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