How Not to Sell a House in Greenwich

Presently, we have 9 houses that have been listed on the GMLS for more 1,000 days and almost a fifth of our 438 listing have been on the market for more than a year; so what keeps houses from selling.

INITIAL PRICING: The biggest reason by far is over-pricing the house when first listed. The first two weeks of a listing is critical and if online buyers think the house is overpriced they won’t even go see the house. Even if their agent recommends seeing the house if what they see online doesn’t match up with their idea of its value they will turn down the showing.

So why do owners over-price their houses? First, it’s just human nature; no one wants to leave money on the table if a buyer would have paid more, so why not take a flyer at a higher initial price. This hope and a dream approach can set off a cascading list of issues that can easily leave the house on the market for a year or more and result in price well below what you might have gotten.

Second, owner’s value the unique features in their houses that were added as labors of love and money. The problem is that most buyers will only pay a little more, if any for these features. Paradoxically, the lowest list price often leads to the highest and fastest sales price, by generating the most traffic to the house.

Things like quality of construction, beautiful gardens, and homeowner care and maintenance often don’t play into a buyer’s decision as whether to see a house or not. With the rise of the Internet, items that can be rendered as numbers have reduced the unquantifiable elements. Buyers look at square footage, price per square foot, acres, days on market and other features that they can sort on their spreadsheets as signs of value.

PRICE REDUCTIONS: Every time, an owner changes the price it shows up on the Internet and each price change or lack of them have an unwritten tag line in buyers’ mind:

  • Price unchanged for 100 days – The seller won’t negotiate a “fair price” and may not want to sell at all, probably a waste of time to go see
  • A small price reduction – Seller will negotiate, but their bottom line is close to their present list price so that needs to be close to the buyer’s perceived value
  • A series of small price reductions – Must be something wrong with the house if no one has bought it after all those price reductions and the buyer is probably desperate and will take a lowball bid.

If the buyer traffic is not there initially, or if you had good traffic, but no offers have been made it’s time to take a major price reduction. You also don’t want to do this more than twice so the bigger the better. Once again paradoxically the bigger the price cut the better your sales price will be. What you don’t want to get caught in is the death spiral of a dozen cuts, if you do you may end up having to reduce the price below “fair market value” to get people to come see your house.

POOR PRESENTATION: I was talking to another experienced agent about how much clutter and poor presentation could cost a seller and we both came to the same figure. We posited two identical older homes, but one was neat and tidy and the other cluttered and dirty. If the neat house went for $750,000 we both estimated, it would be minus $50,000 if the other house was a mess. If you add dishes in the sink and mildew in the shower, you could take off another $25,000. Appearance counts.

So, the things you can do that will improve the value of your house starting at street side:

Curb appeal – A lot of people decide whether they like a property as soon as they see it, so trim the trees and bushes, remove fallen branches, fix the driveway, paint the mailbox and add big house numbers so the house is easy to find. Make sure the path from the driveway to the front door is a nice as you can make it; buy a new doormat with a welcoming message, paint the front door and replace any corroded door knobs and knockers.

First steps – Assuming they still like the house from the exterior the next most important is the first two steps inside. Make the inside air temperature the opposite of the outside; warm in the winter and cool in the summer. Make sure there are no unpleasant smells such as cat pee or cigars (we smell one of these every week.) The entry should have the warm inviting feel of a home not a hotel lobby.

Inside – Get rid of “bad memory points,” the things that people remember a week later about the house. I’ve seen dead squirrels in the attic, dead bugs under the sink, and used diapers left out. Even things that aren’t offensive should be fixed, like door that stick, dust on shelves and a used drinking glass in the sink should be removed.

NEGOTIATION: If you want to really insult a Greenwich seller make a lowball offer, however, if you are the seller put that irritation aside and consider the situation. Last year our median sales price to list price was 92% so if the parties were to meet in the middle the buyer would start with an offer of 84% of list price or an $840,000 offer on a $1,000,000 listing. A lot of sellers wouldn’t even counter this “insulting” offer and a lot buyers would be too embarrassed or prideful to raise their own opening offer so the negotiation is over, before it began.

My philosophy is to counter every offer. The buyer maybe an ignorant, irritating, cheapskate without any money, but you’ll never know unless you counter-offer (along with a strong, and often unneeded, admonition from seller’s agent to buyer’s agent to get serious in buyer’s counteroffer.)

The other major negotiation killer is the line in the sand. Very often the buyer and seller will be less than 1% apart, but they both draw a line in the sand and won’t make a better counter. (Seller: If it’s that small a difference the buyer shouldn’t have problem coming up 1%.”) If that happens try to add more negotiating options; a better closing date, larger down payment, or offer to include the yard furniture, or the Mercedes.

And, whatever you do, try not to tick-off the buyer. It never makes the process easier and greatly increases the chance that both parties will walk. At the same time try not to be ticked-off yourself. Yes some buyers are rude, but it’s a transaction not dating. Too often, what is perceived as rude is really a cultural, regional or national difference in style, so stay cool and a few showings, can lead to a good price and quick close.

by Mark Pruner, Douglas Elliman, 203-969-7900, mark@greenwichstreets.com

 

 

2016 Greenwich Real Estate – Most Active Neighborhoods

The 2016 winner for most popular neighborhood in Greenwich is North Mianus. Last year we had 11 houses sold there and we only have four listing presently which gives us 4.4 months of supply. It’s a small neighborhood but it meets so many of the things that people were looking for in 2016 and will be looking for in 2017. It’s a real coTmmunity with smaller properties, close to town, good schools, and for Greenwich, reasonably priced houses.

The runner-up is Cos Cob, and arguably the winner for larger size communities in Greenwich. Cos Cob last year had 73 properties sold and we have another six contracts waiting to close as of the end of the year. While Cos Cob is only 6% of our listings, it was almost 13% of our sales in 2016. So with only 28 listings, we have 4.6 months of supply and a hot market. When you add up all the sales, contracts and active listings we have 107 properties that were in play in Cos Cob in 2016.

Area Total Activity* Number of Listings Number of Solds Percent of Activity Percent of Listing Percent of Sales Mos of Supply
North Mianus 19 4 11 1.7% 0.9% 1.9% 4.4
Cos Cob 107 28 73 9.7% 6.2% 12.7% 4.6
Pemberwick 17 5 11 1.5% 1.1% 1.9% 5.5
Old Greenwich 150 45 96 13.6% 10.0% 16.8% 5.6
South of Post Road 109 32 63 9.9% 7.1% 11.0% 6.1
Glenville 44 13 25 4.0% 2.9% 4.4% 6.2
Riverside 147 54 86 13.4% 12.0% 15.0% 7.5
Byram 22 10 11 2.0% 2.2% 1.9% 10.9
South Parkway 337 167 148 30.6% 37.1% 25.8% 13.5
North Parkway 145 88 49 13.2% 19.6% 8.6% 21.6
Banksville  4 4 0.4% 0.9% 0.0%
Total Active 450
Total Contracts 78
Total Sold 573
Grand Total 1101 446 573 100.0% 100.0% 100.0% 9.4

(*Total Activity is All 2016 Sales, Contracts as of year end and year end listings)

Pemberwick and Old Greenwich are neck and neck with less than six months of supply, presently on the market. Glenville also does well with lots of demand for a limited number of houses. Riverside, which has been our leader before, has fallen to 7 1/2 months supply with 54 listings and 86 houses sold in 2016 as prices have risen significantly lowering demand. However, Byram which has our least expensive housing also lags behind Riverside with 11 months of supply. For the same price you can get a much larger house in Westchester, you just have to pay the higher taxes.

Illustrating the trend of people wanting to live closer to town, South of the Parkway has 13 months of supply and north of the parkway has 22 months of supply. Now South of the Parkway covers a huge area of Greenwich, from the parkway to the Post Road. For analytical purposes this area which has 37% of our listings makes little sense as it encompasses a wide variety of neighborhoods, lots sizes and price points. It would make a lot more sense to break up this huge area into the 1 acre and 2 acre zones and add a central dividing line, but we work with what we have.

ye2016-areaanalysis-mp-011417

You need to take all of these numbers with a large grain of salt. For example, Old Greenwich has houses from under $800,000 to over $8,000,000, on small 1/6th of an acre lots to multiple acre lots on Long Island Sound. These markets are very different but the MLS groups them altogether for statistical purposes and this might not be a bad thing. The houses maybe be different, but the kids play on the same Little League teams, they go to the same middle school and eat the same Lion’s Club pankcakes. Breaking up areas by price may make sense for Realtors and even buyers, but it’s still one community and people are drawn to it regardless of what their budget is.

 

2016 Year End Greenwich Real Estate Report

Good Sales & Good Contracts at Year-end

December 2016 was a good month for sales and contracts in Greenwich. Part of this increase in sales was the shifting of closings away from the uncertainty of November’s presidential election. Another part of the increase in sales is also attributable to motivated buyers trying to avoid further increases in their mortgage payments from expected increases in mortgage rates.

sales-sfh-2014-dect2016prelim-101316

We had 50 sales of single family homes in December 2016 up 2 from December 2015 and also up 2 from our 10-year average. Month over month the increase was even more dramatic when the 50 sales in December are compared to the paltry 29 closings in November. A third factor in December’s sales increase was the number of contracts signed in November a few of which closed in December further boosting sales.

Contracts are also looking good. In 2015 at year end we had 70 contracts outstanding and this year we are up 8 contracts to 78 contracts even after the 50 sales in December. There is nothing like the likelihood of increased monthly payments to motivate buyers.

The 50 listings sold in December are not all of the story. The true picture will only be known once all of December’s private sales are tallied later this month. At the present time, we have 610 MLS and private sales in Greenwich, and with say 10 more private sales, we’ll be at 620 total sales down only 2% from 2015’s 631 home sales.

All of these December sales and contracts have depleted our inventory to only 450 house listings in Greenwich. While this is up 6% from December 2015 when we had 425 houses on the market, that’s still a tight inventory in a busy market.

As of 12/31/16 Inventory Contracts Dec. Solds Dec. Solds+ Contracts  YTD Solds  YTD+ Contracts Mos Supply Mos w/ Contracts Last Mo. Annlzd
< $600K 5 1 3 4 18 19 3.3 3.6 1.7
$600-$800K 16 3 1 4 48 51 4.0 4.2 16.0
$800K-$1M 13 6 5 11 51 57 3.1 3.1 2.6
$1-$1.5M 35 21 14 35 120 141 3.5 3.4 2.5
$1.5-$2M 50 11 10 21 116 127 5.2 5.3 5.0
$2-$3M 80 17 8 25 104 121 9.2 8.9 10.0
$3-$4M 67 7 5 12 55 62 14.6 14.6 13.4
$4-$5M 40 8 3 11 28 36 17.1 15.0 13.3
$5-6.5M 51 2 0 2 17 19 36.0 36.2
$6.5-$10M 55 0 0 0 11 11 60.0 67.5
> $10M 38 2 1 3 5 7 91.2 73.3 38.0
TOTAL 450 78 50 128 573 651 9.4 9.3 9.0

 

Market by Price Range

Below $1 million we are supplied constrained, particularly on the east side of town. Under $1 million we only have 24 listings. If we had more inventory, we would have more sales. We also have seen lower sales under $600,000 as most of the houses that were under $600K have now appreciated above that price further shrinking inventory. Despite all this we had 117 single family home sales in Greenwich under a million dollars.

$1 – 3M: The price range from $1 – 2 million was busiest part of the Greenwich market in 2015 with 236 sales and another 32 contracts waiting to close. This price range is popular with both young families moving from NYC and downsizers moving from Westchester County our two-major group of buyers. The market from $2 – 3 million had a slow start, but picked up steam as the year went on. We ended up with 104 sales and another 14 contracts in the $2 – 3 million price range.

$3 – 5M:  This price range seems to be the new sweet spot for high end buyers, particularly as the year went on. Both contracts and December sales were up in this price range by 13. For the year, we had 83 sales and have 15 contracts between $3 and $5 million waiting to close. The year started slow however and the 83 sales is down 14 sales from 2015 when we had a total of 97 sales.

2016 Greenwich House Sales

$5 – 10M: The market that has changed the most since 2015 is the $5 – 10 million market, where we only had 28 sales in 2016 compared to 48 sales in 2015. Sales won’t be getting much better in January as we only have 2 contracts in a price range that spans five million dollars. The low sales is not due to lack of inventory as we have 106 beautiful houses on the market now in this price range. We also have a bunch more houses in hibernation resetting their days on market and waiting for warmer weather to go back on the market.

The good news is that 10 of these 28 listings went to contract in less than 40 days. Of these 10, four of them were on the Sound and there were two in mid-country and two in backcountry. Also, four of the houses were built between 1918 and 1961, but all four of these houses had been renovated in this century. So, if you have what the buyer wants you can get a relatively quick sale even in this price range.

Over $10 million things are looking up in the fourth quarter. We have had the same number of sales this year as last year with 5 mansions sold and 2 contracts pending. If you annualize December’s sales over $10 million dollars we are down to 38 months of supply from 98 months of supply for the whole year. This is a dramatic drop, but it is really just fun with numbers as annualizing the one sale we had in December results in more sales than for whole year.

 

Dec ’16 vs Dec ‘15 Inventory Contracts Mo. Solds Mo. Solds+ Contracts  YTD Solds  YTD+ Contracts Mos Supply Mos w/ Contracts Mo. Annlzd
< $600K 2 -1 1 0 -7 -8 1.9 2.1 0.2
$600-$800K 1 -4 -3 -7 11 7 -0.9 -0.4 12.3
$800K-$1M 1 -2 0 -2 4 2 0.0 0.1 0.2
$1-$1.5M -3 10 4 14 -1 9 -0.3 -0.5 -1.3
$1.5-$2M 9 -2 -1 -3 5 3 0.7 0.9 1.3
$2-$3M 2 6 -2 4 -5 1 0.6 0.2 2.2
$3-$4M 2 2 3 5 -11 -9 2.8 2.2 -19.1
$4-$5M -2 6 2 8 -3 3 0.9 -2.2 -28.7
$5-10M 17 -7 -3 -10 -20 -27 22.5 29.4
> $10M -4 0 1 1 0 0 -9.6 -7.7
TOTAL 25 8 1 9 -28 -20 0.9 0.8 0.3

 

2016 vs 2015:

Ups & Downs: When you look at what’s up and what’s down compared to the prior year, inventory is up 25 listings, while sales for the whole year are down 28 sales (with a few private sales yet to be reported). On the good news side, from $600,000 to $2,000,000 sales are up by 19 houses. From $1M to $5M the contract news was also good as we had 22 more contracts than we saw in December 2015.

On the needs improvements side, the $5 – 10M price range has sales down 20 houses from 2015 and contracts down by 7 houses from last year. Over $10M sales also need a lot of more improvement as we have 91 months of supply. Now a few sales will cut that down by several years, but it’s not clear when this segment will turn around.

Sales Volume: When you look at the overall market, our 573 GMLS sales in 2016 is a total sales volume of $1,261,572,386 a number that in any other town our size would enviable, but it is down $186 million from 2015.

Average & Median Prices: Our median price was $1,700,000 down $146,000 from 2015. Our average price went down from $2,426,320 in 2015 to $2,201,697.

The Sales Mix is Lowering the Averages: So we had a 13% drop in sales volume and a 9% drop in both the median and the average prices. All of this reduction is due to a fall in the number of sales between $2 million and $10 million where we are down 39 sales and more than half of that drop is in the $5 – 10 million dollar range. Below $2 million the market is very competitive and so is the pricing. Now the uninformed will say that individual house prices are down 9% in Greenwich, but that is not the case, what is down 9% is the average of all houses.

When there are fewer sales at the high-end, averages will drop. In fact, every house in Greenwich could have gone up in value, but if there are fewer sales at the high-end the average sales price will still drop. (While that’s mathematically true, where the number of sales drop, prices tend to also drop.) The point is that your house is most likely not down 9% in FMV in fact the odds are that it is up in value in 2016 compared to 2015.

 

 dec2016-4pie-010417 The pie charts show this tale of two cities. ·

  • Half of our inventory is over $3.5M, while less than a quarter of our sales are over that price.
  • At the other end 8% of our inventory is under $1M, while 20% of our sales are under $1M
  • The large bulk of our sales, 59%, are between $1M and $3M. These sales come from only 37% of inventory.
  • The $1 – 3M segment was even more popular in December with 64% of our sales.

Months of Supply: When you look at months of supply our market under $1.5M is very competitive with 4 months or less of supply. We also saw decent sales from $3 – 5M particularly in the fourth quarter.  We had 8 houses sold between $3 and $5 million just in December. We also have 15 contracts between $3 and $5 million waiting to close so that price segment will be looking up in January and probably February also.

dec2016-mos-010417

2017?

So, what will 2017 bring? The answer is that more so than in any other post-recession, you can’t say. For every potential plus there seems to be a potential minus:

  • The stock market is reaching record highs, but we have not seen a major correction in the market in years.
  • Interest rates are still very low historically speaking and a slight bump up in interest rates has seemed to spur sales, but a major rise in interest rates could hurt sales
  • The Trump presidency promises to be, possibly the most unique in American history. Business is anticipating a very pro-business policy from a president that has never served as an elected official
  • Citizens of countries that have been major purchasers of Greenwich houses are seeing problems in their home countries from Brazil to Russia to China to Great Britain
  • National unemployment is relatively and is pushing wages higher, but that has little impact on the Greenwich real estate market

Now if I had to guess I’d say we are looking at a good year in Greenwich real estate with a more positive attitude and people who have been saving for years and have surprising amounts of liquid assets for substantial down payments driving a good market. Even if the year play outs this way, I’m can be pretty sure this will be one of the most interesting years in a long time.