Why It Might be Time to Sell Your House
Why wait until later in the year to list your house? (Photo via Thinkstock.)
Bidding wars are common again in many local real estate markets around the Boston area. Yes, common. I’m not saying it’s like 2004 again everywhere in eastern Massachusetts. And prices are not back to the peaks. But out here in the immediate western suburbs, supply is not keeping up with demand. And as we know, that drives up prices — immediately and beyond. This might all fall back into balance if more sellers decide to market their homes.
First some anecdotes, then some numbers. We have a client who has lived in his house for 50 years. He and his wife considered putting his house on the market last spring. In no hurry and not quite ready, they waited and considered last autumn as a possible listing time. Still not ready, they spent the winter preparing the house with some words of advice from my business partner and me. A few weeks ago, they put the house on the market and had accepted an offer the first day, even though they had wanted to at least get through an open house scheduled a couple of days later.
We have brought on six listings below $1 million in the past month or so, in Lexington and Arlington:
- A Lexington mid-century modern listed at $899,000: Accepted offer over asking price first day on the market.
- Lexington mid-century modern listed at $759,000: Accepted offer over asking price first day.
- Lexington Gambrel listed at $570,000: Accepted offer second week on the market
- Lexington Foursquare Colonial listed at $539,000: Accepted offer first week.
- Arlington Dutch Colonial listed at $699,000: Seven offers first week. Sold well over asking.
And we have worked as buyer agents on transactions for other houses in area towns and our clients have lost out on more than a couple of listings. I think most buyers — especially those relocating from out of the area — are shocked that the market has turned so quickly for certain price ranges in some towns. Bear in mind that those examples above are only from one agent’s experience. However, as recent Globe and Wall St. Journal articles have pointed out, this is common in many areas.
I imagine the data-driven readers and buyers will easily dismiss my anecdotal accounts. Here are some numbers for houses in the range of $400,000-$999,000 in the following towns where I tend to do most of my work and similar markets:
In those towns, there are 352 active MLS listings in that price range, with an average of $400,000-$999,000 with an average of 72 days on the market. There are 156 pending listings, average of 44 days on the market. Of the 92 that closed during that time, 22 were over listed asking price, and more than a dozen were right at the asking price. Again, those were closings from houses primarily listed in the late winter and early spring. Most closings likely reflect offers accepted in February and March. I predict closings in June and July will have fewer average days on market, reflecting the faster-paced spring market. Of the closed sales, the sale price was an average of 98 percent of the final list price, and 96 percent of the original list price (before any price changes).
Sellers and buyers alike — perhaps used to hearing a steady drumbeat of dour economic news and tales of depressed housing markets nationally — are surprised to find this sort of dynamic. All of my personal examples above are not instances of severely under-priced, “false” bidding wars; the prices were set realistically. In fact, the main concern when the market turns upwards like this is that an independent appraiser from the bank might not appraise a house to the sale price, thus jeopardizing loans. The way to alleviate that concern for a seller? Price your house sharply to encourage more than one bid and you are likely to not only get the best market value, but you are more apt to get an offer that has the sharpest terms. In a few of my examples above, buyers had home inspections before submitting their offers, and more than a couple waived the mortgage contingency.
I know there are frustrated buyers out there. I have a few of them as clients. And I am not one to counsel bidding out of one’s comfort range, never mind waiving protective contingencies. But there are more than a few buyers who have been sitting on the sidelines, are tired of putting their money into rent, and see 30-year mortgages at historic lows. The problem is, there are not enough houses on the market for them to consider.