Selling
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What Are You Saying With The List Price Of Your Home? |
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 Let's say buyers, sellers and Realtors in our local market would all agree that a house is worth $275,000. Here are a variety of list prices that a seller might consider...
As you are pricing your home for sale, be intentional about the pricing as it relates to your home's market value so that you are saying the right thing to buyers -- and so that you will hopefully see the results you'd like to see. | |
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Most Homes Sold Quickly In 2020! |
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 The graph above is an analysis of all of the homes that sold during 2020 in Harrisonburg and Rockingham County. You'll note that 69% of those homes sold (went under contract) within 30 days of being listed for sale! I expect that we will continue to see this dynamic in 2021. There are still plenty of buyers looking to buy homes, and very low inventory levels. As such, many homes are being scooped up by buyers within days (or weeks) of first hitting the market for sale. Home buyers in 2021 will need to be ready to act QUICKLY to secure a contract to purchase a home! | |
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Not Much Negotiability In Home Prices In 2020 |
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 Looking back at a full year of data now for 2020, it is impressive to note that the median "list price to sales price ratio" was 100% for the year. This means that at least half of sellers sold at or above their list price! Home buyers likely aren't surprised by this revelation as they have experienced it first hand if they bought - or tried to buy - in 2020. New listings that are prepared well, priced well and marketed well are receiving multiple offers within days of hitting the market. Oftentimes, buyers are not discussing whether to make a full price offer - they are discussing how far above list price to go with their offer. Home sellers must still remember that this is not a blank check. Just because buyers are so eager to buy that they are often going above list price does not mean that you can list your home for any price you'd like. If your home is potentially worth $300K in the market right now, you ought not list it for $350K and then be surprised when you don't have a rush or showings and don't have any offers. You still need to price your home based on recent sales, though you might be able to round up a bit more than you had in the past when pricing your home. I expect this dynamic (most homes selling for the list price or higher) to continue as we move through 2021. | |
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So, Will My House Sell For 10% More This Year Than Last? |
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 It's a reasonable question. The median sales price increased from $223,000 to $244,900 between 2019 and 2020 -- which is a 10% increase. So, would your house sell for 10% more this year than last? Maybe. A good, solid, maybe. Whether your home would sell for 10% more than a year ago largely depends on its location and the buyer demand for homes like your home. If you live in a popular neighborhood where lots of buyers want to buy homes -- and few sellers are selling homes -- it is much more likely that your home would now sell for 10% more than it would have last year. In analyzing the market value of a property to prepare to list it for sale, we aren't going to look for comparable sales from 12 to 18 months ago and then add 10% to those sales prices. We will look for comparable sales from 6 to 12 months ago and then also examine current listings that are either actively for sale or are under contract. When prices are increasing quickly (10% over a year puts us in that zone) it is even more important to be precise and intentional with the pricing of your home. Pricing your home for sale won't always be a super straight forward decision but usually there are enough data points of recent sales and pending listings to give us enough guidance to make a good decision to maximize both the price for which you sell your home and the speed at which you sell your home. If you're getting ready to list your home this spring, it is definitely worthwhile to start looking at market value now. We can then continue to monitor listings and sales between now and when you list your home for sale to affirm our decision on pricing. | |
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Is All Showing Feedback Really About Price? |
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 Is All Showing Feedback Really About Price? Often, yes. My house is needs many cosmetic updates, but all of the potential buyers (who did not make an offer on my house) didn't complain about price, they complained about the need for cosmetic updates. My house is next to the railroad tracks, but all of the potential buyers (who did not make an offer on my house) didn't complain about price, they complained about the railroad tracks. My house has an unbelievably steep driveway, but all of the potential buyers (who did not make an offer on my house) didn't complain about price, they complained about the steep driveway. Guess what --- unless you're going to flatten the driveway, move the railroad tracks (or the house), or make all of the cosmetic updates -- it really probably is an issue of price! If you're getting consistent feedback about your house that is unrelated to price, in almost all cases, you need to adjust the price to accommodate for that specific issue. If the price is lower then buyers might actually buy despite the specific issue that they were complaining about. | |
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Will You Take Your House Off The Market This Winter? |
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 In some ways, NO, you should NOT take your house off the market -- because inventory levels are very low. And yet, still, some sellers will still -- quite reasonably -- take their homes off the market for the winter. Our local MLS requires a house to be off the market for 90 days before the "Cumulative Days on Market" statistic resets. So, if you take your house off the market tomorrow, you could put it back on the market during the first week of March and have that statistic reset. During these 90-ish days of being off the market, we will want to talk about price, condition and marketing....
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As A Home Seller, You Are Always Optimizing For Something |
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 What are you optimizing for?
As a home seller, you are always optimizing for something. PRICE - Maybe you are willing to wait as long as it takes to get the price that you want for your house. Even if it takes months longer than you had hoped and even if it means that you aren't able to continue on with other life transitions that you had planned, at least you go the price you wanted. TIME - Maybe it's important to you that you wrap up your home sale (have the house under contract) within a few weeks or within a month. If so, you might be willing to price your home a bit lower to maximize the possibility that you accomplish your timing goals. CONVENIENCE - Maybe your strategy for when you list your home and your pricing strategy all revolve around making it a seamless transition to your next home. You're willing to be flexible on timing and on pricing so long as it lets you accomplish your goals of buying that perfect next home. When your home is on the market, you're always optimizing for something. Be sure you know what you are optimizing for and make sure that is your intention! | |
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Three Ways To Make A Contingent Offer |
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 If you have to sell your current home in order to buy a new home - there are (at least) three ways to do that...
If you're making an offer on a new-ish listing then Option 1 and Option 2 are not likely to be successful strategies to securing a contract on the house you want to buy. The best bet is to wait until you have your house listed for sale AND under contract - Option 3 - because at that point your have positioned yourself (and your home sale contingency) as best as you possibly can from the seller's perspective. A few additional, related, notes...
Selling and buying simultaneously can be tricky, complicated and frustrating -- but it is possible! Feel free to be in touch if you want to talk through the options outlined above as they pertain to your situation. | |
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If You Are Not Getting Offers On Your House, Will You Wait, Or Lower Your Price? |
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 If you are selling your home and it is prepared well and marketed well, you will likely have a decision to make related to time and price... TIME - Are you willing to continue to wait for the right buyer to come along, eventually, hopefully - that will come to a different conclusion about your house than previous buyers who did not make an on your house? PRICE - Are you willing to adjust the list price of your house to try to make it more attractive to potential buyers and to expand the pool of potential buyers who can afford to buy your house? If your home has been on the market for 60 days without an offer -- or if it has been 60 days since your last price reduction -- you should reflect on whether you choose to value time or money more over the forthcoming 60 days. You can always continue to wait for new buyers to enter the market that hopefully will find your house to be just the right fit for them - or you can adjust the price to try to make your house more attractive to buyers who have and who have not yet seen your house. What will you choose if 60 days have passed without an offer on your house? | |
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Buyers Kept Showing Up In October 2020 |
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 Who cares about normative seasonal changes in home buying activity... ...this is 2020! :-) Usually, buyer activity (contracts being signed) starts to slow down in October. We usually see around 110 contracts signed during the month of October. But not in October 2020. This year, there were 147 contracts signed! I'll take a full look at market activity in October in the next week or so, but until then, rest assured that buyers keep on buying, even as the weather gets colder and the leaves fall off the trees! | |
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Home Buyers and Sellers Think Differently About Repairs After A Home Inspection |
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 While not always the case, a general rule of thumb is that... On home inspection repairs...
Inspector: Several roof shingles are missing, and the roof is past its life expectancy. Seller: Replace the shingles. Buyer: Replace the roof. Inspector: The air handler coils are dirty and the heat pump is reeaaallly old. Seller: Clean and service the heat pump and air handler. Buyer: Replace them both! These are a few extreme examples to start to show the differences in perspectives on repairs. Again, the important thing here is to recognize that a buyer and seller look at home inspection reports differently. A seller typically wants to minimize their repair costs while keeping the home sale on track. A buyer wants to make sure that any previously unknown property condition issues are addressed in a manner that is likely to prevent further near term maintenance needs in those areas. So, what is a buyer to do? A few thoughts....
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Million Dollar Home Sales In Rockingham County, Virginia |
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 If you're planning to sell a property in Rockingham County for more than a million dollars, it's important to realize how small this pool of potential buyers has been over the past ten years. As shown above, there has been average of one such sale every 20 months over the past decade. Curious about the details of those six million(+) dollar sales? You'll find them here. Do you have a million(+) dollars burning a hole in your pocket? Here are the nine current properties for sale for $1MM+ in Harrisonburg and Rockingham County. | |
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Seasonality Might Matter A Bit Less For Sellers Given Low Inventory Levels |
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 If you had asked me a year or two ago whether it was a good idea for a homeowner to list a home in November (if they would be fine waiting until Spring) I would have said it wasn't necessarily a bad thing -- but it certainly also wasn't a surefire path towards success. In reflecting on this with a homeowner last week, though, we came to a different conclusion -- because inventory levels are SOOOO low! So, here's my revised November advice to would be home sellers... If you would rather sell now/soon instead of six months from now - and if you are in a segment of the market that is under supplied - then let's go ahead and get your house on the market! Looking at historical inventory levels...
Today... there are 162 homes on the market for sale! So, if you want to sell in the next six months, maybe we should be talking now about getting your house on the market in early November! | |
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Think Twice Before Ignoring That Low Offer On Your Home |
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  If you have not yet had an offer on your house (that is listed at $300K) and you receive an offer of $250K, that doesn't necessarily mean your house is only worth $250K, nor does it necessarily mean that you should accept $250K or something close to it. It does, however, mean something quite exciting --- somebody wants to buy your house!!! Of course, negotiations won't always work out with low offers -- but recognize a low offer for what it is -- a buyer who wants to buy your house, and perhaps the first buyer who has declared as much through a written offer! If there is any way to put a deal together with those buyers, you ought to pursue it, as it's hard to know when the next buyer will work up the courage to tell you that they want to buy your house! | |
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Harrisonburg Area Home Sales Over $500K Continue To Soar In 2020 |
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 Only 5% of local home buyers spend $500K or more on their home purchase (per sales data over the past year) but this segment of the local housing market has been strong over the past few years. As shown above, there were 47 home sales over $500K last year - which was more than any time in the past decade. This year we have already exceeded that pace of $500K+ home sales even with just the first 9.5 months of the year. There have been 54 home sales over $500K up through October 19, 2020 and there is still time for a few more before the end of the year. Reigning in our enthusiasm a bit, though, this is a relatively small number of buyers. If you are selling a home over $500K, you need to keep in mind that only about 50 buyers per year (just over 4 per month) spend that much money on a home in ALL of Harrisonburg and Rockingham County!  Last year was an extraordinarily strong year for home sales over $600K - with 27 such sales - well more than in any other year in the past decade. This year -- we're seeing even more $600K+ home sales, with 29 thus far and still two and a half months to go! And one more look at an even higher price point...  Above, you'll see that most years there are only 5 or fewer home sales over $700K. But back in 2015 there were 11 (which was more than double the norm) and last year there were 14 such sales. This year seems to also be a very strong year for these $700K+ home sales, with 12 thus far. So -- overall, the high end home sales market is doing well -- comparatively, but that is not to say that selling a home over $500K is an easy task - it's not. Home sellers over $500K are aiming for a tiny pool of potential buyers -- even if that pool of buyers might be stronger this year (and last year) than in most other recent years. | |
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Contract Activity Continues Full Steam Ahead In October 2020 |
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 Home sales usually start slowing down in October - but not this year. In the first two weeks of October we usually see forty-something contract signed by buyers and sellers in Harrisonburg and Rockingham County. This year -- 65 contracts were signed during that timeframe! I assume at some point things will start to slow down, somewhat, but it isn't happening as quick as you might think it would given the time of the year. So, if you're thinking of selling your home but are wondering whether you should wait until the spring market - you might not need to wait after all! | |
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Sometimes Buyers React Irrationally To Home Inspections |
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 The purpose of a home inspection contingency is to allow a buyer to learn more about the property they have contracted to purchase -- and then to request repairs to the property if they discover new issues of which they were unaware when they contracted to purchase the property. For example -- a buyer contracts to buy a home for $250K and believes the electrical wiring and plumbing are all in good condition. The home inspection takes place and the inspector discovers that there are four plumbing connections that are leaking in the unfinished basement. It is then reasonable for the buyer to ask the seller to repair these plumbing leaks prior to closing. They agreed to pay $250K for a house that they did not believe had plumbing leaks -- and thus they request the seller restore the house to being a leak-free house. This is certainly an oversimplification of the matter, as there are often many discoveries during a home inspection -- of varying levels of seriousness or complexity -- but stick with me for now. Back up at our prior example -- rarely would a seller be disappointed, surprised, or unhappy if a buyer asked for plumbing leaks to be repaired. But what is a seller to do when a buyer starts to behave irrationally -- in a way that the seller believes no other buyer would certainly ever respond? For example --
I could go on and on. The point is -- sometimes buyers behave irrationally -- for whatever reason they have decided that they cannot / will not buy the house, and they are going to dig in their feet and make irrational repair requests until the seller finally caves and releases them from the contract. Or, rather, given the standard Virginia home inspection contingency, the buyer just terminates the contract on the basis of the home inspection even though their decision to do so was based on a view of the property condition (and of needed repairs) that is unlikely to be shared by any other buyer, ever. So, what in the world is a home seller to do in such a situation?
Of course, I hope this advice is absolutely never pertinent to you. May you never be in the midst of a home sale -- under contract -- just working your way through contingencies and excitedly anticipating a closing in the near future -- and then have the rug pulled out from under you by a home buyer with unreasonable expectations or demands. But if you do find yourself in this situation, try to move on quickly and be transparent with future buyers -- after getting angry, frustrated and discouraged, of course! | |
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Harrisonburg Area Home Sales and Prices Soar In September 2020! |
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 Happy Monday Morning! What a wild year this has been - and it is now, already, more than three quarters of the way to the end. Many things have been turned upside down in our daily lives, but as this year has continued to progress, one thing that has not been affected as much as you might expect has been our local real estate market. We're seeing more home sales this year than last, at higher prices, taking place at record speeds. Before we dig into the data, be sure to check out Founders Way, a condo development currently under construction just minutes from downtown Harrisonburg. Find out more about these new two bedroom condos starting in the $170K's by visiting FoundersWay.com. Now, feel free to download a PDF of my entire monthly report, or read on for some juicy tidbits to start your week off right...  First, from a big picture perspective, referencing the chart above...
So, again, repeating the story from above - COVID has created plenty of train wrecks, but our local housing market has been able to keep on moving right along, full steam ahead. Now, looking for a moment at detached homes compared to attached homes...  The green portions of the chart above show the trajectory of detached homes, and you might note that there have been slightly fewer (735 vs. 737) of these sales in 2020 when compared to 2019. Despite that ever-so-slight slow down, however, the median sales price of those homes has increased 9%! If detached home sales have slowed down, slightly, attached home sales have been running in the opposite direction, quickly. We have seen an 11% increase in the number of attached home sales in 2020 as compared to 2019 - and again - a 9% increase in the median sales price of these attached homes. Now, for the visual learners, let's take a look at September again...  As shown above, September was a wild month for home sales. The (150) home sales seen in September 2020 make it the second highest month of home sales for the year - which is quite atypical for September! I assume that home sales will slow down quite a bit in October, and then much further in November and December -- but this year has been anything but predictable, so who knows!?! Oh, and did I mention that 2020 finally caught up with 2019?  Back in March and April, I noted that 2020 was off to a STRONG start -- with more home sales in the first quarter of this year than in any recent year. But then, COVID. Many fewer sellers put their homes on the market in March, April and May, which resulted in fewer buyers being able to buy houses, which slowed down the annual pace of home sales quite a bit as we progressed through late spring and then through the summer. But then, September! The high sailing month of home sales in September caused our year to date trajectory to pop above all recent years again. So, 2020 is a great year - or at least for home sales in Harrisonburg and Rockingham County! Want another visual of the impact of COVID?  The weird dip in the orange line on the graph above is the impact of COVID. Our annual pace of home sales started dropping about five months ago, and we can only now confidently say that we're back on track to see the expected overall increase in that trajectory of home sales in this area. But that green line!?! Despite a slow down in home sales, we continued to see the median price rise, rise and rise some more. Maybe because COVID caused inventory levels to dip even lower, causing buyers to be willing to pay even more for a house? Maybe because the super low mortgage interest rates allow a buyer to be more flexible on price? Nobody knows for sure, but those prices, they keep on rising! Speaking of prices rising...  Over the past five years we have seen an average annual increase in the median sales price of 5% per year. This year, it is looking like it will be a 9% increase. This is not totally surprising -- more buyer interest, lower inventory levels, low interest rates, etc. -- but prices can't rise at 9% per year forever, so 2021 and 2022 will be interesting to watch to see how much further prices can or will increase. And now, looking back a bit to look forward...  A few things to note here, on the graph above. First, it was a summer FULL of contracts. There were 34% more contracts signed this summer than last, and 32% more signed this September than last. Thus, it seems relatively likely that the strong home sales we have seen thus far in 2020 will continue on through at least October and likely into November. How many times have I said "low inventory levels now"?  There it is, visualized, above -- the agony of buyers in our current local housing market. Inventory levels are at historic low levels. Never have there been fewer homes on the market, for sale, at a single point in time in Harrisonburg and Rockingham County. We have seen a 46% decline in active inventory over the past year. Now - keep in mind, we have seen a 2% - 3% increase in home sales, so these low inventory levels just mean that as quickly as new listings come on the market they are being scooped up by a buyer, preventing them from contributing to the "number of homes for sale" metric which we call "inventory". Unfortunately, I don't anticipate that these inventory levels will shift upwards anytime soon unless it is due to new construction at a large scale. Finally, a few times above I have noted that prices are rising - and this is perhaps one of the reasons why buyers can pay higher prices without blinking...  As shown above, the average mortgage interest rate keeps on falling. A year ago it was 3.64% and now it's down to 2.9%. These super low interest rates create a great opportunity for today's home buyers to lock in ridiculously low interest rates -- and they soften the impact of rising home prices. Alright, I'll pause here for now. If you've made it this far, thanks for taking the time to seek to better understand our local housing market. For more such joy, feel free to check out my blog or shoot me an email (scott@hhtdy.com) with any questions you have about our local housing market or about your house. Some key take aways... BUYERS
SELLERS
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Is October (Right Now) Too Late In The Year To List Your Home For Sale? |
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 I believe this question is best answered by evaluating when buyers make an actual buying decision -- which is when they sign a contract. The data above shows when buyers sign contracts -- calculated by averaging data from the three most recent years. As can be seen, the busiest buying season is March through August when an average of 136 buyers per month make a buying decision. The remaining six months of the year (September through February) show anywhere between 46% and 79% as many buyers as the average of 136 per month seen in the busiest six months of the year. So -- listing your home in October is not at all a bad idea based on this data! As shown above, it's likely the highest month of buyer activity that we'll see between now and next March. Even late October can work, as we're likely to see 60% as many buyers signing contracts in November as compared to the average busy month. That said, in the following month (December) we're likely to only see about half as many buyers as compared to the average month. | |
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Is Average Price Per Square Foot A Useful Metric In Pricing A Home? |
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 Some folks might wonder whether analyzing a home's "price per square foot" is a good way to understand market value. Let's take a look by analyzing a data set of relatively similar homes. I'm going to constrain things pretty tightly to try to have homes that we might theorize would have a relatively similar price per square foot. Here's how I picked the data points...
This resulted in (30) home sales in neighborhoods such as Barrington, Battlefield Estates, Crossroads Farm, Highland Park, Lakewood, etc. The average "price per square foot" of these homes was $136. But looking a bit more closely...
So, basically, the price per square foot of these relatively similar homes is ALL OVER THE PLACE! Let's take it a bit further to further illustrate this... Next, I took the square footage of each home and multiplied it by the $136/SF average to point to what we'll call a projected sales price for each home if it had sold at that average price per square foot. Then, I calculated the difference between the actual sales price and the projected sales price. If each of these property sellers had tried to sell their homes at that projected sales price based on the average of $136 / SF...
Oh, and the average difference between the actual sales price and this projected sales price? $84,619 I'm going to go with "no" -- but I'm happy to be proven wrong. Email me with your thoughts, insights or questions at scott@hhtdy.com. | |
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Scott Rogers
Funkhouser Real
Estate Group
540-578-0102
scott@funkhousergroup.com
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