Why It Might be Time to Sell Your House

By | Boston Daily |

massachusetts homeWhy 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:

  • Arlington
  • Bedford
  • Belmont
  • Cambridge
  • Lexington
  • Newton
  • Wellesley

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.

  • http://info.realstatecafe.com RealEstateCafe

    Bill J,

    As a fellow real estate professional who loves data, I appreciate the level of detail you provide to Boston Magazine readers for the seven highly sought after communities you serve. Our company is monitoring the situation in statewide and our analysis of MLS closings between March 1 and April 10, 2012 presents a different picture:

    http://bit.ly/DisarmRE

    HIGHLIGHTS:

    1. As shown in the graph on our blog post above, only 13% of MLS listings sold OVER asking price between March 1 and April 10th:

    2. Just 3.4%, a mere 176 listings statewide sold for more than $11,100 over asking price!

    3. Another 282 listings sold over asking price, but by $3,100 or LESS .

    4. Guess how many properties sold for more than $11,100 BELOW the list price? 2,263 listings or 13 times the number that sold for $11,100 OVER asking price.

    When a property sells for pay more than $10K over asking price there’s a tendency to sensationalize that example, and generalize to market.

    So, despite the 22 sales over asking price you counted, buyers should not assume that bidding over asking price is “the new normal” or a wise strategy. As one housing economist scoffed, “this looks exactly like Q1/Q2 2010 during the home buyer tax-credit period to me (remember, “bidding wars” filled the headlines back then too as people paid $30k more than the ask price in order to get their $8k tax credit).”

    We’ve seen this seasonal phenomena before, and time will tell whether this is a sustainable trend or just another eposide of “House Prices at “a Bottom”…For the forth year in a row!!!”
    http://mhanson.com/archives/856

    • Bill Janovitz

      Bill W.,

      Thanks for reading and for your thoughtful analysis.

      Yes, of course many other communities are experiencing houses selling for under asking price. But as you know (perhaps better than I do as an exclusive buyers-only agent), most buyers concentrate on one or two towns, or at least that had been my experience. So, providing data for all of Massachusetts is not exactly the most helpful way to look at this sort of microtrend. Such an analysis seems to imply that buyers should look everywhere in all towns across the state. Markets in, say, Northampton have little or nothing to do with the markets in Newton or Lexington. You might as well compare it to Albany. I have a hard enough time trying to convince buyers intent on Lexington to look in more-affordable Bedford, an adjacent town close right on 128 with well-rated schools. As I and others always say, real estate is a hyper-local sort of market dynamic. Houses in good towns, with good schools, in reasonable commuting distance to Boston and Cambridge, below a million dollars are selling fast. Period.