Houses in D.C., Chevy Chase and Bethesda are snapped up days after they come on the market. However, many Potomac homes — particularly those selling for more than a million dollars — are remaining on the market for months without so much as an offer — or maybe even a buyer gracing their doors. Some sellers are scared, confused and concerned, wondering why their homes are not selling and trying to decipher what they need to do to make their home more attractive to buyers.
Realtors Alison Ross Tompkins, Karen Friedman and Brittany Barsky represent three area offices of Long and Foster Real Estate. Tompkins explains that “in order to be competitive, both the Realtor and the client must understand the trends, price the home properly, and present the home in a manner that it will be attractive to the buyer — in other words, stage the home on both the inside and outside.”
Friedman said, “Every property is unique and every situation is different. It’s imperative that Realtors and sellers ‘listen to the market’ and stay abreast of changing market conditions. The Realtor also needs to understand how motivated the seller is. The market is fluid and always changing with properties coming on and off. Realizing everyone wants top dollar for their property, your Realtor must do the research and map out a reasonable price range and number of days in which it is expected to sell. If the seller lacks the motivation to sell – in other words, doesn’t care how long it will take, than that’s a different scenario from the seller who needs to sell as soon as possible. If a property sits on the market for a long time, then the seller and Realtor may choose to remove it from the market for awhile and then, looking again at market conditions, may re-price and advertise it again.”
“When putting their home on the market, many sellers forget they cannot control the market,” said Barsky. “However, agents must educate their clients on the factors they can control and return to basics to maximize their chances of selling their home at the highest possible price.”
TOMPKINS BELIEVES that all sellers need to have knowledge of current trends in the real estate market.
“There are four different categories of the population in the U.S.: Seniors who are 69 – 89 years old (born 1925-1945), Baby Boomers, who are aged 50 – 68 (born 1946-1964), Generation X who are 33-49 years of age (born 1965-1981) and the Milennials, who are 11-32, (born 1982 – 2003). Of course, the Milennials that we are concerned with are ages 23-32 – a very small group,” she said.
A percentage of all four groups are vying for the same types of properties. Most want an urban environment where the “action” is, where they can walk to Starbucks, restaurants, movies, fitness clubs, healthcare, cultural activities and/or work. They want a “lock and leave” lifestyle. Seniors want ease of living, Boomers want smaller living environments, and many Generation Xers and Millennial are just trying to enter the market to become homeowners. Many only desire two bedrooms and an office because they plan to have no children or are “empty-nesters.” They are seeking one-floor living such as condominiums, or they are buying townhouses with elevators. Stairs are not in demand, but amenities such as outdoor kitchens, fire pits, garages, solariums, large closets and storage space, elaborate kitchens and master baths are definitely desirable.
Another trend is toward multigenerational households. Children returning from college with huge debt, parents who need caregivers – the sandwich generation may hang onto their large homes to provide homes in which three generations live together in one household.
Tompkins cites sellers who “came out of the gate earlier this year, and thought this was the year to sell. They put their homes on the market and were overly optimistic, thinking that prices had rebounded. They priced their home too high and as sellers flooded the market, the supply of housing went up – and as the supply increased, the prices went down. Had they priced it appropriately at the beginning, they most likely would have sold it when there were fewer homes on the market.”
An appraiser or a real estate agent can price a home properly for the trend and the market. Many sellers think that if they replace their windows or roof, or renovate a bath or a kitchen that they can charge more for their home. That is really called home maintenance – it might help sell a home, but it will not increase the price. Pricing a home at the correct price is a must in order to sell it.
FRIEDMAN INDICATED why staging is important in this real estate market: “Staging is not necessarily putting a ton of high-end furniture in the property. It’s about getting the house in the best possible condition, cost-effective updates and de-personalizing to let buyers picture themselves living in the property. Some inexpensive, but important improvements such as tidying up the grounds, front porch, garage, patio, painting the front door, replacing the hardware, shampooing carpets, removing extra furniture, painting walls a neutral color, and removing clutter will make all the difference in the world. Putting fresh towels in the bathroom, replacing anything broken and removing family photos and personal items will give the home a fresh appearance.”
Barsky agreed: “The most important factor, besides the obvious — price, is presentation of the property. A seller must present their property to the market with their best foot forward. The house must be clean, freshly painted and organized. Personally, I will strongly encourage my clients to stage their property and enhance their curb appeal to create the best possible impression on potential buyers. Most properties not selling do not have the proper presentation.”
“Curb appeal is now called web appeal,” said Tompkins. “Property buyers look at photos from the internet. If the home does not have web appeal, then the buyer will not choose to look at it – and surely not visit it. Photos must be a good quality with excellent lighting. The look must be one of ‘Clean, Color and Clutter Free.’ Before the internet, buyers would drive by a home. Now they ‘surf-by’ on the internet.
“Once the buyer enters the home, there must immediately (within the first 8 seconds) be a ‘Wow’ effect. Within these first seconds, the buyer decides if she/he is interested or if walking through is just to please the Realtor. Turning on the buyer and getting him or her excited about exploring more of the house is exactly what staging is all about. Staging can cost a few thousand dollars, but it is worth it to impress the buyer with the ‘look and feel’ of the home – and whether it will become their dream home.”
Don’t expect buyers to be looking for a “fixer-upper.” Today's buyers are busy. They are looking for properties where they can unpack without doing a lot in renovations or decorating.
THE ABSORPTION RATE is the rate at which homes are selling in a specific area. Here is the absorption rate in Potomac for properties in three different price categories. This data indicates that, in Potomac, the average number of days a property sits active on the market increases as the price increases.
Properties priced below $1M
There are currently 79 active properties on the market and 23 properties under contract. There have been 201 properties sold since Jan. 1, 2014 - 246 days (8 months.) The absorption rate is therefore 3.2 months at this price point. This suggests that if market conditions do not change and if no new listings come on the market, it will take 3.2 months for the current inventory to sell at the current pace of the market. It’s a sellers’ market for properties priced below $1M because there is less than 6 months of inventory.
Properties priced from $1M to $2M
There are currently 97 properties active and there are currently 31 properties under contract.
There are currently 113 properties that have sold since Jan. 1, 2014 (246 days.) The absorption rate is seven months. This tells us that it will take 7 months for the current inventory to sell at the current pace of the market. For properties priced in this category currently it’s a buyers’ market because there is more than six months of inventory available.
Properties priced above $2M
There are currently 73 active and there are currently 7 under contract. There are currently 20 properties that have sold since Jan. 1, 2014. The absorption rate is 29.93 months or 2.5 years to absorb this inventory. It will take 29.93 months for the current inventory to sell at the current pace of the market. This is considered a buyers’ market because there is more than six months of inventory available.