Smart Moves

Leading housing economists caution against overconfidence on the part of anyone hoping to do a real estate deal in the upcoming year.

“After being overwhelmed in the housing frenzy of the recent past, homeowners, sellers, buyers and renters may be underwhelmed in 2023,” says George Ratiu, manager of economic research at Realtor.com, the home listing service.

He foresees a further slowing in sales transactions due to the surge in mortgage rates that began this year. He also predicts that, at long last, the market will finally tip in favor of buyers.

One category of sellers who should pay special attention to the cautionary words of economists are those who hope to soon market a property in the top 5% of their local price range.

“Testing the market on price is a terrible idea for any sellers, but especially for those with an upscale property. While it’s true that buyers of high-end homes have more discretionary funds for bidding, that doesn’t mean they’re willing to overpay,” says Eric Tyson, co-author of “Selling Your House for Dummies.”

Stacy Berman, an agent who sells property in the Washington, D.C., region, says the buyers of expensive homes are typically insistent that all repairs be done by the owners before they’ll close on a purchase.

“These buyers know the value of their money, and they expect high levels of service. They are not going to accept a house with such minor issues as malfunctioning garage doors or unfilled exterior holes caused by carpenter bees,” Berman says.

She urges the sellers of luxury properties to ensure that all repairs are completed before staging their place for sale.

Here are a few other pointers for the sellers of high-end homes:

-- Choose a seasoned listing agent.

Many real estate agents have the expertise to market average properties. But relatively few have experience selling upper-echelon homes, says Joan McLellan Tayler, the author of several real estate books.

“Upscale communities are totally different marketplaces than average communities. This is no place for beginners,” she says.

When looking for an agent, seek someone with a network of friends and associates who travel in affluent social circles.

How can you create a shortlist of qualified agents?

“I recommend you count on referrals to screen candidates. Word-of-mouth recommendations should overtake all other factors,” says Tayler, who long headed a San Francisco-area realty firm.

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

“Request details on their marketing plans and how they’ll follow through to finally close a sale,” Tayler says.

-- Consider pricing your place by consensus.

The sellers of a cookie-cutter home in a tract subdivision normally have an easier time setting their list price than do those who own a luxury place, says Mark Nash, a longtime real estate broker and author of “1001 Tips for Buying and Selling a Home.”

“Most estate homes are one-of-a-kind custom properties. So it’s harder to figure out the right price tag to hang on them,” he says.

As a basis for pricing, the owners of any for-sale property should analyze the results of comparable recent sales. But, as Nash says, 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,” he 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.

“Given the difficulty nowadays of selling a very large luxury home, you really have to resist the temptation to price high. The buyers of these houses may have money. But in this market, they will still demand a deal,” he says.

-- Stress the quality of your local public 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.

-- Emphasize curb appeal.

Obviously, one common motivation for those planning to buy a luxury home is the opportunity to impress friends and family with the grandeur of their residence. Therefore, owners seeking to sell a high-end home should address this reality, Nash says.

A handsome front door with polished brass hardware and meticulously pruned shrubbery -- such as topiary gardens -- 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 spending the money to put in a 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.)

All over the country, aspiring home sellers are kicking themselves for failing to put their property on the market during the pandemic, when owners reigned supreme. That’s when multiple offers were the norm, not the exception, and eager buyers sought to outdo each other with escalator clauses that pushed prices over list.

Yet smart sellers should keep perspective on the current, more balanced market, “which continues to offer them many positives,” says Stacy Berman, a real estate agent who’s sold homes for more than two decades.

“You may not get the super-escalated price available to you during the pandemic, but you’re going to get a good deal on the next home you buy,” Berman says.

Danielle Hale, the chief economist for Realtor.com, the home listing service, doesn’t anticipate a major decline in home values. Rather, she says “price growth is slowing moderately as the housing market resets in a relatively balanced fashion.”

List prices are down in most parts of the country, it’s true. But homeowners who choose to sell this winter, either before or after the holidays, should fare relatively well, according to Lawrence Yun, chief economist for the National Association of Realtors (nar.realtor).

“The upcoming months should see a return of buyers, as mortgage rates appear to have already peaked and have been coming down since mid-November,” Yun says.

Berman insists that in most parts of the country, the winter months are typically a favorable period to sell. Demand has been especially strong in recent years, given that so many young adults have entered their prime home-buying years. This population cohort includes a large number who failed to score a purchase to date in 2022.

“Pent-up demand remains excellent for sellers, especially among first-time buyers,” she says.

Here are a few pointers for those who want or need to sell in the near future:

-- Consider the advice of pros in the real estate field.

Sid Davis, author of “A Survival Guide to Selling a Home,” notes that those wishing to sell during the holiday season are especially likely to challenge the counsel of the listing agent they hire. Often, they want to set a higher price for the property than their agent recommends. They’re also inclined to question the need to spend for pre-sale home improvements.

But those who are determined to sell in the near future should try to avoid such conflicts. The best way to do so is to carefully select a listing agent you trust to give you the best possible advice.

“Look for an agent who is thoroughly familiar with property values in your area. Try to find someone who has sold homes there for at least two to three years. Also, ask for references and then question former clients about whether the agent’s advice proved sound,” Davis says.

-- Clarify your timing priorities if selling in December.

Many people are unusually busy in December, when holiday-related activities crowd their already hectic schedules. But because home-sale preparations can eat up many hours, Davis suggests that sellers on a tight deadline consider simplifying some of their holiday plans.

“You’re going to have to triage. Over the long run, it’s probably a lot better for your pocketbook to put your heart and soul into selling rather that expending all that energy on ultra-fancy holiday arrangements,” Davis says.

-- Don’t cancel your plans for holiday decor.

Though it’s never necessary for sellers to decorate extensively for the winter holidays, a simple and elegant type of décor is not a bad idea, assuming it’s tastefully done.

“Go ahead and put up lights and bring in holly and evergreen boughs if that’s what you normally do. You can also use a Christmas tree if you’d like, but don’t get one so big that it makes your place seem crowded,” Davis says.

-- Ensure that your home is accessible for as long as it’s on the market.

These days many prospective buyers are able to wrap up their property search quickly because they preview property on the internet.

“Most buyers are doing a huge amount of pre-screening on the internet before they even set foot in a single place. People are extremely web-savvy, and prior to a property tour they’ve already done an extensive review of the available homes,” Davis says.

What does this mean for wintertime home sellers? He says this makes it imperative that your home be available for showings every day and that you don’t let holiday activities block access to potential buyers who may be home shopping for just two or three days.

“A big penalty is inflicted on those who refuse to let prospects into their home when it’s inconvenient. You’ve got to keep your home accessible or risk missing some of the most eager buyers of the year -- people who have to make a major move during the first quarter,” Davis says.

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

It was four years ago this month when a musician and his wife, a pharmaceutical company manager, happened upon a Victorian house that thrilled them. Built in 1901, the place featured high ceilings as well as classic moldings and built-ins. Also, it was set on a full acre lot on a restful roadway.

“They loved the house but because this was before the frenzied pandemic-era seller’s market, they could take their time mulling over the purchase. Then, after their bid, they could hire a home inspection firm -- which ultimately led to a price reduction due to the discovery of roofing and electrical problems,” says Rich Rosa, the real estate broker who represented the couple.

Rosa, who co-owns a realty firm with 18 brokers, says current buyers are once again able to enjoy the benefits of a more balanced real estate market.

“Of course, mortgage rates will continue to stay high until the Federal Reserve beats inflation out of the economy. But that problem won’t last forever, and in coming years you can refinance when rates come back down,” says Rosa, who since 1997 has refinanced his own mortgage 17 times.

He discourages those with stable jobs and down payment funds from staying on the sidelines if they’re able to afford a first home in the near future.

“Don’t try to time the market if you’re in a position financially to buy now and intend to stay in the same house for five to seven years,” says Rosa, president of the National Association of Exclusive Buyer Agents (naeba.org).

Of course, many renters are not currently in a good position to buy a home. Realistically, they must wait until mortgage rates moderate and inventories loosen.

“It’s OK to stay on the sidelines for a matter of months, so long as you use the time to get your ducks in a row and that includes contacting more than one mortgage lender to learn about available home loan programs,” Rosa says.

Here are a few pointers for would-be buyers:

-- Inform yourself on mortgage products.

The mortgage market is always evolving. In addition to the traditional 30-year fixed-rate mortgage, new loan products are constantly developed by the industry.

Most mortgage innovations involve adjustable rate mortgages of one type or another. But they can differ dramatically relative to their names, terms and conditions.

“It’s always a good idea to know what you want before you start shopping around for a mortgage,” says Keith Gumbinger, a vice president at HSH.com, which tracks home loan markets across the country.

He says first-time buyers need as much lead time as possible to educate themselves on mortgage basics, to cull through alternative home loan choices and to compare lenders and rates.

“One way to learn is through internet resources,” says Gumbinger, who suggests mortgage shoppers seek consumer information through his firm’s website.

Of course, most home loan applicants now favor traditional fixed-rate mortgages. But Gumbinger says buyers who expect to stay in the home they buy for a relatively short time might also consider a so-called “hybrid loan,” in which the interest rate stays firm for three to 10 years before adjusting to market levels.

-- Insist on an in-person meeting with at least one mortgage lender.

Gerri Detweiler, a consumer finance expert and author of “The Ultimate Credit Handbook,” encourages first-time buyers to seek a lender who will instruct them on the intricacies of home loans.

“A reputable mortgage lender should spend at least 30 to 60 minutes with you on the fundamentals and should help you to begin fixing flaws on your credit reports,” Detweiler says.

How do you find a sympathetic lender?

Gumbinger says real estate agents are usually a good source for names. But he says you should look beyond their suggestions.

“Besides that co-worker from your office, ask friends and family who’ve bought homes lately,” he says.

-- Prepare in advance for in-person meetings.

To streamline the process, there’s no substitute for gathering key documents in advance of your meeting. Ideally, these should include recent pay stubs, your latest W-2s and a couple of years’ worth of federal tax returns, as well as bank and savings account statements.

“It makes sense to find these documents up front because you’ll need to provide them eventually anyway. Also, they’re necessary to help your lender set the upper limit on how much you can afford, a process known as pre-approval,” Gumbinger says.

By providing these documents early, your lender can quickly calculate your top borrowing limit and also assess your eligibility for various lending programs.

“Once you’ve found a house and are ready to apply for a loan, having had this tutorial will clarify your situation,” Gumbinger says.

What if the lender you contact resists your request for a tutorial? If so, he says you should move on to another lender.

“You deserve to have your questions answered -- and in human language, not mortgage industry jargon,” he says.

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