For many who want to sell real estate in the Washington metropolitan area, it hasn’t been easy adapting to this year’s market. Those who watched neighbors sell in a matter of days last year are currently wondering “Why didn’t I sell last year, when it was so easy?”
There’s no question that selling a home has become more difficult.
In May 2005, homes sold in Montgomery County spent only 17 days on the market on average. This year, it took 45 days to sell a home there.
It’s worse in Virginia. The time it takes to sell a home in Loudoun County jumped from 14 days last May to 70 days this May on average.
However, there are several reasons why it is still a good time to sell your home.
“Buyers today are more committed, which is good for sellers,” says Susann Haskins, co-manager of the Long & Foster Real Estate Inc. Potomac/Cabin John office.
“When we had the frenzied buying of recent years, we saw people buying without giving thought to what they were doing,” she says. “Sometimes, they would find ways to back out of contract. But today’s buyers are more committed to the transaction because they’ve had time to see the house more than once. They’ve thought about it, and made a conscious decision rather than an impetuous one.”
The fast-paced market of the past few years could sometimes make the business of selling a home rather frustrating. Settlements were sometimes delayed due to paperwork problems. Appraisals and home inspections could be difficult to schedule because of the volume of transactions taking place.
“It is very important for today’s sellers to understand what the market is doing,” Mrs. Haskins says. “It’s not a crash, it’s normalization. Those of us who have been in the industry for 20 years or more have seen this before.”
That kind of historical knowledge can help put things in perspective.
There’s no question that it is much harder to sell a home this year than it was from 2000 to 2005. However, if today’s sellers could remember what the 1990s were like, they might not feel so blue.
As recently as 1998, the market was significantly worse for sellers. And, in 1996 it was much worse because the region was in a profound buyer’s market. Sales chances 10 years ago were only 11 percent.
Sales chances are a way of measuring the level of competition in the real estate market. When dividing sales figures for the month by the inventory on the last day of the month results in a percentage figure below 20 percent, this indicates a buyers’ market. Higher figures mean the region is in a balanced market or a seller’s market.
Compared to the 11 percent seen in May 1996, this May’s 21 percent indicates that the market is markedly better for sellers than it was a decade ago. But it is not nearly as good as it was in May 2005, when sales chances were 91 percent.
Chances have dropped this year because inventory went through the roof. Three times as many homes are on the market now compared to last year. Because there is so much competition from other sellers, homes on the market today need to be in top shape.
“It is not too late for sellers to sell. But you need to do the basic things that will ensure the marketability of your home,” says Julia Kriss, managing broker of the Arlington office of McEnearney Associates.
This is the same truth sellers learned in the 1990s. They just managed to forget it during the hot market of the past five years, when eager buyers would pay top dollar for anything with a door and a roof.
“Get the property in very good condition,” Mrs. Kriss says. “Pay attention to the exterior. Nobody wants to buy the weeds in your flowerbed. This has really never changed, but during the superheated market of recent years it was less important. Sellers got away with things then that they cannot get away with now.”
Besides making your home look good, you have to price it properly, too.
“Pricing your home properly is so important right now,” Mrs. Haskins says. “Sellers today can afford to be flexible on their pricing, because they have enjoyed a ride up recently.”
Anyone who bought a home prior to 2005 has made money on their home since then. Most homes in the Washington region doubled in value from 2000 to 2005. By comparison, home values only increased by about 20 percent from 1995 to 2000.
So, sellers in the 1990s not only faced a slower market than today’s, they also had less to gain from a sale. Sellers today can often afford to price their home competitively, because they have larger amounts of equity to work with.
“Sellers in the 1990s didn’t have that kind of flexibility. We bought a house in 1988, and it wasn’t until 1998 that we could sell it for what we paid for it,” Mrs. Haskins says. “Of course since 1998 it has doubled in value.”
Last of all, today could be the right time to sell because the future is uncertain.
“There are a lot of qualified buyers out there today,” Mrs. Haskins says. “But, if mortgage interest rates go up considerably, it will change the pool of qualified buyers. Right now, you know what the market is. It’s not a time to panic, and you aren’t going to have to give your home away. But if you want to sell, this is a good time to find a qualified buyer who can afford that house.”