Smart Moves

For a full decade, a California social worker in her 60s rented out a Spanish-style town house in Arizona she bought as an investment. Through the pandemic, the place had steadily risen in value. But, foreseeing the end of the frothy seller’s market, she sold the town house this past summer.

“I’m incredibly happy I sold when I did. My retirement is just around the corner, and I really need to prepare financially. If I’d waited until fall, the sale wouldn’t have yielded the same profit I got this summer,” the social worker says.

Not all homeowners have timed their selling plans so perfectly. This fall, the market has slowed substantially due to rising mortgage rates.

“Even buyers able to qualify for a loan at current rates could feel frozen, waiting for mortgage rates to fall dramatically again,” says Skylar Olsen, the chief economist at Zillow, the national real estate company.

At this point in the economic cycle, some would-be sellers are waiting it out. But like the social worker, others have a compelling reason to sell promptly.

Whether your home sale is voluntary or involuntary, real estate specialists say it’s critical that you make agent selection a priority.

“Treat hiring an agent as seriously as you would hiring any professional -- including an attorney, an accountant or a surgeon,” says Eric Tyson, a personal finance expert.

Tyson, the co-author of “House Selling for Dummies,” says it’s “all too common” for owners to take a casual approach to hiring a listing agent.

“In many cases, people just make a random selection --picking an agent whom a friend or co-worker knows. But selling success depends on due diligence,” Tyson says.

Ron Phipps, a real estate broker and former president of the National Association of Realtors (nar.realtor), says more owners are gradually getting the message about the importance of careful agent selection.

“It used to be that a lot of people would just call a family member who happened to have a real estate license. But now, many sellers search more widely,” he says.

Here are a few pointers for sellers:

-- Seek to interview at least two to four candidates.

Without interviewing other contenders, you may be tempted to hire the first agent who comes recommended. But Phipps says it’s still wise to interview numerous candidates.

“When you talk to several people, you’ll get different perspectives on your sale,” Phipps says. “Several opinions on pricing can be especially helpful.”

He says you should be wary of any agent who suggests you list your place for more than 10% above what others say is its fair market value.

“Find out how they arrived at that higher price,” says Phipps, noting that occasionally some agents may suggest an above-market-list price to flatter you into hiring them. This practice is known as “buying the listing.”

“It’s a shortsighted listing strategy,” Phipps says.

-- Zero in on local knowledge.

Your uncle or that highly recommended friend-of-a-friend might be an excellent real estate agent. But should you consider hiring this person if their office is located a significant distance away from your place?

Absolutely not, says Tyson, who contends that a faraway agent is likely to be much less effective in marketing your property than one who knows your local turf well.

“Anyone who works more than a 15-minute drive from your place is probably a very poor bet. Geography matters a lot,” he says.

It’s especially wise to have an agent close by if you’re trying to sell a property in a city setting -- such as a condo in a high-rise building. In such a case, the ideal agent is typically someone with proven experience selling units in your same building.

“Agents with an intimate knowledge of the floor plans and sales history of your complex can hit the pricing target right the first time. That spares you the agony of multiple pricing adjustments later,” Tyson says.

Realtors call the area where they most often sell homes their “farm.” As Tyson says, agents who say they farm your area should be able to demonstrate this with a list of transactions they’ve done there recently.

-- Ask for data on a candidate’s awards and honors.

How can you identify agents who have achieved an unusual level of expertise? Phipps says one way to do so is to ask if they’ve been elected to positions of leadership within their professional groups.

“This shows they have a reputation for collaborating with other real estate people,” Phipps says. That’s important because real estate is a cooperative profession, and a successful sale typically involves more than one agent.

-- Choose an agent with a proven deal-closing record.

During boom times, most sellers feel comfortable once they’ve obtained a ratified contract -- meaning their deal has been agreed upon by both sides of the transaction.

But in a transitional period like the current one, many sellers are understandably nervous that complications along the way to closing might jettison their deal. That’s because qualifying for a mortgage is trickier than it was prior to the recent increase in mortgage rates. Consequently, more home loan applications are declined than before.

“Selling has become much more complicated. So, it’s smart to find an agent with experience handling many different kinds of transactions. Look for their record of closing deals, not just taking listings,” Phipps says.

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

The stunning rise in mortgage rates coupled with shocking rent increases have compounded the gloom experienced by many tenants who wish to escape their apartments by purchasing a property of their own.

But real estate specialists see some surprising positives for the current generation of first-time buyers.

“We’re finally seeing some rebalancing of the formerly ultra-strong seller’s market -- including seller concessions and a softening of inflated prices,” says Rich Harty, an independent realty company owner.

Harty cites the case of one tenant who was driven to buy after getting hit with a proposed $400-a-month rent increase on his Chicago-area apartment.

“My client wanted to stabilize his monthly expenses. Luckily, he was able to negotiate a good deal on a small townhouse with a nice little garden. The townhouse had been vacant for several months, and the seller was highly motivated,” says Harty, who works solely with buyers.

Harty says more owners are now willing to bargain with purchasers, especially if their property has been sitting vacant for an extended period and they have a compelling reason to move.

Many wannabe buyers are nervous about buying a place that’s lingered on the market for many days. Yet Sid Davis, the author of “A Survival Guide for Buying a Home,” says many vacant homes that languish unsold for a long period have simply become stigmatized because they were overpriced when first listed.

“There will be a whole lot less competition for a property that’s gone vacant, raising the suspicions of all the buyers searching that market. You probably won’t have to scramble with rivals the way you would for a well-staged home that’s not vacant,” Davis says.

Still, he cautions that buyers considering ownership of a long-vacant house should seriously investigate why it’s been sitting vacant and unsold.

“There’s always a reason, and it goes without saying that you darn well better find out what that reason is before going forward. Your risk, though small, is that there could be something gravely wrong with that house,” Davis says.

Here are a few pointers for buyers pondering the purchase of a vacant home:

-- Seek out information on the home’s owners.

It’s tough to gain details on a house that’s been vacant for months if its owners have already moved away --perhaps due to divorce, ill health or a job transfer.

To learn the unvarnished truth about a vacant property, your best sources are often neighbors, says Dorcas Helfant, the broker-owner of several Virginia-based realty firms.

“Neighbors often have an irresistible urge to tell everything they know about a vacant house on their block -- even if it’s against their personal interest to do so,” says Helfant, a former president of the National Association of Realtors (nar.realtor).

-- Consider doing a “pre-inspection” on a vacant place.

Perhaps the property you like has gone unsold for so long that you’re nervous about hidden defects. In such cases, Merrill Ottwein, a veteran broker who specializes in finding property for those in the military, suggests you have a pre-inspection.

He tells the true story of one of his clients, an Air Force colonel who wanted to learn more about a handsome ranch-style house that had gone vacant a few months before he spotted it. The house was listed at $50,000 below other comparable homes in the same neighborhood, and he wanted to know why.

At Ottwein’s recommendation, the colonel spent $200 for a very brief home inspection. This revealed that the house had a serious crack in its foundation. As a result, he walked away from the property and bought a two-story place in the same neighborhood that proved a better choice, even though it was marked $30,000 higher.

Why is it sometimes wise to hire a home inspector to check a property before (rather than after) you’ve submitted your bid?

“If you decide to go through with the purchase, a pre-inspection will let you bid based on findings from the inspection. Alternatively, you can back out without complications,” Ottwein says.

-- Examine local sales data before making a final offer on a vacant home.

“Don’t put in a bid until you and your agent take a good look at the recent sales history of the area. It’s always smart to be vigilant to avoid overpaying,” Helfant says.

To get a handle on values, you and your agent should examine at least three similar properties that have sold in the immediate area in the past three to six months -- adjusting for differences, such as a larger kitchen or a kitchen with brand new cabinets, appliances and quartz countertops.

But Helfant cautions against seeking out-of-proportion discounts to make up for minor shortcomings in a vacant house.

“In many areas, sellers are still in a relatively strong position, due to high demand from younger buyers in the millennial generation. In areas where owners remain in the driver’s seat, you don’t want to get picky about little issues like a spot on the carpet or a bedroom painted a color you find unpleasant. These days buyers who let their emotions get the best of them can still easily become losers,” she says.

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

Right after returning from an Independence Day vacation, the parents of two toddler boys put their petite bungalow on the market, with high hopes for a quick sale because the place is located in a coveted suburb. But despite a price cut, they’ve yet to receive a single offer.

“We thought we were selling into a red-hot market. Our boys are growing like weeds, so we really need a bigger house. But at this point, we’re disenchanted about our plans to trade up, because our place is just sitting unsold,” says the father, a college professor.

The couple don’t blame their listing agent, who has gone to great lengths to promote their sale. Rather, they blame the abrupt rise in mortgage rates, which has eroded the buying power of would-be purchasers.

“During the pandemic, every house in our neighborhood was snatched up within minutes of the first open house, if not before. But all that’s changed,” the professor says.

Joel Berner, a senior economic analyst for Realtor.com, the home listing company, says new data validate the professor’s assertions about the cooling market and buyer limits.

“Uncertainty has made its way into the minds of buyers, as 31.8% now don’t know when they want to buy,” says Berner, noting that for-sale properties are lingering unsold for five more days than at this time last year.

For the couple with the two toddler boys, living for a longer-than-expected time in a property they’re attempting to sell presents many challenges. But real estate specialists say it’s essential that owners keep their domain show-worthy until it’s ultimately sold.

“Unfortunately, you can’t relax your standards for cleanliness and order until you’re sure you have a solid transaction,” says Eric Tyson, a personal finance expert and co-author of “House Selling for Dummies.”

Here are a few pointers for sellers:

-- Try to prepack to the extent possible.

Vicki Norris, a professional organizer and former real estate agent, knows how hard it can be to keep a house in prime showing shape. It’s especially difficult for people who are working from home or selling involuntarily.

“Sometimes life takes people off track, and they get unusually disorganized. Then it’s twice as hard to keep their home in good condition for a sale,” says Norris, who runs her own consulting firm, Restoring Order (restoringorder.com).

To limit upkeep demands during the showing period, Norris recommends that sellers clear through their clutter in advance of putting their place on the market. Throw away or donate any items you don’t intend to keep and place the remainder in neatly stacked boxes in your garage or other storage area.

-- Consider hiring a cleaning service.

Are you sloppier than the average homeowner? If so, it might be wise to pay for what real estate agents call a “super-duper cleaning.”

“If you start with a professional cleaning at the beginning, you’ll have an easier time keeping your house tidy all the way through to your sale,” says Sid Davis, a real estate broker and author of “A Survival Guide to Selling a Home.”

Though it’s likely to cost over $100, he says a single in-depth cleaning could hold you for more than a month before another in-depth cleaning job would be necessary.

“Sorry to say that hiring a cleaning crew won’t spare you the need for routine upkeep. This will be no substitute for keeping your dishes washed and your bathroom toiletries put away. But it’s still a big step,” Davis says.

-- Seek to get everyone in your household to cooperate.

After a home has sat unsold for more than a month, those who live there can easily lose focus and slip back into their bad habits.

"The problem is that keeping your house in show condition is not a relaxed way of living, so people get tired of it,” Davis says.

According to Ashley Richardson, an agent affiliated with the Long & Foster realty firm, it can be especially tough to ensure that children’s rooms are kept orderly and that their toys are put away.

“The parents may need to clean their rooms for them. Alternatively, to get the kids to do it themselves, you might need to bribe them with pizza or a dinner out,” she says.

-- Accept the reality that selling is stressful.

Donna Goings, a realty company broker-owner, says homeowners who earnestly want to sell should “keep their houses looking good enough to appear in a magazine.” But she cautions that even picture-perfect properties that are fairly priced can languish unsold for a lengthy period through no fault of their owners.

“Sometimes, there’s no rhyme or reason why a particular house won’t sell for a long time. Even if you make the house beautiful and set the price right, it could stay on the market for months,” Goings says.

Richardson advises her clients to avoid dwelling on critiques of their property.

“Buyers are more candid than they were in the past, and sometimes can be quite blunt in their feedback after a showing,” Richardson says.

To limit your exposure to unfiltered and discouraging negativity about your home, she suggests you tell your listing agent to filter out all pointlessly critical comments about your place.

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