Smart Moves

Many homeowners intent on selling a luxury residence in the near future are watching economic indicators nervously. They fear a possible recession could undermine their odds of a successful sale.

But housing economists offer calming projections for such sellers. They say it’s unlikely the next recession will cause home values to drop as they did during the Great Recession of a decade ago. The only impact would likely be to slow the velocity of sales.

Sarah Mikhitarian, a senior economist for Zillow, which tracks real estate markets throughout the country, has reassuring words for sellers intending to liquidate a luxury property in the near future.

“Yes, economists largely agree that a recession is on the horizon within the next year or so. But home values shouldn’t be heavily impacted this time,” Mikhitarian says.

The major reason the next recession will likely have less impact on housing is demographics. The millennial generation of buyers, who are now in their mid-20s to late 30s, are currently moving into their prime home-buying years.

Of course, relatively few young adults can afford a luxury property in a high-demand area. But those who can don’t have as many properties from which to choose as did upmarket buyers making a purchase prior to the last recession.

Still, Mikhitarian cautions luxury homeowners that it could take longer to sell their property in coming months, due to a weakening economy.

“Don’t stress out if your home doesn’t sell right away,” she says.

Here are a few pointers for those seeking to sell a high-end home in the near future:

-- Engage an agent who specializes in luxury home sales.

Many real estate agents have the expertise to market average properties. But fewer have experience selling upper-echelon homes, says Mark Nash, a real estate analyst and author of “1001 Tips for Buying and Selling a Home.”

In searching for an agent, he recommends you look for someone with a network of friends and associates who travel in affluent social circles.

“Word of mouth is a huge element of success when it comes to selling expensive property,” Nash says.

How can you find the appropriate agent to help sell your luxury house?

“There’s no substitute for strong referrals. Try to find people who’ve been successful selling a high-end home and ask who they hired to represent them,” Nash says.

After you’ve assembled a short list through references, he says you should do in-depth interviews with all the agents on the roster before making your final selection.

“Request details about their marketing plans and how they’ll follow through to close a sale,” says Nash, noting that buyers of high-end houses typically expect more help with their housing transitions than do average purchasers.

-- Evaluate various pricing opinions.

As a basis for pricing, the owners of any For Sale property should analyze the results of comparable recent sales. But home sellers in the upper echelon usually need to make more adjustments.

“Don’t just rely on your one agent for a recommendation on the appropriate list price. Ask the agent to draw colleagues from the same office into the discussion and maybe their broker, as well. That way you’ll get more of a consensus on the correct price,” Nash says.

If in doubt on the appropriate price for your luxury home, Nash says you should move to the lower end of the suggested range.

“Because of the changing market, you really have to resist the temptation to price high. The buyers of these houses may have money. But they always seek to negotiate a good deal for themselves,” he says.

-- Underscore the quality of your local schools.

Though it’s not universally the case, most luxury home communities are served by public schools with good reputations. Also, many are within a short drive of private schools that are widely admired.

Given that school quality is important to buyers in all income categories, make sure the marketing materials developed to sell your home highlight statistics that show the strength of the local schools.

“Also list the tuition costs for the nearby private schools to show potential buyers how much they’d save if they sent their kids to public schools. Many people appreciate a bargain in education,” Nash says.

-- Put a huge emphasis on curb appeal.

A handsome front door with polished brass hardware and meticulously pruned shrubbery are status symbols that matter for many high-end buyers.

Though no home seller should expend a fortune to make a property more appealing to prospects, a sizeable investment in curb appeal could help hasten the sale of a luxury home.

“In some rare cases, even investing in that circular driveway with the fountain in the middle could be justified if it gives your house killer curb appeal,” Nash says.

(To contact Ellen James Martin, email her at ellenjamesmartin@gmail.com.)

At age 30, Gabrielle Bosche and her attorney husband are content living in a rental apartment in Fairfax, Virginia, where they enjoy a handy fitness facility within their building. But like many young adults, they’re keen on homeownership and soon intend to buy a townhouse in the same area.

Bosche, who heads a consulting group on millennial issues, says that in their preference for an affordable townhouse over a detached property, she and her husband are typical of many in their generation who enjoy a more communal lifestyle than did their baby boomer parents.

“Millennials ... (are) steeped in social media but want authentic interpersonal relationships. That’s why living in a close townhouse community is very comfortable for them,” says Bosche, the author of “Five Millennial Myths.”

Marc Angelo, a real estate broker in Portland, Oregon, says his millennial clients would rather buy a diminutive townhouse in a lively city neighborhood than an equally priced but much larger detached property 10 miles outside the city.

“Young buyers want to live around people with energy and ideas, a place where they can walk to a grocery store and restaurants. To get all that at an affordable price, a townhouse can be the perfect solution,” Angelo says.

But he cautions buyers to make sure they don’t choose a city neighborhood that’s noisy and crowded on weekend evenings.

Here are a few other pointers for buyers focused on the purchase of an urban townhouse:

-- Screen for a townhouse with an expansive interior.

Nowadays, most buyers strongly favor an open, airy and bright house. But many townhouses, especially older ones, have relatively few windows and are narrow from side to side and deep from the front door to the back, says Tom Early, a veteran Ohio real estate broker.

“To get a more open feeling, try to find a townhouse that’s wider than average. Also, look for one where the rooms are square rather than rectangular, with larger-than-average windows. However, remember that big windows typically translate to higher energy costs,” says Early, a past president of the National Association of Exclusive Buyer Agents (naeba.org).

Another way to obtain a more open, airy feeling in a townhouse is to buy one with high ceilings.

-- Don’t overlook the importance of ample parking.

Newer townhouses are typically built to give each unit a one- or two-car garage. That means your own parking needs should be met. But what about the visitors to your home?

“It’s important for townhouse owners to feel confident that their friends and family members will not face lots of hassles when they come over to visit,” Early says.

He recommends that the best way to scope out the parking situation near a townhouse is to ask those already living there about their experience with parking in the common areas of the complex.

“You should get unvarnished opinions about all the pros and cons of life in the community through informal conversations with the neighbors there. It can be particularly helpful to go back to the area without your real estate agent at your side,” Early says.

-- Search for a convivial townhouse community.

It’s a fact of life that in nearly all townhouse communities, residents are bound together through membership in a residents' association. As Early says, the quality of leadership in that group can make a major difference for residents.

"The point is to search for a community where people can reach consensus harmoniously, rather than through arguments and petty disagreements,” Early says.

Those who bond together in a well-functioning association set aside money for major expenses, like the replacement of a roof or renovation of a pool house. Otherwise, everyone living in the community could be hit with a special assessment, which can mean a large addition to your monthly homeowners’ fees.

To investigate the operations of a townhouse association, Early suggests you ask for minutes of its last three meetings to see if major disputes are brewing within the organization.

“The last thing you want is to live in a community where everyone is squabbling over minor issues or large ones,” he says.

-- Don’t sacrifice a good location when you buy.

It can be tiring to hear that location should beat all other factors when it comes to the selection of real estate. But this principle remains true, says Eric Tyson, a personal finance expert and co-author of “Home Buying for Dummies.”

What constitutes a location where you can reasonably expect strong or rising property values? Tyson urges you to look for a neighborhood served by high-quality public schools, even if you have no plans for children.

Even those who would prefer a detached house might consider buying a townhouse in a coveted city neighborhood if that’s all they can afford there. That’s because over time, as Tyson says, you can anticipate that the townhouse in the premier area will be a better investment than a traditional single-family home in a weaker area.

“For real estate, one reality remains constant through time and economic cycles. That is that location tops all other factors in defining value,” Tyson says.

(To contact Ellen James Martin, email her at ellenjamesmartin@gmail.com.)

It’s not exactly a tsunami, but real estate pros say there’s finally a growing wave of baby boomers letting go of their family homes and moving into smaller housing units, usually condos.

“From the point of view of price, it’s an absolutely fabulous time to sell one house and buy a smaller place,” says Stacy Berman, a longtime real estate agent in Washington, D.C.

Take the case of a retired social worker who’s about to relinquish ownership of the three-bedroom townhouse she’d hung onto for more than 20 years. The property is expected to sell for twice the value of the condo she intends to buy in a gated retirement community nearby.

“We anticipate a feeding frenzy for this townhouse among young families because it’s in a neighborhood with five-star schools that kids can walk to,” says Berman, the social worker’s listing agent.

Economists say there are multiple reasons why this is an opportune time to sell an affordable home in a popular community where property is still in short supply relative to demand among young adults. That’s because many from the millennial generation, who postponed marriage and child bearing, are now better positioned to buy. Meanwhile, more boomers have become eager to downsize.

Frank Nothaft, the chief economist for CoreLogic (corelogic.com), a California-based provider of global property information, says that many potential sellers are better off financially than they were in the years after the Great Recession.

“Also keeping the home-sales market humming is the fact that mortgage rates continue to hover near historic lows, a major factor intensifying demand among buyers of all ages," Nothaft says.

Though it’s a fortuitous time to sell in many affordable neighborhoods favored by young families, real estate specialists say it’s nearly always better to close on the sale of one property before buying another rather than making the purchase conditional on the sale.

“You can bargain more strongly if you’ve already liquidated the old property,” says Berman, who sells homes for the Long & Foster realty company.

Here are a few pointers for those planning to sell:

-- Try to obtain a realistic assessment of your home’s value.

As always, a minority of real estate agents might try to flatter you into hiring them by suggesting your property is worth more than it truly is, says Dorcas Helfant, a former president of the National Association of Realtors (realtor.org).

“You don’t want a fantasyland answer about your home’s value. You want your agent to be brutally honest -- to give you ‘tough love’ when it comes to the value and condition of your place,” says Helfant, the co-owner of several Coldwell Banker realty offices.

One way to increase the odds of finding a realistic listing agent is to interview at least three prospects. Ask each to do a “comparative market analysis” on your property, using recent data from similar home sales in your neighborhood as a basis to set the appropriate list price.

-- Rely on data to calculate your sales prospects.

Beside the location and condition of your home, another factor could strongly influence how much cash you’ll receive if you were to sell: neighborhood competition.

“Statistics on inventory levels are a meaningful way to determine the strength of demand in your neck of the woods,” Helfant says.

For instance, if there’s a three-month supply of unsold homes currently for sale in your market, you can expect to wait longer (and receive less in proceeds) than if there’s only a one-month supply.

Helfant recommends you ask your listing agent to give you a graphic showing fluctuations in inventory levels for your immediate area over the last six to 12 months. Also, ask for a similar chart showing what percentage of list price, on average, sellers have been receiving.

“In a strong seller’s market, you should expect to get at least 95 percent of your asking price and this gap should be narrowing rather than widening,” Helfant says.

-- Don’t let fear keep you from actualizing your home-selling plans.

As always, the real estate market is buffeted by economic trends related to both supply and demand for property and local employment conditions. Prices fluctuate continuously. This causes some potential sellers to delay their sale in hopes of a greater reward at the bottom line.

The current period, when consumer sentiment is still high, could be a good time to put your place up for sale. Yet there are no guarantees of timing, even now.

Those who’ve worked in the real estate field for many years know it’s tricky to time your home sale to your advantage and that a delay could hurt you on price as well as help you, should the economy slow.

“Trying to outsmart the market is usually a fool’s game. It’s nearly always better to time your housing transition to suit your personal plans and preferences,” Helfant says.

(To contact Ellen James Martin, email her at ellenjamesmartin@gmail.com.)