by Harlan Levy, The Journal Inquirer
Published: Wednesday, October 21, 2009
The Journal Inquirer | Harlan Levys Consumer Diary
Over the weekend my wife and her brother finally succeeded in selling their late mother's 45-year-old house in Armonk, N.Y., after months on the market starting last summer. The sale price was about $150,000 below its original list price.
What a bummer, especially since within a week of the listing a neighbor's adult children had checked the house out a few times, complained about several problems, and ended up offering $75,000 less than the list price. But my brother-in-law was fed up with their endless dithering and flatly rejected them, sure that the list price would attract a buyer. He was so adamant that my wife couldn't argue.
Wrong! No one even looked at it for weeks. Then, one couple saw it and expressed interest, only to withdraw, saying it was just too old. A few weeks ago two other couples seemed hot to trot. After a brief bidding war (actually just a skirmish) the winners, a nice couple from Queens, N.Y., with an infant, won by underbidding the other couple by $5,000 but promising to deal with whatever we left in the house - a major factor, since my wife abhorred the prospect of sifting through 40-plus years of stuff.
However, the whole ordeal could have been avoided, according to real estate agent Rob Giuffria, vice president of Prudential Premier Homes.
First offer = Best offer
"Based on statistics, the first offer that comes in on a house is your best chance of getting the highest sale price for your house," Giuffria said, "although that wouldn't be true if you had multiple offers very quickly when the house is listed at above what you think the market value is."
Too bad a negative emotional reaction to the first potential buyers dictated what happened to my mother-in-law's house.
Giuffria's credo is that the list price has no material effect on the market value of a home, and if a home is priced correctly it will sell quickly.
"Most homeowners believe they'll leave money on the table if they list their house at too low a price," Giuffria said. "The fact is the list price has no material effect on the sale price of a home."
Trend: List low, sell high
Here's another trend Giuffria has observed and taken advantage of (which we could have used): listing a sale price below market value seems to draw sale prices above the list price.
"If you believe the market value, based on Realtors' and other professionals' opinions, is $300,000, I would recommend a list price of say $289,000," Giuffria said. "What this does is that when someone looks at the house and likes the house, they know its worth more than the list price, and it makes them think about the true value of the house, and it creates a bidding war, which gives the sellers the best opportunity to get the most amount of money for their home."
Giuffria has been an agent on two recent sales using that tactic.
· 7 Lawlor Road, Tolland, a four-bedroom, 2½ bath, 3,300-square-foot Colonial built in 1993 on 4.39 acres, in the Clayton Woods neighborhood.
"We listed it at $449,000 on Sept. 25, and the buyer signed a contract for $470,000 on Oct. 6," Giuffria said. "We had three offers within the first 48 hours, and the second offer was the offer than won the house."
The market value was probably in the high $450s or low $460s, he said, "but if we had priced the house at $495,000, my opinion is that we would have eventually sold the house in the mid $450s, and it would have taken 90 days or so."
The buyer's bank supported the $470,000 price for the house, Giuffria said, so the buyer wasn't overpaying, "and we got all of this done much more quickly than if we had priced it higher."
· 41 Balsam Landing, Glastonbury: a four-bedroom, 2½-bath, 3,294-square-foot Colonial built in 2003 on 2 acres.
It was listed at $639,900 on May 2, 2008, and was sold for $651,000 on May 5. The house was finally appraised at $682,000.
"In my opinion the market value was in the $660,000 to $670,000 range," Giuffria said. "We're not sure if the agent purposely listed it too low, but I can tell you the homeowners weren't happy when they saw the final appraisal at 682, and the buyer was extremely happy with the instant equity of the difference."
Giuffria's conclusion: You have to price right and just because you list the house at a higher price than you should doesn't mean you're going to sell it at a higher price.
"About 80 percent of homeowners list their homes at prices that are above what their real estate agents recommend," Giuffria added.
As for the overall housing market in the state, Giuffria said the market under $500,000 is "steady and trending better The market between $500,000 and $800,000 is "pretty soft, and over $800,000 is abysmal."
Indeed, he said, some of the best deals are for homes over $1 million.
Here are home sale and median sale price numbers for three towns, comparing January through July 2008 to the same period in 2009:
From $200,000 to $500,000:
East Hartford: 2008: 55, $230,000. 2009: 29, median price $222,000.
Somers: 2008: 25, $308,000. 2009: 26, $335,000.
Tolland: 2008: 57, $304,000. 2009: 37, $286,000.
From $500,000 to $1 million:
East Hartford: none.
Somers: 2008: 1, $508,000. 2009: 2, $518,000.
Tolland: 2008: 2, $506,000. 2009: 1, $515,000.
$1 million and up:
None in the three towns.
East Hartford, Somers, Tolland: none.
