Selling a home in an uneven market
Sales of previously owned houses are sluggish, and presale improvements debatable.
Before the real estate bubble burst a few years back and exposed the financial sins of so many people, home sellers often spent serious money to attract those much-desired buyers.
"Before the downslide in 2008, we used to encourage sellers to put in new kitchens, new bathrooms," said Frank Blumenthal, a Realtor with Keller Williams in Abington. "It was worth the outlay of money to do that."
But what should a home seller do today? The market hasn't been decisive: New-home construction was up nationwide in November, for example, but the sale of previously owned homes continued to slow.
Reasons for the latter segment's sluggishness are myriad, but the primary one, some market observers say, is there simply are not enough houses for sale. Many homeowners' mortgages are underwater, and they're waiting for their houses to increase in value.
Interest rates started to rise even before the Federal Reserve's recent announcement that it will start cutting back on bond purchases. And though the number of houses in some stage of foreclosure has been falling nationally, it's still high compared with pre-recession levels.
These days, Blumenthal doesn't want his clients even picking up a paintbrush - because of interest-rate unpredictability. In the time it takes a seller to finish painting, on top of decluttering, cleaning and so on, he said, interest rates could go up. The house's value could slide, and the cost to buyers could rise.
"I am telling people, 'Get out there.' The market is not getting better." As for those who are underwater, they have a long wait to gain equity, he said.
Many apparently trust Blumenthal's approach: This year, he said, he has sold homes, on average, in 30 days. By comparison, 84 days was the average time on market for homes in the Philadelphia region during the first nine months of 2013.
"Blumenthal's approach does sound pretty reasonable to me," said Abbe Will, a research analyst for the Joint Center for Housing Studies at Harvard University's Leading Indicator of Remodeling Activity. "I think people . . . are looking for those deals, even though [the house] might need work. . . . They are looking for value."
Not everyone agrees with Blumenthal's reading of the real estate tea leaves, however.
Linda Amsterdam, a Realtor with Berkshire Hathaway Home Services Fox and Roach, said she tells clients to find out who the buyers are in their market and what is important to them. Though that information, by itself, will not provide "a pat answer," she acknowledged.
"What a buyer is looking for in a $700,000 home is different than in a $100,000 house," she said. Sellers need to study the market, and their locations.
Amsterdam, who sells in Center City, wants her clients to paint: "Oh, yeah, absolutely . . . it makes a big difference." But do they listen?
Not all, she said; many consider it a hassle. They haven't prepared themselves emotionally for sales prep. They believe it's a "huge invasion of privacy."
"If the house is priced right and in good condition, it will sell almost immediately when they take the advice exactly, that is how strong demand is," she said. Otherwise, the house will sit for six months, maybe longer.
Buyers watch too much HGTV, Amsterdam said: "They're totally unrealistic. They want new to nearly new." Housing stock in the Philadelphia area is mostly old, she said: "It's tired, and you have to do what you can to make it better."
Blumenthal has no problem with old. "Houses that look best and price best sell first," he said. "Just because it's dated doesn't mean it won't sell."
That said, there are some general improvements that sellers can make, said Drew Miller, of Drew Miller Custom Builder in Collegeville. Among them: fixing screens; making sure windows work; caulking bathtubs; changing hinges in bathroom and kitchen, and painting registers.
"The key to anything with real estate is to keep potential buyers on as large a list as possible," said Paul Bondy, of Exit Realty in Ambler. "Everything you do to a home that becomes specific, you may cut out a buyer."
Make sure all windows work.
Caulk bathtubs, especially the base around the shower.
Change heat, ventilation and air-conditioning filters.
Change hinges in the bathroom, kitchen.
Paint HVAC registers.
Clean the tops of door trims and ceiling fans.
Clean switch-plate covers.
Be sure appliances work.
Clean kitchen hood, filters and bathroom exhaust fans.
Clean the dryer vent.
Source: Drew Miller Custom Builder