Tuesday, July 29, 2008

Selling a home quickly – a Realtor’s input on current challenges

I have been asked by quite a few homeowners this year about home value relative to landscaping as they are preparing to put their home on the market. I decided to do a little research and better understand what is happening in the current Cleveland Heights and Shaker Heights housing market. With the SunNews reporting recently that the Heights area has lost between 8-9% of its population base there are a lot of homes available on the market.

I had an informative conversation with
Kevin Cahill, an agent with Keller Williams Realty of Greater Cleveland, who specializes in residential Heights area homes. Cahill shared his insights with me about some of the challenges that sellers face in the current housing market.

“One of the biggest challenges facing a seller in today’s market is the length of time the house sits on the market. As the length of time on the market increases, so do carrying costs for the owner. The ability to make a quick sale in this market provides the best opportunity to capture the homes real value and to cap the outgoing cash flow required to own and maintain the property.”

A report generated late June from information available through the MLS (Multiple Listing Service) indicated the following average market times for homes in the
Cleveland Heights and Shaker Heights market for the previous 90 days. The report includes active, closed, contingency and pending listings.
$150,000 to $300,000: 95 days average on market with 362 listings
$301,000 to $450,000: 97 days average on market with 120 listings
$451,000 to $700,000: 119 days average on market with 85 listings
$701,000 and above: 112 days average on market with 35 listings

Cahill commented that he does not believe the MLS statistics reflect the actual market conditions. “I believe the average market times are actually higher – closer to 50% longer than the MLS indicates as it does not account for expired listings or those homes that are relisted which therefore do not reflect the true market time.”

If this is accurate, then for homes in the $150,000 to $400,000 price range with an average market time of about 95 days, the real average would actually be closer to an average of 143 days on market, or nearly five months.

Cahill explained the financial impact: “Let’s use the example of a $250,000 home – with a cost of ownership not including utilities and maintenance costing the owner $2,000 per month. If this home would typically sit at least six months on the market, cutting the market time to twelve weeks would save the owner $6,000, or about 2.5% of the home value.

“In today’s market the goal is get the house to sell faster than anyone else’s. Sellers need to have a strategy.” Cahill shared.

When asked about the factors that would shorten the length of time on the market, Cahill said, “To get on the low side of the average number of days on market there are two factors – price and condition of the home. These two factors will open up the pool of potential buyers, thereby attracting more qualified and likely buyers for the property.”

Cahill explained how buyers today use the internet and how time on market is affected. “Prospective buyers are looking at listings online to determine if they want to make an appointment to see the home. Photos that reflect an attractive, appealing front façade will get more activity. Once the prospective buyer sees the condition of the home, and it is priced appropriately for the market, the market time can drop fast.”

I asked Kevin what impact landscaping has on the sale of a home. “I generally recommend that sellers put in as much time and effort on the landscaping and the interior of the house as they can afford. Spending money on specific projects to get a house ready for sale is worth it – including the landscaping if necessary. It’s going to impact perception, which impacts the number of showings and also the buyer’s opinion of value.”

I asked Kevin his specific thoughts on landscaping and how sellers should approach getting their house ready for market.

“Homeowners don’t always have the cash before the sale to do the work that might be necessary to make the house competitive in this market which contributes to longer market times. Each scenario is different – each house has different needs. Sometimes landscaping isn’t the highest priority if the living room has shag carpeting or there are other more obvious drawbacks to the home. Although basic maintenance goes a long way to making a house more marketable and this includes the landscaping.”

“Most homebuyers will identify initial qualifiers like location or neighborhood, price range, bedrooms, baths and certain key amenities. Good landscaping is generally not defined in the initial search criteria; however the curb appeal gets the home shown more quickly and frequently than other homes that are being considered.”

Thank you Kevin for taking time to discuss the current housing market and how quality landscaping can affect a homes time on market and value.

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