As Winter Approaches, Should Sellers Wait for Spring to Put Homes on the Market?

The short answer is “no.”  Winter has proven to be a great time for listing a home, with less competition from other listings but still an abundance of buyers looking for a home.

I tell clients that December is now the “hottest” month when it comes to selling homes in Denver and Jefferson County. It’s shown in the chart I created (below) using the MLS, www.recolorado.com.

On that chart you can see that in December 2014 and 2015, there were a nearly equal number of active and sold listings. This was also true of the late winter months. January was the only winter month with low sales. In the summer, there were far more active listings than sold listings, meaning that if you are one of the sellers choosing to put your home on the market in the winter, you have less competition for buyers who are looking year round.

 

I no longer think of summer as the “selling season.”  Rather it is the “listing season,” because that’s when sellers assume it’s best to list a home. But the smart sellers list their homes in the winter.  I know, it sounds counterintuitive, but consider the following:

 

Last week I published a chart of the Golden Real Estate listings which sold recently at well above their listing prices. Most of them sold in less than a week. That only happens when you attract multiple buyers by pricing a home at market value, rather than at a wished-for higher price.

Recognizing that only one buyer won the bidding war for each of those homes, that means all the other buyers are still looking.  Even if they get discouraged and stop looking actively, you know they’re keeping an eye on listings, and if your home matches what they’re looking for, they’ll ask to see it.

 

That’s why it’s smart to put your home on the market in the winter months. But beware of overpricing your home. I recommend using my personal strategy of pricing your home at that sweet spot — low enough to attract multiple offers quickly — and then working with the agents submitting offers to get the highest price. As I’ve written before, this is no different than how an auction works.  If you’ve been to an auction, you know that the auctioneer starts the bidding at a low price to get buyers engaged, and then lets buyers drop out as the price rises due to competition. The same process works for selling a home. We know, because we do this all the time, as demonstrated by that chart in last week’s column. (If you missed last week’s column, you can read it at www.JimSmithColumns.com.)

Why Owners Who’d Like to Sell Their Homes Aren’t Putting Them on Market

[Published Feb. 9, 2012, in the Denver Post]

In recent columns, I’ve pointed out the rapidly declining inventory and the need for more listings.  There is no better time than right now to put a home on the market. Buyers, lured by record low interest rates, are snapping up the few homes on the market—when the price is right.

This is especially true in the lower price ranges.  When I did my monthly analysis on Feb. 1st, I found that 40% of all front range listings under $200,000 are under contract. That figure drops to 37.4% for homes between $200K and $300K, and to 29.5% for homes from $300K to $400K.

Between $400K and $500K, 22.4% of the listings are under contract, and between $500K and $600K the percentage is 20.9%. Above that price range, the percentage keeps dropping, so only 9.1% of homes priced over $1 million are under contract.  But that’s still a pretty hot market.

That raises the question, “Why aren’t more people who want to sell putting their homes on the market? Let me speculate on some of the reasons, and perhaps some readers will want to suggest their own reasons.

Reason #1: Sellers are “under water,” owing more than they can sell their home for.  This is especially true in the higher price ranges, as well in areas impacted by foreclosures and short sales.

Reason #2: Sellers are not under water, but they don’t have enough equity to produce the cash they’d need for a down payment on their next home. (Those who are wanting to buy under $420,000 may not know that with an FHA loan they can put down at little as 3.5%, or with a CHFA loan as little as $1,000.)  Observation: If you’ve been wanting to refinance your current home and have good credit but not enough equity for the refi, you probably do have enough equity to buy a different home at low rates with an FHA loan!

Reason #3: Would-be sellers want to wait until the value of their home increases. However, if these sellers expect to buy another home after selling, they need to realize that if they wait until their home’s value increases, then they’ll probably end up paying more for the home they purchase, so they might as well “take a loss” on their current home. It evens out in the end.

Reason #4: Sellers are worried about their job security and loss of income to support a new loan.

I’m sure there are many other reasons, and I’d love to read them on this blog. Or call me at 303-525-1851.

Supply of Homes for Sale Is Being Depleted; We Need More Homes on Market

[As published on Jan. 19, 2012, in the Denver Post]

The statistics speak for themselves. Right now there are 31% fewer homes for sale on the Denver MLS than there were at this time last year.  In the non-foothills portion of Jefferson County, the inventory of homes for sale is down 39% from a year ago. 

Despite fewer homes to choose from, the number of homes under contract is up by 13% from last year.  Thus, the percentage of inventory that is under contract is 27.5% vs. 18.8% a year ago.  In Jeffco, that percentage is even higher.

The bottom line message could not be clearer.  If you are thinking of selling your home, there is no better time than now to put it on the market.  We need inventory!

Buyers are buying right now, and for a very good reason.  The interest rates are at record lows. Look at these rates offered by a lender with whom I do business:  30-Yr Fixed—3.75% (Jumbo* 3.875%)  15-Yr Fixed—3.0% (Jumbo—3.125%)  5/1 ARM—2.125% (Jumbo—same rate)  FHA 30-Yr Fixed—3.75% (no points)

The above rates all include one point, except for FHA. If you want to pay no points on the non-FHA loans, the rate is 0.25% to 0.375% higher. 

As a guide, each 1% change in rate on a $250,000 loan saves or costs the borrower about $50,000 in interest over a 30-year term.

Not only should sellers consider putting their home on the market at this time, but buyers should get off the fence and buy before rates go up. Remember, you can buy a home with as little as $1,000 down in Colorado, thanks to the Colorado Housing and Finance Authority (CHFA). If you don’t have a good lender, I’d be happy to refer you to one.  Call me at 303-525-1851.

*A “jumbo” loan is a loan over the conventional loan limit of $417,000.