Spaces Living Near a Professional Sports Arena Lots of Mature Trees

Except for the Wal-Mart, this list has Montclair, NJ written all over it.

I have talked about walkability until I'm blue in the face, but I'm usually referring to a stroll to a restaurant or movie theater, or the ability to get to the bus or train on foot. Not nearly often enough do I mention the two reservations that sit on Montclair's western border - Mills at the north end of town and Eagle Rock at the south end. When my kids were younger, we'd go hike one of the reservations after school sometimes - they're that close.

I don't golf but if I did, I wouldn't have to travel much further than the reservations to find myself on a public or private golf course. There are probably 10 within a 15-minute drive.

Mature trees: check. Sports arena: check. Carriage house or in-law suite: not always, but many homes offer ample and independent space for guests.

Montclair does not have a Wal-Mart and I make no apologies for that. In fact, there's always a lot of debate about what type of chain establishments may or may not set up shop here. However, Montclair is flanked by two major highways, which can take you to Wal-Mart, Target or dozens of other fun places to spend money. In fact, there are six Wal-Mart stores within 10 miles of here. We Montclair dwellers don't mind these little away trips. It's nice to leave Shangra-la sometimes.