Speaker 1: It's a seller's market in real estate for sure. Still,
Speaker 1: there are plenty of big mistakes that you can make
Speaker 1: as a seller that cost you a ton of money.
Speaker 1: Some people price their houses too high. They see their
Speaker 1: neighbor's home selling for a lot more last year than
Speaker 1: this year. There are many ways to mess up the
Speaker 1: sale of a house. What's a potential seller to do?
Speaker 1: As it turns out, there are some steps you can
Speaker 1: take to make the sale go smoothly as possible and
Speaker 1: still get top dollar for the sale of your home.
Speaker 1: I'm Barry Ridolts, and on today's edition of At the Money,
Speaker 1: we're going to discuss how to sell a home in
Speaker 1: today's market. To help us unpack all of this and
Speaker 1: what it means for your home sale, let's bring in
Speaker 1: Jonathan Miller of the real estate appraisal and data firm
Speaker 1: Miller Samuel. For the past thirty seven years, Jonathan's monthly
Speaker 1: in Totally Housing Sales and Rental Reports have been must
Speaker 1: read within the real estate industry. They've made him the
Speaker 1: most quoted man in all of real estate. So Jonathan, good.
Speaker 2: To have you back. Great to be here.
Speaker 1: Last time we talked about how to buy a house
Speaker 1: Now we're going to discuss how to sell a house.
Speaker 1: And before we get into the details, I just have
Speaker 1: to point out twenty twenty twenty one, twenty two real
Speaker 1: estate market was on fire. Then rates spiked up. It
Speaker 1: seems to have slowed a bit, but not all that
Speaker 1: much tell us what's the state of the housing market today.
Speaker 3: The challenge is that inventory is missing from the market,
Speaker 3: so rates have gone up so quickly that many home
Speaker 3: buyers that would be sellers are waiting. What do consumers
Speaker 3: do when they're on certain many pause, They wait until
Speaker 3: the coast is clear, and that's what we're going through
Speaker 3: right now.
Speaker 1: So not a lot of inventory. But if you are
Speaker 1: a seller, perhaps you're retiring or downsizing, there are some
Speaker 1: things you need to do to create the best sale.
Speaker 3: I would be remiss if I didn't mention that mortgage
Speaker 3: rates are significantly higher. So the seller that's locked in
Speaker 3: on a three percent thirty year fixed is reluctant to
Speaker 3: become a buyer at seven and a half percent, right,
Speaker 3: So as time passes, there's going to be pressures on
Speaker 3: their lives. You know, they just had triplets, or they're
Speaker 3: being relocated, or some reason to move and become a
Speaker 3: buyer and pay the higher rates.
Speaker 1: Last time we spoke, we mentioned the psychology of buying,
Speaker 1: what people needed to think about before they went out
Speaker 1: and bought a home. Let's flip that. What's the psychology
Speaker 1: that sellers need to get into their heads before they
Speaker 1: list their homes.
Speaker 3: Well, one of the biggest things is it's not twenty
Speaker 3: twenty one, meaning that over the last couple of years
Speaker 3: prices stopped rising or not stopped completely.
Speaker 2: But it's not a rocket ship.
Speaker 1: Any things seem to have moderated and moderated maybe a
Speaker 1: little bit of upward price growth on the margin, but
Speaker 1: this is not the rocket ship it was a couple
Speaker 1: of years ago.
Speaker 3: And sellers are usually the last one to get the
Speaker 3: memo because they want to get the most of their home. Understandably,
Speaker 3: but buyers are facing a lot of headwinds with higher
Speaker 3: mortgage rates, lack of supply, and you're sort of threading
Speaker 3: the needle of trying to get the most for your house.
Speaker 3: But you have to recognize that the market is not
Speaker 3: what it was a couple of years ago.
Speaker 1: And you have brought us up to me. In the past,
Speaker 1: we've talked about sellers tend to be a couple of
Speaker 1: months behind the market.
Speaker 3: Longer than that, I are behind twelve to twenty four months,
Speaker 3: where they don't feel after that period, they don't feel
Speaker 3: like they left money on the table.
Speaker 2: It takes.
Speaker 3: There's the sort of process that they have to go
Speaker 3: It's almost a morning or griefing process where they have
Speaker 3: to go through it to feel they're not giving something away,
Speaker 3: that they're actually priced within reason.
Speaker 1: I have a vivid recollection of people in nine and
Speaker 1: twenty ten, yes, in my neighborhood putting homes up for
Speaker 1: sale at prices that were like, hey, it's not five
Speaker 1: or oh six anymore. That era is long gone.
Speaker 3: And the problem with that kind of thinking is that
Speaker 3: when you overprice or wildly overprice your home in many ways,
Speaker 3: you end up damaging the value of the home.
Speaker 2: In the perception of the marketplace.
Speaker 1: Because eating it becomes stale.
Speaker 3: It becomes stale because it'll sit for a longer period
Speaker 3: of time. Also, the you know would be buyers or
Speaker 3: you know brokers that are servicing the market the local
Speaker 3: market look at that seller and say, hey, they're not
Speaker 3: realistic at all. This is a waste of time. And
Speaker 3: so you'll see houses on the market for several years.
Speaker 3: Another way to look, as they're chasing the market. The
Speaker 3: market's falling and they're dropping their prices, but they're always
Speaker 3: like six months behind the market, and it doesn't sell.
Speaker 3: It's so hard to disconnect yourself from the home itself
Speaker 3: when it's on the market, because it's you, it's.
Speaker 1: Personal family or your memories. You plus the endowment effect.
Speaker 1: Of course, your house is worth more than all these
Speaker 1: other houses. Let's talk a little bit about the high
Speaker 1: end of houses and what the term that you created.
Speaker 1: I wasn't sure if it was Manhattan or the Hamptons,
Speaker 1: but ask urirational pricing tell us a little bit about that.
Speaker 1: So let's say you buy a home for a million
Speaker 1: dollars and then you put a three four hundred thousand
Speaker 1: into it, and you put it on the market for
Speaker 1: five million, and that's really not uncommon. And then your
Speaker 1: neighbors do the same thing, and then pretty soon your
Speaker 1: neighborhood or the region all has a bunch of five
Speaker 1: million dollars listings that are worth two million, And everybody
Speaker 1: gets this confirmation that it's the right price because my
Speaker 1: neighbor and this person in that cross the street. Everybody's
Speaker 1: got that same number, yet none of them sell, and
Speaker 1: none of them sell for a long period of time
Speaker 1: until they ultimately get removed from the market. That's what
Speaker 1: aspirational pricing is. Where you're throwing the number out that's
Speaker 1: so high that but you have everybody.
Speaker 3: Around you doing the same thing. There's sort of safety
Speaker 3: in numbers, yet you don't ever sell your home.
Speaker 1: My favorite thing to do on Zillow is to pick
Speaker 1: a neighborhood and sort by newest and then scroll down
Speaker 1: to the bus bottom. You see this stuff on sale
Speaker 1: listed for seven years for five years. Right like, if
Speaker 1: your house is listed for three thousand days in the
Speaker 1: hottest real estate market in history.
Speaker 2: You have a pricing problem.
Speaker 3: And the way to think of it is what we
Speaker 3: do is we look at things like days on market
Speaker 3: as an appraisal firm market analysts from the moment it's
Speaker 3: priced correctly to the moment it sells or goes to contract.
Speaker 3: Let's just say the market averages ninety days. It takes
Speaker 3: three months for a property that comes on Zelo or
Speaker 3: whatever realtor website and then it sells. You look at
Speaker 3: that and go exposure.
Speaker 2: Nine days.
Speaker 3: Now you have a listing that's been on the market
Speaker 3: for a year, right, and properly priced houses sell in
Speaker 3: ninety days. There's no stronger tell that you're significantly overpriced,
Speaker 3: because the average is ninety days. And we run into
Speaker 3: when markets slow down days on market rises, because it's
Speaker 3: harder for sellers, as we said earlier, to sort of
Speaker 3: get in sync with the market.
Speaker 1: So let's talk about the upper ends of aspirational pricing.
Speaker 1: I've seen some condos in New York billionaire's Row, or
Speaker 1: some really crazy waterfront places out in the Hamptons. Maybe
Speaker 1: these are ten fifteen, twenty million dollar homes. They're priced
Speaker 1: for ninety two million dollars, and then a year later
Speaker 1: they sell for twenty seven million dollars. It looks like
Speaker 1: it's an effective technique for some of these to anchor
Speaker 1: people in an absurd amount and squeeze an extra five
Speaker 1: or ten million dollars out of the buyer. Is that
Speaker 1: realistic or was that just during the red hot part
Speaker 1: of the market.
Speaker 3: So there were certainly examples of that working, But the
Speaker 3: reality is that that technique was.
Speaker 2: Used by everybody.
Speaker 3: I mean, it was such a popular thing, sort of
Speaker 3: wildly overpricing, and because then what it does is it
Speaker 3: gets headlines. It gets ink, you know, it's bold faced names. Right,
Speaker 3: it almost becomes your asset. It's like a ninety million
Speaker 3: dollar asset when it's really only worth twenty five million.
Speaker 3: And then when the sales reported, there's shame because because
Speaker 3: the buyer at twenty five million just bought something for
Speaker 3: a seventy percent discount or whatever the number is. But
Speaker 3: it was never worth that to begin with. That's not
Speaker 3: the basis for value. This was a marketing technique that
Speaker 3: really sprung up during the pandemic, which I call the
Speaker 3: biggest housing boom of the modern era. And it no
Speaker 3: longer applies.
Speaker 1: So let's talk about the opposite. Forget the one hundred
Speaker 1: million dollar houses seven hundred and fifty thousand, a million,
Speaker 1: a million. Five. Some people recommend pricing your home moderately
Speaker 1: in hopes of generating a bidding war.
Speaker 2: Tell us about that.
Speaker 3: I believe that is something right now that would be
Speaker 3: very effective. The idea is that you price it at
Speaker 3: or just below, what you truly understand the property to
Speaker 3: be worth, Like you've vetted it out. It's not what
Speaker 3: you wish it is worth, but what it's actually worth
Speaker 3: based on data, based on all kinds of things. That's
Speaker 3: the logical conclusion. What that ends up doing is ramping
Speaker 3: the transaction up to a bidding.
Speaker 1: War, cocks a lot of attention, a lot of ages
Speaker 1: because there's very affordable let's go look at.
Speaker 3: It, right, Yeah, there's very few listings on the market.
Speaker 3: Here's one that seems to be priced a little low,
Speaker 3: and then all of a sudden there's fifteen people bidding
Speaker 3: on it and it ends up going for ten twenty
Speaker 3: percent more than the ask. You get a premium. That's
Speaker 3: one of the more effective. It doesn't always work though,
Speaker 3: but it's probably one of the more effective techniques in
Speaker 3: a market devoid of supply.
Speaker 1: So I mentioned agents. What is the advice best advice
Speaker 1: for working with a real estate agent when you're a seller?
Speaker 3: So the number one thing is to listen to the agent.
Speaker 3: You know a lot of people. They live in the home.
Speaker 3: They know the home better than anybody I know in
Speaker 3: my gut. Or I need this number, you know, And
Speaker 3: I always say, the market doesn't care what you need,
Speaker 3: and so you really need an objective third party to
Speaker 3: make a presentation on why they think it is worth
Speaker 3: what it's worth, and not necessarily what you think it's worth,
Speaker 3: and they're measured based on, you know, whether it's their
Speaker 3: success is based on whether it sells or not. A
Speaker 3: lot of times, what I find is that sellers will
Speaker 3: listen to the agent and they'll say, well, let's just
Speaker 3: try wildly overpricing it for a short period of time.
Speaker 3: And that's always always a mistake in my view, because
Speaker 3: ultimately it's not successful. It kind of damages the brand
Speaker 3: and the market. And you start wondering, well, if they
Speaker 3: cut the price from this wildly high price, say they
Speaker 3: cut it twenty percent, does that mean this is still
Speaker 3: very much overpriced, Like it just adds more flags to
Speaker 3: the property. And it's because largely because as a seller,
Speaker 3: you didn't listen to somebody providing external or outside advice.
Speaker 1: What about FISBO? What about for sale by owners?
Speaker 3: Yeah, for sale by owners? So that's without a broker,
Speaker 3: and the theory behind that is that you're not paying
Speaker 3: a broker commission, right. The challenge with that is that
Speaker 3: it probably will end up getting a lot less exposure
Speaker 3: in the market because now you have an agent negotiating
Speaker 3: directly with a seller, and usually the seller is not
Speaker 3: necessarily a pro at negotiating. So I'm very skeptical of
Speaker 3: the FISBO approach. It certainly happens. It's probably four or
Speaker 3: five percent of transactions. It's a small number. Certain markets,
Speaker 3: you'll see it rise a little bit and fall a
Speaker 3: little bit. But it hasn't been widely accepted because the
Speaker 3: buyers traping through your house aren't being vetted, and you
Speaker 3: don't have that buffer between you know, the broker and yourself.
Speaker 3: You know, you're dealing with the professional negotiators. So it
Speaker 3: works for some people, but I'd say it's not as effective.
Speaker 1: Let's talk about timing. Is there a better or worse
Speaker 1: time of year to list a home for sale?
Speaker 3: It's really hard to time a market. You have seasonal
Speaker 3: ebbs and flows, so you know, the winter it's quiet,
Speaker 3: so there's not a lot of maybe competition, but there's
Speaker 3: also a lot less inventory, and usually the best product
Speaker 3: isn't put out till the spring or the fall. I
Speaker 3: always see housing markets as a two hump camel. Bigger
Speaker 3: hump in the spring, meaning higher activity, and the lesser
Speaker 3: in the fall. You can try to time it, I
Speaker 3: don't recommend it.
Speaker 1: What about timing a vacation property. You cover the Hamptons
Speaker 1: for a long time, do you want to list that
Speaker 1: in the dead of winter or do you wait for
Speaker 1: March or April when people want to buy a house
Speaker 1: and spend the summer out there.
Speaker 3: Probably just a little bit before spring really kicks in
Speaker 3: post super Bowl, post super Bowl, so that you're in
Speaker 3: place and you're one of the first looks in the
Speaker 3: market is probably a good good methodology. Beyond that, I
Speaker 3: don't think it matters that much.
Speaker 1: So HDTV and those sort of channels have been showing
Speaker 1: homes for sale forever and they're always talking about curb
Speaker 1: appeal and staging and all the How important is that
Speaker 1: stuff decluttering a home for searching.
Speaker 3: I think it's really a lot of It's really important.
Speaker 3: Probably even better, the most important principle when you're listing
Speaker 3: your home is you have to enable the buyer to
Speaker 3: envision themselves moving in. And so if you have a
Speaker 3: lot of clutter, a lot of personal.
Speaker 1: All your photos of you and your kids, they can't
Speaker 1: really picture.
Speaker 3: It's harder to picture. And also remove half the furniture.
Speaker 3: Oh really, yeah, because they're trying to imagine their furniture
Speaker 3: in the space and it's harder. It's just crammed with
Speaker 3: everything that you've got.
Speaker 1: Huh, really fascinating stuff. So it it's a seller's market.
Speaker 1: But if you want to get the most amount of
Speaker 1: money for your home, have the smoothest sale and the
Speaker 1: smoothest closing. There are a lot of things you can
Speaker 1: do to make that happen. We've been speaking with Jonathan
Speaker 1: Miller of Miller Samuel. I'm Barry Rittolts and you're listening
Speaker 1: to At the Money. Find it at Apple Podcasts and
Speaker 1: Bloomberg dot com.