This post is reprised from my entry earlier this summer, but it’s been slightly remixed for 2009 and beyond. A couple of things to keep in mind when you read this: Denver’s inventory of houses have continued to decline, although the sales rate has not proportionally increased. Also, the million-dollar housing market in metro Denver is in suspended isolation, although indicators from the lower-end markets show promise across the board. If you need any indication, I have a $250,000 buyer right now who just lost a bidding war on a house in central Denver and couldn’t even get another offer in because the house went under contract that fast. Anyway, read, learn and enjoy:
As a Realtor living in Denver’s Driving Park Historic District (which encompasses all houses north of 4th, south of 6th between Downing and High), I have a pretty good view of how buyers and sellers have been reacting to the real estate market. Nine years ago, we moved into a 1400 sf Victorian for way more than we wanted to spend ($350,000 at the time), and struggled for at least 2 years wondering how we would spend the $14.32 left over after we paid mortgage and heat. Eventually, our income caught up to our house payment, and now we can go to the movies together, as opposed to taking turns. Still, we learned a lesson about buying in Denver; you either buy a house in a neighborhood you can afford or you make sacrifices to get the house you really want. People trying to make a living buying houses formerly occupied for the last 50 years by the lovely 90-year-old neighbor are wading in a very shallow pool. But I digress… you want to know how to control the sale of your home, and I’m getting there, I promise. This isn’t about Karl Lueders.
One of the nice things about living in a core neighborhood like Driving Park, Congress Park, Country Club, Hilltop and Washington Park is that we’ve remained relatively bubble-proof. Other than the obvious charm in an older neighborhood, you can’t build location in the outer layers of the suburban sprawl and you can’t build a 90-year old house next to 1000s of other homes just like it. And that makes people want to move -and stay – there.
Currently, there are only 9 (nine) homes on the market out of 500+ homes in the Driving Park district; seven of them are $700k and up (the other two: $695k and $675k). Only house is under contract and 15 homes have sold in this 16-block area in 2008. There are a couple of reasons why this number is strangely low for this neighborhood: the most important reason, I think, is that sellers in DPHD DON’T HAVE TO SELL.
How does this help you? Read on. Once you know the rules of selling a house in a nieghborhood like this one, you will realize how you can take control of the sale of your own house.
THE RULES OF SELLING IN THE DPHD
IMHO, many of my neighbors do not see their homes as their primary investment. In order to buy a home, you have to be able afford it, but, more importantly, you have to be able to update and maintain it. This rule increases 4-5x with $1M+ homes. If you’re reading this, there’s a good chance that your home is your primary investment. That’s the case with most homeowners. But that’s OK! If you can act like it isn’t, then you’re taking the first step to making the rules of selling a home work for you.
Most homeowners develop a strong emotional attachment to their home, but unlike you and I, well-to-do homeowners that aren’t “house poor” bring a little less emotion and more strategy when it comes to pricing their house. Specifically, two distinct strategies:
- PLAN A: when you live in a great neighborhood and there is no pressure to leave, you can move on your terms. What ends up happening is that many sellers will price their house according to optimal market conditions and let the market come to them. Most Country Club homeowners don’t – and shouldn’t – allow unqualified buyers to tour their homes, thus filtering the number of “tourists” from coming through their houses. Depending on motivation, there are times when houses north of $3 million will stay on the market for more than 2 years!
- PLAN B: There are times, however, when job, family or some other circumstance will change the motivation of a homeowner. When you lose control of your situation, Country Club homeowners are just like any other homeowner. More often than not, buyers can take advantage of sellers that relist their house within a couple of years of moving in - especially in this market – or sellers who failed to upgrade a house hoping that the great bones and great block would keep it up with the competition. Regardless of where you live, if your house doesn’t show well because you failed to update or (gasp) your taste isn’t as mainstream as the next house, you can almost see the calculator in a buyer’s head deducting huge chunks off your list price. Don’t get me wrong, there isn’t one homeowner on the planet who is going to be happy about taking a loss on their home, but it’s not a coincidence that successful people often possess a healthy mix of reality, proactivity and a desire to move forward with their lives. And it’s no coincidence that many people that live in Driving Park have already found success or are well on their way.
HEY, I DON’T LIVE IN AN HOITY-TOITY AREA LIKE KARL LUEDERS
It doesn’t matter (and for the record, I thought my neighborhood was a little far from downtown… Mrs. Karl Lueders chose it.) Regardless of your neighborhood, you as a homeowner have several options on how to market your property when you need to sell. If you’re electing to move, you can certainly choose Plan A, but eventually you’re going to have be honest with yourself about what your house is really worth in this market or if you just want a change of scenery. This market is very quick to respond to your opinion of your house’s worth, so if there’s part of you that thinks you’re not going to get what you want, you may reconsider listing your house. What you NEVER WANT TO DO is overprice your house to recapture false gains (that’s another post altogether).
Plan B is never the optimal alternative, but it reflects reality, and as many people are loathe to admit, life ain’t fair. The best way to ease the pain of B, especially in this market, is to make a run at a price you’d like to get but be ready to accept what a buyer will bring you.
THEN THERE’S PLAN C
There is Plan C, which I find to be the optimal route for selling a house, but it also forces you to resist the urge to procrastinate and – yuk – do some work around the house.
- PLAN C: I have clients that will contact me in March/April, letting me know that they’d like to be in a new house by September. While that conversation is nothing new, these clients are prepared to make it happen. They’ll expect me to come by the house and consult with them on what needs to be done to the house in order to have it sold in 4 months.
Sound impossible? Not at all. (Maybe, if they need to gut their kitchen. But if these people are calling 6 months ahead of time, they’ve already made significant updates to their house.) They also recognize that the ultimate goal is to be in a new house, not trying to squeeze every nickel they can out of their current home. These people have either made a profit on their house and won’t led greed disrupt their lives, or their life change is more important than an extra 1-2% of sales price (now that’s another post for another day!) in a bad market. In either case, they’re moving forward with their lives.
What’s my role in moving them forward? To bring as many buyers as possible to the house, present as much feedback as possible, and give the seller the opportunity to react to the market’s criticisms.
Remember, most of us don’t live in the Country Club, but with a little planning, we can be just as savvy when it comes to selling our houses. And when you’re ready, be sure to visit me to get a little more insight as to why I can get you in the driver’s seat.
Karl Lueders is a Realtor in Colorado who specializes in the metro Denver area. He works with buyers and sellers alike to realize their true value of their homes. As a builder of several custom homes, he can provide insight into what it takes if you need to resort to Plan C to sell your home. Karl can be reached via his Website, www.karlsellsdenver.com, or via phone, 720-971-8267.)