Jeremy

Jeremy, you said in a recent post that making “low-ball” offers is generally ill-advised.  However, I see homes out there that have been on the market for 3 months with no price change.  Doesn’t this mean they’re overpriced?

That certainly could be the case.  There’s no question that many homes are overpriced.  Any time a house has been on the market for even 1-2 months at the same price, I do want to have some idea of the “why” no one else has bought it.  It’s possible that it’s priced too high, but there are other possibilities as well.

First, let’s assume that a home is overpriced based on the market data.  They’re listed at $330k, and the best “comps” to support the value come in at $290k.  In that case, they’re overpriced and there is likely nothing we can do about – you just need to buy a different house from people who are reasonable about their home’s value.

You can try a low offer if you absolutely love the home, but statistically, you probably won’t get it for a fair price when the seller is that far off so don’t get your heart set on it.  Approximately one third of all listings never sell, and often this is why.

But what if a home hasn’t sold for some other reason?  There are other factors that will keep a home from selling.  Here my thoughts on the most common reasons a home isn’t selling.  These first three are the most common factors, and in my experience it’s likely that one or more of these is to blame:

1. Bad marketing – especially bad photos.  I’ve personally listed 5 homes this year (2014) that were first listed by other agents for months with no success.  We sold all 5 of them.   Of those, we listed 2 of them at the same price and sold them in a matter of days.  The difference was the marketing.  They looked stale and overpriced, but the real problem was bad marketing, not price.  As a buyer, great opportunities often lurk behind bad photos – even at list price!
2. It’s priced too high.  As we already discussed, lots of homes are priced too high.  Of the 5 homes I mentioned above, we did reduce the price slightly on 3 of them.
3. The home doesn’t show well.  This is closely tied to the first point about marketing.  Lots of homes are held back from their potential by the home owner.  Imagine two identical homes are for sale at the same price, one is cleaned, staged, and welcoming – the other is cluttered and smells like last night’s dinner.  Which will sell faster and for more money?  Which one is actually worth more?   Obviously, the first one sells sooner, but once the owners move out and the house is cleaned, they’re worth the same.  So was the second one “overpriced”?
   Some other reasons, that while not as common, are still reasons I see frequently.
4. Unique home that may be priced and marketed right, but only appeals to a small segment of buyers.  (Examples might be: homes with handicap accessibility, an mother-in-law suite with private access, or just a house with a unique floor plan that isn’t universally appealling.
5. Slow neighborhood.  Certain neighborhoods, usually on the outskirts of town, tend to move slower.
6. Specific, undesirable aspect of the home that is beyond anyone’s control.  The most common thing that comes to mind is a house that backs to a busy street.  In a situation like this, the house that would be worth $250k on one side of the road, might realistically only sell for $240k when it backs to the road.  However, even at this appropriate lower price, it will still take longer to sell in most cases.  I’ve seen a similar dynamic with nice homes where the neighbor’s house is particularly junky.

When looking at a home that’s been on the market for a while, it may be overpriced, or it may be something else.

– Jeremy
(719-231-9043 or jeremy@thecircagroup.com)

I recently had a client ask about just throwing out low offers to see if we could get a seller to “bite” on something.  My response is below and I thought others may find it interesting. – Jeremy

No, it doesn’t hurt to make low offers, but that is different from saying that it is actually useful to make low offers.   Frankly, the harm done is that it wastes your time looking at homes you can’t have.

The reality in the Colorado Springs area right now is that for typical homes there just isn’t that much “wiggle room” when it comes to negotiating price.  Here are some numbers for perspective:

Total homes sold in El Paso county over the past 6 months in which the list price was between $200-300k: 2041

Of those 2041, the number of homes which sold for 0-89% of the list price: 8 (0.39%)

Of those 2041, the number of homes which sold for 90-94% of list price: 91 (4.46%)

(Note: This data was based on the previous 180 days from the day I pulled the data.)

So combined, only 99 homes (4.85%) sold for more than 5% “off” list.  This means we have to write, on average, 21 offers to get one accepted for 5% less.  And we have to write, on average 256 offers in order to get one accepted for 10% less than list.

However, the real picture is even more bleak than that:

1.  If I take new construction offerings out of the equation the numbers are even worse.  (These are skewed because builders don’t reflect builder “incentives” in their list price and then once they apply the discounts they’re advertising it skews the ratio.)
2. Also not reflected is that 59 of the 99 had exactly $0 in seller concessions.  Whereas the overwhelming majority of transactions do have the seller paying some or all of the buyer’s closing costs, these homes sold at a greater discount did not.
3. A disproportionate number of these homes are also in areas where pricing is difficult due to lack of equivalent comps – this allows for a little more wiggle room on price.  Not too many of these homes are in “cookie cutter” neighborhoods such as the ones we’re looking in.

Does this mean you absolutely won’t be able to purchase something for 5% “off” or more?  No, but it does mean that it’s not a reliable game plan.

We need to look at homes that are already priced right, or at least close to it – especially when there are quite a few good homes out there that are already priced well.

Be sure to read the follow-up post about why homes stay on the market for a long time, and how their price may or may not factor into that.

A reader wrote:

We are in the beginning stages of planning a move out of state. While we know we will need to do some things to prepare our home for market, we don’t have much to spend. My husband is of the mindset of move everything out before placing it on the market (our furniture is not splendid, in fact quite ugly) and he doesn’t think this house would show well furnished. I would rather show the house and try to sell before we move out. Any suggestions as to if one way sells a home better than another?

Thanks for the question.  Here’s the short answer: the *best* way to sell a home is one that is well decorated, decluttered, and staged for selling – our portfolio page has numerous examples of homes like this that we’ve sold recently.

The second best way to sell a home is vacant – such as the home we just listed last Thursday in Stetson Hills.  We had 4 showings and 2 offers within 24 hours.  Obviously the lack of furniture didn’t hurt us!

Regardless of which route you go, it would be good to set aside a little bit of money to get your home ready. Obviously, I can’t comment on specifics without seeing your home, but most homes are going to have a few rooms that need fresh paint, a good professional carpet cleaning, a storage unit to help declutter, and some misc minor repairs (the broken screen door, dripping faucet, re-caulking the tub, etc.)  In almost every case, spending money on these relatively minor items will bring a much better return on your sale price (for example, spending $1,000 on paint, carpet cleaning, a storage unit, etc. might increase your sale price by $4,000.)

If  you have a similar question and would like me to come by your home sometime to discuss your situation in more detail, please let me know.

– Jeremy

Jeremy Isaac is a local Realtor, but you probably know him better as Carrie’s husband.  Do you have a real estate question you’d like answered? Email Jeremy directly at jeremy@thecircagroup.com or call/text 719-231-9043

You can search homes for sale in Colorado Springs, Monument, and Black Forest on The Circa Group’s website, with no registration required to view homes, prices, addresses, or any other information. If you’re looking to sell your home, be sure to view our marketing portfolio and see how our marketing portfolio will help your home sell for top dollar.

Edie writes:

I am looking to have the exterior of my house painted. Are there any recommendations as to color to make my home more marketable in the future?  Thanks!

The exact color of your house is typically of little consequence provided it’s a typical, relatively neutral, color.  If you paint it bright blue or neon green it’s going to be a problem, but I don’t think there is any difference in going with grey instead of tan, for example.  Personally, I’d just go w/ a similar color to what you already have because it will make painting easier (and cheaper) than doing a major color change.

Don’t forget that if you’re in a neighborhood with covenants you might be required to get approval for any color change you’re contemplating.  Depending on how quickly they respond to such requests, you may want to keep the color the same just to expedite the process and avoid having to get it approved.

– Jeremy

Jeremy Isaac is a local Realtor, but you probably know him better as Carrie’s husband.  Do you have a real estate question you’d like answered? Email Jeremy directly at jeremy@thecircagroup.com.

You can search homes for sale in Colorado Springs, Monument, and Black Forest on The Circa Group’s website, with no registration required to view homes, prices, addresses, or any other information. If you’re looking to sell your home, be sure to view his marketing portfolio and see how our marketing portfolio will help your home sell for top dollar!

Bianca writes:

My husband and I are a young couple with a child. We are thinking about buying our first home. We currently rent a condo for $850 monthly. We have no credit card debt, we do have car loans but don’t owe much. We have good credit and $8000 saved up for a down payment.

Would this be the best time to buy a home? Or should we wait 1 year to get a bigger down payment (we should have about $25,000 by then) in your opinion will the interest rates rise enough in the next few months that a bigger down payment wont make much difference?

Thanks for the question.  There tends to be a significant benefit to having at least 5% set aside as a down payment, so the answer to your question depends on how much you’re planning to spend on a home.  8k would be sufficient to purchase $160k home… If you can save just a little more, $10k works well for $200k purchase.  (There are options with even less than 5% down, they just aren’t as attractive.)

Obviously, a larger down payment is great, but unless you have a full 20% to put down the benefit is fairly negligible.  Regarding interest rates, they’re amazing right now, and I’m leery to project what they’ll be in the future.  I tend to think they’ll go up slowly over the next couple years, but we just don’t know.  One thing that I can say definitively though, is that prices are going up quite quickly right now, so if that trend continues you’d be better off buying this year.  Frankly, I’m more concerned that prices will rise over the next 6-12 months than I am that interest rates will change significantly.

– Jeremy

Jeremy Isaac is a local Realtor, but you probably know him better as Carrie’s husband.  Do you have a real estate question you’d like answered? Email Jeremy directly at jeremy@thecircagroup.com.

You can search the Colorado Springs MLS on Jeremy’s website, with no registration required to view homes, prices, addresses, or any other information. If you’re looking to sell your home, be sure to view his marketing portfolio and see how the use of HDR photography, professional video, and more will help your home sell for top dollar!

A reader writes:

My husband and I have decided that we are likely going to sell our house in the next year and a half. We have four kids and three pets and the same carpet that came with our house when it was built 16 or so years ago. As you can imagine, it is pretty awful at this point, even right after we get it cleaned. Do we replace the carpet now (so we can enjoy it), when we go to sell the house (so that it stays relatively clean), or do we not bother?

Yes, you’ll definitely want to replace the carpet.  I call this the “large surface rule” – Any surface that takes up a significant amount visual space is of paramount importance.  This applies first to flooring and walls, and then to things like counters, cabinets, windows, shower surrounds, etc.

The question of when to replace the carpet is a little more difficult.  Obviously, it would be nice to have some time so you can enjoy it, but if it gets dirty before you sell then you’re losing the benefit of what you paid for.  You’ll have to make that call for yourself.  As a Realtor though, I’d say error on the side of doing it just before you’re ready to sell.

– Jeremy

Jeremy Isaac is a local Realtor, but you probably know him better as Carrie’s husband.  Do you have a real estate question you’d like answered? Email Jeremy directly at jeremy@thecircagroup.com.

You can search the Colorado Springs MLS on Jeremy’s website, with no registration required to view homes, prices, addresses, or any other information. If you’re looking to sell your home, be sure to view his marketing portfolio and see how the use of HDR photography, professional video, and more will help your home sell for top dollar!

A reader writes:

We have a 1900+ sq.ft. house in Briargate. Its 3 bedrooms, 2.5 baths, ranch-style with a finished basement which is just a large family room. We now need to add a 4th bedroom in order to stay in our home. Naturally, we want to put it in the basement. Will this negatively impact the value of our home?

Also, we will have to move or remove our gas fireplace in order to accommodate this new room. For resale, would it be worth our while to go through the hassle of relocating the fireplace?

The short answer is that adding a 4th bedroom is usually a benefit when selling, but let me add a few caveats:

First, I’m assuming you have at least a 3/4 bathroom (sink/toilet/shower) in the basement already.  If not, you need one.  It doesn’t qualify as a bedroom if there isn’t a bathroom on the same level.

Second, a gas fireplace in the basement is nice, but typically won’t make or break a deal, so I wouldn’t worry too much about that.

Third, it is very important that the bedroom be done to blend in with the basement as a whole.  Properly done, no one should be able to tell that you added the bedroom after the rest of the basement was finished.  That means, try to match the trim, have the walls textured to match (if applicable), etc.  You also need to make sure any necessary permits are pulled because that comes back to bite people all the time when selling.

Fourth, don’t create an awkward layout.  The fact that you’ll have to move the fireplace makes me wonder about the space you’re working with.  If you make the basement awkward (albeit functional) it will hurt you when it’s time to sell.

So I guess in summary, adding a bedroom is a great idea as long as it’s done properly.  Done wrong, what could have been an asset turns into a liability.  I hope that helps!

– Jeremy

Jeremy Isaac is a local Realtor, but you probably know him better as Carrie’s husband.  Do you have a real estate question you’d like answered? Email Jeremy directly at jeremy@thecircagroup.com.

You can search the Colorado Springs MLS on Jeremy’s website, with no registration required to view homes, prices, addresses, or any other information. If you’re looking to sell your home, be sure to view his marketing portfolio and see how the use of HDR photography, professional video, and more will help your home sell for top dollar!

Shana writes:

I have a coat closet that shares a wall with the kitchen. I would like to convert the coat closet into a pantry. The door would open into the kitchen instead of at the top of the stairs (split level home). Is having a coat closet in Colorado important? Which is better for resale – a nice kitchen pantry in a smaller kitchen or a coat closet? Do people use coat closets for coats anymore? There are other storage areas in the home.

I would go with the pantry.  Having shown thousands of homes, I can tell you that buyers rarely even mention (or notice) a coat closet, but pantries are usually noticed and commented on.  IF a coat closet is noticed it will usually be on the way out the door, or after they’ve seen the whole house and they’re making a second trip through because they think the home is a possibility.  In other words, by the time they realize your home doesn’t have a coat closet, they’ve already decided if they like the house or not!

Do you have another place for coats?  Many homes have another area to hang coats when you come in from the garage which is actually a more practical location anyway.  In fact, this was the case in our home, and we recently tore out a coat closet in our living room to make the room larger, but we still have another place for coats.  If you have another place to put coats it makes your decision even easier – definitely do the pantry!

Either way, even if you don’t have a second location for coats, I wouldn’t hesitate to make the change if that is what you want for your home.  Having a pantry in lieu of a coat closet isn’t going to be an obstacle to selling, and may actually be a benefit.

– Jeremy

Jeremy Isaac is a local Realtor, but you probably know him better as Carrie’s husband.  Do you have a real estate question you’d like answered? Email Jeremy directly at jeremy@thecircagroup.com.

You can search the Colorado Springs MLS on Jeremy’s website, with no registration required to view homes, prices, addresses, or any other information. If you’re looking to sell your home, be sure to view his marketing portfolio and see how the use of HDR photography, professional video, and more will help your home sell for top dollar!