22 Dec 2017 – The Year to Sell a Cincinnati Home!
by Dan O’Toole
You thought about selling this year, but real life got in the way. 2017, though, that will be the year – YOUR year to sell your house. Much of 2016 was the hottest sales market that we’ve seen in years, but what matters to you is how a whole bunch of over-analysis of this year’s housing market will help you sell fast and for as much money as possible.
So, much like the evening news covering a local election, we are just the team to provide the over-analysis that, surprisingly, does matter to you. We’ve gathered sales information from the Cincinnati MLS and our exclusive Teradatum Report system on the Cincinnati area’s 10 largest school districts as a basis for the discussion. Excluded were new (construction) home sales; we focused on pre-existing resales. But our summary goes deeper. Why did these homes sell? What types of homes were they? Most importantly, how does this knowledge help to sell yours? Not without coincidence, it will be the only resource you’ll need.
Market Share – More Than Just A Number
The fact that 10,151 homes sold this year has no bearing on whether or not your beautiful bungalow at 123 Main Street. Here’s the per district breakdown anyway:
What is important to take from this information begins with a breakdown of specific price points. You can pretty well guess where your house fits in the mix. What is a buyer looking for in these ranges? We’ll help you speak to your audience.
The lower tier buyer, as seen in the charts below, is very cost driven. This buyer is probably buying their first home and THINKS they’ll be okay with doing a little work themselves. But, consider this: When you bought your home, I bet you had a laundry list of updates you wanted to do. Years later, how many of those items still appear on that list. Almost all, right? Now imagine trying to conquer this list on a budget tighter than skinny jeans.
This is where you, as the seller in this range, create VALUE. Do anything you can to make the home appear more move in ready, because honestly, most are not. Clean. Paint. Lawn Fertilizer. Shampoo carpets. This differentiates your home from the others in this price range. My team has seen most of them, so trust us when we say more than a few are very worthy of the advertised $40,000 listing price.
The charts below represent what is known as a Step-Up buyer.
This buyer is the young hotshot at your firm. Part kiss-ass, part go-getter. Like him or not, he’s working his way up the ladder. This buyer is probably buying his second home with plans to begin or expand his family. They expect to find a home that is more move in ready, because with career and family, little time exists to take on projects.
A minimum of 3 bedrooms, but preferably four, is what this buyer seeks. As the price increases through this range, a home with more square footage is expected. All the buzz is still an “open” floor plan – can you advertise that? Also, kitchen and baths are what sell this guy. Have you updated, or does the kitchen still have sideburns and platform shoes? Think bright and clean. White cabinets, updated hardware, (anything but Formica) counter tops and quality laminate flooring. Also, keeping in mind he has a growing family, how’s the lawn? Get it clean, get it green.
As our analysis proceeds through the top end of sold homes, budget becomes less of the concern. The focus shifts to quality.
This buyer is educated. Attach name brands wherever you can – not just “new windows”, but instead “Pella Wood Windows.” Occasionally, attaching a dollar amount to your upgrades helps to provide value – “A $50,000 basement renovation,” or “$30k roof.” (A great tool that we have used to sell in this price range is $/finished square foot – if you can boast something smaller than the average, that creates more value.)
The biggest battle when selling at this price point comes from differentiation. If all the homes priced +/- $100,000 offer the same features, why should a buyer pick yours? Start by remembering why you chose the home. No detail is too small; you want to overload the buyer with value. Make sure your agent is very knowledgeable of comparable properties so he/she can help determine why a buyer should pick yours.
Waiting is the Hardest Part
You believe that your home is without a doubt, the best deal on the market. The honest truth is, most buyers will not. See the chart below for our Days On Market (DOM) analysis for pre-existing homes within each of our 10 selected school districts.
How to sell quicker than the average? A few things to consider:
Pricing – There is a 100% guarantee that you and your real estate agent will disagree on price. Your home holds more value to you, because simply, it is YOUR home. Your agent should be able to provide data supporting his/her price recommendation, but should also be willing to listen. When determining price, here is a key point to remember: Your goal is to get as much traffic through the house as possible. An aggressive pricing strategy helps to achieve this. Once a buyer comes forth, it is up to you how much you are willing to negotiate. Keep in mind that buyer doesn’t even exist if your price is too high.
Timing – DOM is measured from the date a home goes up for sale to the time a contract is accepted (pending). In the summer of 2016, we saw the most aggressive market that we’ve seen in years. Homes went up for sale, and had an accepted deal less than 24 hours later. This created a “seller’s market,” one in which the seller holds the cards.
The main reason for this is that there just simply isn’t enough homes for sale in the Cincinnati area. The spillover is that, many of those summertime buyers lost out on multiple bidding wars, and these people are still looking for homes. This has taken our usual wintertime drop off to a not-so-drastic decline in sales. We expect that fervent pace to continue next year, and probably start earlier. If you want to sell, be ready by late February.
Marketing – On our team, we are extremely honest with the sellers we work with. The truth is, EVERY agent is capable of creating a plan to market your home. But what the plan looks like and the tools at their disposal is what creates separation from agent to agent. Don’t settle for Joe Real Estate who just puts his sign in the yard and heads out on vacation, hoping a buyer appears. Look for proactive vs. reactive.
Demand(ing) Your Price
Much like buying a souvenir mug in Mexico, buyers never expect to pay full price for a home. Here, we take a look at what homes have sold for (SP), relative to what the listing price (LP) was.
The differences are only sometimes a fraction of a percentage, but when it comes to selling a home, that fraction could equate to thousands of dollars. A home priced in our top tier for example, at $500,000, at 95% would sell for $475,000. That same house sold at 95.5% yields the sellers $477,500. What drives this percentage?
The biggest factor is demand. Looking back at this past summer again, buyer demand was very high, while selling inventory was low. This caused a situation where instead of one buyer having interest in a house, 3 or maybe more buyers were vying for that same home. Occasionally, we saw homes that sold for more than 100% of what they were asking!
The value of your home has a huge impact on demand. In our market, we see most buyers purchase homes in 2 of our middle tiers, ranging from $100,000 – $300,000. Generally, these homes generate a sale price closer to listing price than other ranges because more buyers exist. Usually, as price increases, we see this percentage drop, because unfortunately, fewer Cincinnatians have the ability to buy a $600,000 home.
What this means to you? Determine a base line for your sale. As an agent, I always tell my clients that this is information I don’t need to know. For the most part, your real estate agent should have an expectation of 95% of asking price. Exceptions exist, make sure your agent is up front about those and why.
At TREO, our research efforts and marketing keep us very in tune with buyer demand at all stages throughout the year. Our analysis relies on trends based on home sales, pricing vs. last year, and length of time on market. The good news is, these trends are steadily leaning in favor of the seller, especially in pricing tiers where most buyers and sellers exist. Values are up, but at safe levels that cause little concern for a bursting bubble.
The Starting Line
2017 is going to be your year. The real estate market has showed us that it will be a great year to sell. Put yourself ahead of the curve and contact a Team TREO agent soon to begin talking through the process. The overview supplied is meant to be a base for your journey into a new home, but it is important to obtain an in depth analysis specific to your home and surrounding areas. At TREO, we invest heavily into the information that helps to sell your home. Are you thinking about selling in 2017? Share with us your concerns about selling your home, and let us find the best marketing solution for you!