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Size up the market before you list
With home prices back where they were ten years ago and sales still sluggish, it seems as if sellers can’t catch a break. But if you want to sell your home this year, there are glimmers of hope. In January, the National Association of Realtors reported that sales of existing homes nationally rose slightly from the year before and were also higher than in three of the preceding four months. Plus, the inventory of existing homes for sale fell 21% from the year before.
But even if you have less competition and better prospects, today’s buyers are still a tough sell. They’re nervous and risk-averse. They want a home in move-in condition, with all the upgrades completed, because they know they can’t count on a quick increase in the home’s value to help them recoup money they spend on improvements. They try to negotiate a steal from list price. “You must find a way to improve the condition or lower the price until a buyer pulls the trigger,” says Leigh Brown, an agent with Re/Max in Charlotte, N.C.
How long will it take to sell your home? You can get a rough idea by looking at the average “days on the market,” preferably for your neighborhood and price tier. You’ll find that and other market statistics on the Web site of the local Realtors association or from an agent. You may have some advantage if your home is in a desirable location because, say, it’s in a good school district or close to jobs.
As a seller, you may have your own issues to grapple with — not the least of which is thinking your home is worth more than it is. Gayle Henderson, an agent with Re/Max in Phoenix, recommends that sellers play “buyer for a day” to check out the competition in their neighborhood. It will help you be more realistic about the price you set for your home.
Above all, find a good agent. Don’t interview just one candidate — that’s a mistake that two-thirds of sellers make, according to the National Association of Realtors. In addition to a history of successful sales in or around your neighborhood, you want total honesty — even if it’s painful to hear that you must spend money in order to sell.
In 2010, sellers nationwide paid an average commission of 5.4%, reports Real Trends, a real estate consulting firm. If an agent or the agent’s firm wants to be able to represent you and a buyer in the same transaction in order to collect the full commission, try to negotiate the rate down by one or two percentage points.
Get your home in shape to sell
To hook buyers and reap the highest possible price, you must clean, declutter and stage your home, inside and out. Cotty Lowry, an agent with Keller Williams, in Minneapolis, tells his sellers that they should expect to spend two to four weeks preparing their home for sale, and be ready to spend as much as 2% to 3% of its list price on improvements. Lowry tells balky sellers that spiffing up the place could cost them less than having to make an initial price reduction.
As a first step, Lowry says, you should hire a home inspector for a “pre-inspection” to identify all the issues that would otherwise turn up in a buyer’s inspection. Get a termite inspection, too. (The report would count toward any closing requirement.) Each will cost you $300 to $400. The inspections give you the opportunity to make repairs so buyers won’t reject your home out of hand or use problems to negotiate against you.
Charlotte, N.C., agent Leigh Brown says that you may also need to invest in improvements that buyers now expect as standard features. In many markets that means granite countertops and hardwood floors, even in starter homes. All other things being equal, those two features will put you head and shoulders above your competition. Ask your agent to check the features of recently closed and pending sales. You’ll know what amenities you need to match, or what you can do to sell faster, even if you can’t raise your price.
Expect to get advice about spiffing up your home from agents and their stagers. But you can begin preparing your home using the checklists in the “Home Sale Maximizer Guide” by HomeGain, a home-marketing Web site. Stagers declutter if you haven’t, rearrange furniture to improve traffic flow and create a sense of spaciousness, and make sure your décor doesn’t shout your personal tastes. Home sellers spend an average of $1,800 staging a home, but the cost can be $5,000 or more. Agents may provide the service as part of their fee.
Staging proved critical to the sale of Tim and Kristel Barber’s home, in Minneapolis. They thought that their four-bedroom, four-bath home had everything a buyer could want, including high-end finishes and a hot location in the city’s Linden Hills neighborhood, where million-dollar homes were replacing tear-downs. But the sticking point for buyers was a long, narrow living room.
The Barbers first put their home on the market in March 2011, but by October, after several price cuts and an attempt at staging, it hadn’t sold. So the couple got serious: They moved their four children and belongings to their new home, and a stager brought in new furnishings throughout and redesigned the living room to create a welcoming entryway and a seating area with smaller-scale furniture. A month later they got an offer. Altogether, the Barbers spent $6,200 on two stagings.
Price it right and negotiate
No agent can guarantee that your house is worth x and will sell for z. Instead, you and your agent should scrutinize all the comparables (current listings of homes for sale, recently closed sales and pending sales in your neighborhood) for the past six months that are similar to your property. Agents must visit comparables in person to accurately assess differences that will influence desirability, price and whether they really are your competition, says Francie House, an agent with Seattle broker Windermere.
If you want to start with a price at the high end, be prepared to lower it within a certain length of time or number of showings, based on your agent’s experience. While sellers may think that a price reduction suggests weakness, Lowry says it shows buyers and their agents that sellers are flexible. Plus, it will generate automatic e-mails to buyers and inclusion on agents’ “hot sheets,” which prompts renewed interest and showings.
Negotiate the price. To head off a price reduction, try offering perks that add value for the buyer without costing you too much. But wait to include the incentives until you make a counteroffer, or else your tactic could backfire. For instance, buyers may want you to cover
part of their closing costs. But if they know too early that you’re willing to ante up the money, they’ll expect you to reduce your price by that much – and still ask for closing costs later.
If the buyer gets a mortgage backed by or sold to Fannie Mae or Freddie Mac, the agencies’ rules will limit how much of the buyer’s closing costs you can pay. If the down payment is 10% or less on a principal residence or vacation home, you can cover up to 3% of the closing costs; from 10% to 25%, 6%; and 25% or more, 9%. With VA financing, you can pay all closing costs, plus up to 4% of the sales price for other buyer costs or to pay down debt so that the buyer will qualify for a mortgage.
Perks in lieu of price cuts. When you make a counteroffer, instead of a price reduction you can try to offer something that adds value for the buyer without costing you too much. Your agent can ask the buyer’s agent, “What’s important to your buyer? What do they need?” says Leigh Brown, an agent in Charlotte. The possibilities include a flexible closing date, a home warranty (about $400), paying homeowners-association dues for some period of time or offering appliances or furniture that you don’t want or don’t want to move.
Qualify the buyer. The best offer isn’t always the one with the highest price. It’s the one that will close, and that means buyers must assure you they will qualify for the financing they need. A preapproval letter (the buyers have qualified for a loan based on an application and some documentation) from a known, creditable lender beats a prequalification letter (a ballpark estimate of what the buyer can afford). If you receive an offer with only a prequalification, your agent can call the buyer’s lender to scope it out. Or better yet, ask the buyer for permission to get financial details from the lender.
You could ask buyers to sign a financing addendum to the purchase contract. The buyer must agree to be fully approved for financing and ready to close in a set amount of time — typically two weeks to a month — before the scheduled closing. If the buyers and their lender don’t meet the deadline, the seller can cancel the contract.
http://www.kiplinger.com/magazine/archives/how-to-sell-your-home-fast.html?topic_id=35
REThink Real Estate
By Tara-Nicholle Nelson, Thursday, March 8, 2012.
I’m a proponent of listing with an agent with as deep a local knowledge and relationship base as possible. With buying, things can be a little bit different — especially if you are relocating and looking at a wide range of areas.
Unless you’re house hunting in a super-specialized neighborhood or for a unique property type, like a Manhattan co-op, any buyer’s agent from the general area can get familiar with a neighborhood in that region pretty quickly if he or she is up to speed on the basics of doing deals in an area.
When it comes to selling, though, it’s quite a bit tougher, especially on today’s tough-to-sell market where pricing and marketing nuances (along with vendor, lender and inspector relationships, and contacts with buyer’s brokers and buyers themselves) are crucial to get homes sold.
Before we get into the details of what a local specialist has that another agent might not, though, I do want to say this: I don’t know your local market, but in many areas of the country even the most local, smartest, most aggressive, best-marketing listing agent might not be able to move a home in five months or less. Frankly, the best agent cannot move an overpriced or poorly prepared home.
And the fact is that nonlocal, specialist agents do provide sound advice on pricing, preparation, marketing and strategy to sellers every single day across the country. So, while a local-area specialist might have a leg up on another agent based on relationships and insider knowledge, that is no guarantee that he or she will be superior to the agent you have right now.
So, before you go through the upheaval of finding another agent, ask yourself:
- Do the challenges you have with your current agent actually have anything to do with her relative “outsider-dom”?
- Has your current agent given you any advice on getting your home sold that you have failed to follow (i.e., cut the price, clear the clutter, hire a stager, etc.)?
If you are not following your current agent’s advice, then you should think twice before firing her because your home hasn’t sold. Hiring another agent will not resolve your problem if your home is still overpriced or underprepared.
So, assuming you are willing to do everything within your power to price and prepare your home fairly, here are some of the considerations that tilt my general opinion in favor of a local listing agent vs. an agent from outside the area:
1. Local agents may have insider marketing knowledge. In certain neighborhoods in my town, for example, the standard practice is to:
- List a home midweek.
- Hold it open for brokers only on Thursday — and advertise those on agent-only fliers.
- Not allow it to be shown otherwise until the Sunday open house.
- Hold it open for two Sundays.
- Take offers the Tuesday or Wednesday following the second open house.
Agents from surrounding areas could probably guess at some but not all of these things, but often they don’t. And that lack of insider knowledge might actually prevent out-of-the-area agents from getting the fullest exposure for their listings.
For example, if you just took the first offer that came in, you might forgo the offer of a local buyer who was expecting to have two weekends to get to the place.
2. Local agents may have relationships outsiders don’t. They may know the other agents in town, and be able to market the property to them casually, as they run into them in the grocery store or at local meetings, in a way that (a) works and (b) an agent from outside the area cannot. They also will have the built-in marketing channel of being able to market to agents inside their own office — not to mention the buyers they represent.
Finally, local agents might know the inspectors, appraisers, even lenders (i.e., all the pros who have to work together to close a deal) and have a relationship of trust with them that a stranger does not.
And that includes being able to find contractors or other vendors who will do repair work at better prices or on better terms than they would offer to a stranger.
3. Local agents might have a leg up on pricing. Possibly the strongest argument for working with a local listing agent is that they know what local buyers want, care about and deprioritize. That means they understand local pricing nuances better, having worked with local buyers, and having viewed and/or sold recent homes nearby.
You don’t have to have been in the market long to understand that photos can be misleading and that location nuances weigh heavily on the prices that buyers are willing to pay, so the history of having actually been to and inside the comparable sold listings — rather than just having seen them online, can be critically important to understanding how comparable they are to your home, and how your home should be priced accordingly.
Depending upon which day of week you list a house for sale, you may have better luck in selling it, suggests a new study.
You only have one chance to make a first impression with your listing, and it’s best to do that on Friday, the study notes. Homes listed on Friday are 12 percent more likely to sell within 90 days, and these Friday-listed homes also are likely to be toured more by potential buyers, according to the study by Redfin, which analyzed sales data of more than 1 million listings over nearly a 2-year timespan to determine if a certain day of week tended to generate higher sales.
So what’s so special about Friday? According to Redfin, buyers tend to tour homes on the weekends and, therefore, homes listed on Fridays tend to be the most top-of-mind when they’re plotting out their weekend.
“It also seems likely that many home buyers sort their weekend ‘must see’ lists by date listed, going to see the freshest homes first so they have the best chance of getting in on a potential good deal before other buyers,” the Redfin blog suggests.
Redfin also found in its study:
- Homes listed on Sunday were found to get slightly more online views.
- Homes listed on Friday get toured 19 percent more than homes listed on other days of the week.
- Homes listed on Friday or Thursday tend to sell for slightly closer to the original list price.
It’s a highly competitive market for home sellers right now. More homes to compete with means that the impression your homes makes – from the curb, and on the inside – matter now more than ever. You can increase your chances of selling faster – and at today’s top dollar – by investing in a select few home improvement projects that have been shown to make a big impact on buyers.
Bad news alert: it might cost you a little time, effort and cash. The good news, though, is that the best projects for quickly increasing your home’s resale value tend to be cosmetic and fairly simple and inexpensive to do. Here are five projects with big-time return on investment for home sellers-to-be, in terms of their power to attract buyers, and to attract dollars from those buyers.
1. Painting: Adding a fresh coat of paint to ceilings and walls is a tried and true way to increase your home’s appeal to buyers. Go for white or neutral tones that help lighten your rooms. (Now is not the time to show off your fascination with fuschia and lime green.) Buyers will have an easier time envisioning how they will infuse their own personalities into your home if they’re looking at a relatively blank slate.
Painting lightens and brightens rooms, instantly removes scuffs and dings and gives every room a fresh, polished feel.
Fresh exterior paint – even if your time or cash budget limits your efforts to accents like eaves, shutters, doors and trims – is also a quick, inexpensive way to polish the look of your home from the curb.
2. Landscaping: Everything you’ve heard about curb appeal is true. First impressions matter – especially if your house is one of eight or nine a buyer has seen in one day. Buyers will be more excited to look at the inside your home if the outside looks clean, charming and inviting. Mow the lawn, trim the hedges, pull the weeds and plant some flowers, bushes or shrubs for the biggest impact – and be diligent about keeping your landscaping very well-manicured throughout the time your home is on the market.
Be sure to keep it low-key, relatively low maintenance and neutral, though. This is not the time to indulge your personal fantasies of living in an exotic paradise, unless that matches the existing look and feel of your home, nor is it the time to install a time-intensive English garden that buyers will love, but not want to take on. Think clean, simple and elegant for the biggest boost in value.
3. Cleaning and de-cluttering: Start by removing all your family photos from the walls and all sorts of tchochkes and clutter from the tops of tables, desks, dressers and counters. Buyers want to be able to envision their lives in the house, not yours. Personal items – and the visual clutter they create – have been shown time and time again to block buyers’ ability to create this vision.
Also, remember that buyers are coming to see the house and evaluate its space, not to bear witness to all the fabulous furniture that means so much to you (no matter how amazing your personal taste). Remove furniture that takes up too much space and fills up rooms. Get rid of clutter such as clothes, boxes, piles of mail and other items.
And then clean – and keep cleaning obsessively, the entire time your place is on the market. Kitchens, bathrooms and bedrooms should look unlived in when they are shown. And don’t forget to clean less obvious places like windows, walls, doors and and floors, to dust off shelves and furniture, and to polish appliances.
4. Plumbing repairs and water stain/damage repair: Paying a plumber to make a few stops throughout your home can be well worth the investment. Leaky faucet in the master bathroom? Get it fixed. Does the space under your kitchen sink look like a science experiment? Leaks and water stains definitely provoke disgust and exasperation on the part of the buyers you want and need to impress. And they can be pretty cost effective to fix – ask your agent for a referral, if you need one.
5. Staging: Staging your home can make a dramatic difference in the price for which your home sells. Good staging is equal parts:
(a) removing your personal belongings and replacing it with more artwork, decor and cleaner-looking furniture,
(b) and tweaking the home’s paint, wall coverings and even landscaping to show the place in its very best light.
When done well, staging can convert your home from just another listing on a buyer’s list to the setting for a fresh, new start to the fresh, new life of their dreams. Professional stagers, in particular, have special skills and materials they use, from convincing you to get rid of a bunch of things you value (but read: junk to a buyer), to items like mirrors, plants, art work, lamps, pillows and even furniture that tells a visual story of the life buyers can fantasize about living in your home.
Talk to your agent about staging – some agents have the skill to do this on their own, while others might have a professional stager they frequently work with.
In some cases, you might want to take on even larger projects. Before you go that route, talk with a local real estate agent; they are well-positioned to know what sort of updates and features will make the most impact on local buyers. Not all major, non-cosmetic upgrades to your home will create a significant difference in the price it commands, so take advantage of your agent’s expertise as you make decisions about whichproperty preparation investments to make (and which to forego).
RISMEDIA, February 17, 2011—In a landmark study examining the home buying and selling preferences of consumers in the Mid-Atlantic region, 95% reported that working with a real estate professional is just as important, if not more important, than it was just a few years ago. The survey results were released in a new research paper entitled Keepin’ it Real, by MRIS, the area’s Multiple Listing Service (MLS) and a leading developer of real estate information technology. According to the report, which can be found on www.MRIS.com, today’s consumers recognize this is not the time to complete a real estate transaction on their own, and are placing a stronger emphasis on the agent’s professional skills. As such, trustworthiness was ranked as the most critical factor in choosing an agent, followed by experience, willingness to look out for a client’s interest, expertise in negotiating contracts, responsiveness, familiarity with contracts and knowledge of the local community. These requirements are evidence that consumers are seeking more than simple guidance, they are looking for an expert they can trust to execute a step-by-step process throughout the entire transaction. “In today’s housing market especially, this is no time to go it alone,” noted John L. Heithaus, Chief Marketing Officer of MRIS. “With 95% of all buyers and sellers reporting that working with a professional real estate agent or broker is important, it is evident that consumers understand how vital they are to the process. A real estate professional has the industry knowledge, networking ability and expert guidance on home buying and selling to deliver top notch customer service and advice, and provide a successful experience for consumers.” Additionally, the Keepin’ it Real report reveals that 68% of buyers and sellers rated their agent with a six or seven, on a 7-point satisfaction scale. This high level of consumer confidence reinforces the credibility of the real estate professionals in the Mid-Atlantic area. Nearly half of the consumers surveyed, or 48%, found their agent by way of referral. Moreover, 80% of consumers stated that they would recommend their agent to a friend or family member, especially those that purchased or sold a home in the past twelve months. Whereas in years past, the agent was the first step in the home buying or selling process, today, Internet-savvy consumers can gather information and educate themselves, long before contacting an agent. The Internet empowers consumers to search for homes and neighborhood information, compare pricing and explore financing options on their own. Yet, despite all of the tools and resources available, when it comes time to actually buy or sell a home, there is nothing more valuable than the industry knowledge, expertise and guidance a real estate professional brings to the table.
Here is a brief summary of this year’s GSMLS sales data for our market area, which comprises the Chesters, Mendhams and Long Hill Township of Morris County, and Basking Ridge, Bernardsville, Bedminster, Far Hills, Peapack Gladstone, Warren and Watchung of Somerset County.
In an earlier post I referred to a very large markdown from a very high starting price for Leonia Helmsley’s Greenwich CT estate. The very large markdown resulted in a much lower sale price, but one that certainly was still “very large”, at least by my humble standards.
Originally listed for $125 million in early 2008, the property finally sold at $35 million. At that sale price the 40-acre, 23,000-square-foot Dunnellen Hall estate is a $90 million let-down, a 72% reduction over 2 years from the original listing price. Harsh.
But that’s probably not your problem, at least not in the same scale. Still, what should you do when your listing doesn’t sell? How much of a markdown will get you offers and the most money for the sale of your home?
I’ll start by stating your mileage can and probably will vary, but there are a few recommendations to make.
1. A Nice Entryway
Impress buyers right off the bat with a beautiful entrance. I always recommend sellers put a fresh coat of paint on the front door. And if you don’t have an entrance at all, make one. This problem, more common in condos and apartments, is solved by cleverly placing furniture to create more of an entryway. A console table or demilune chest of drawers with something over it creates a welcoming vignette.
2. Hardwood Floors
Realtors agree that most buyers are hunting for hardwood. You can bet that, of all types of flooring, hardwood floors will have the most longevity and will never go out of style..
A synthetic wood floor, like Pergo is always a good option for those who can’t afford hardwood . But know that a laminate floor won’t fool everyone – it has a hollow thud when you walk on it and it doesn’t look the same but it does show crisp and clean and today’s buyer is looking for “move-in-ready”.
3. Fabulous Fixtures
Fixtures says designer Linda Applewhite, “are the jewelry of the house.” Only the extremely detail-oriented among us will stop to inspect doorknobs, faucets and cabinet knobs, but designers and real estate agents argue that we’ll prefer the look of a place that has coordinated fixtures that are a cut above standard developer grade.
Replacing knobs and drawer pulls is the quickest way to make over a bathroom or kitchen. And when it comes to faucets, for $60 or $70 dollars you can buy something infinitely better than what you likely already have.
4. Beautiful Baths
According to real estate agents, marble counters, whirlpool baths and steam showers up the attractiveness of any bathroom. But if you don’t have these luxury items, it may be more practical to address the unattractive aspects of your existing bath.
Rip out that big sheet mirror and those globe lights that look like you’re in a theater dressing room. Replace them with an elegant framed mirror (don’t be afraid to look outside the bathroom section) and sconce lighting on either side.
This lighting scheme is also more flattering to the face and making buyers feel pretty will pay off!
5. Countertop Considerations
You’ve probably heard that granite is the secret to a contemporary kitchen, but that’s not necessarily what buyers are after. It’s really about the slab. Buyers don’t want to see grout lines on their counters. So, when it comes to slab countertops, granite is the top pick because it’s hard, nonporous and easy to care for. But then again, so is Corian; so are composite stone surfaces such as Silestone and, she notes, with the help of today’s sophisticated sealants, so are concrete, limestone, soapstone and marble.
Even butcher-block, which is much less expensive than stone, can be a more appealing alternative to tile or laminate countertops. When it gets funky, you can sand it and oil it and it looks good agains.
Already have granite? Make it cutting edge. A lot of people are honing their granite now….. What that does is knock it down and make it more matte, so it looks warmer and more inviting. Shiny surfaces can look very cold.
6. Steel This Idea
Why do buyers go bananas for stainless-steel appliances? It’s the power of suggestion. A kitchen with stainless appliances looks like a commercial kitchen. It makes people think that they’re great cooks, but because the finish shows fingerprints, it’s not for everyone.
As far as other alternatives go, the designers agree that in general, black fixtures can look dated, while white is okay for a country kitchen. And some people are making appliances blend in beautifully by ordering front panels to match their cabinetry.
7. Pre-Organized Closets
Just as stainless appliances convince buyers that they are better cooks, closet organizers make buyers believe that they are better homemakers. If your closets are unadorned, don’t underestimate the importance of this easy addition.
They make you feel secure and calm and people need that. And while you don’t need to use high-end organizers, make sure that the materials are up-to-date. Twenty years ago, closet organizers meant wire shelves. You can’t slide anything over a wire shelf. You can’t even put a hanger in some of them. Today’s ideal would be melamine shelves, in bone or white, with some drawers and metal rods to maximize storage.
This organization shouldn’t stop in the closet – make sure your kitchen cabinets are orderly, too. If they open up a door and see a big pantry, but it’s not organized properly, it won’t be as exciting as something already organized with a place for everything.
8. Light Up
Floor lamps just don’t cut it these days. If your home doesn’t get a lot of natural light, consider installing recessed lighting or new sconces, or both, so the buyer won’t struggle to figure out how to brighten up the space.
Lighting is probably the most overlooked, yet the most important aspect of interior decoration……In newer construction, you don’t have sufficient lighting. The reality is that everyone needs three types – task, ambient and decorative lighting – which allow you to change the mood of the room.
When it comes to recessed lighting, know that the smaller the fixture, the more updated it is. We used to have six-inch apertures, now we have four-inch openings. And using halogen bulbs gives a cleaner, more modern look.
9. Built-In Bonus
Many buyers view built-ins as “free furniture.” Well-crafted bookshelves, china cabinets and entertainment units can “make a home stand out as quality.”
On the other hand it can be a catch-22 because some people would rather organize their own furniture. Sometimes it’s better to have freestanding pieces that look like built-ins, that you can give the buyer the option to purchase.
10. Grass Is Greener
Are the homebuyers in your area families with young children? If so, they’ll be drawn to spaces with a flat, open lawn.
Were you thinking of putting in a concrete patio or rock garden? Don’t bother if you’re putting your home on the market. A flat yard is a real plus. Spend some money and put in the grass. It’s a good seller; green is good.
Bonus Tip: Furnish That house!
Think you’re ready for the open house? Consider this: Architecturally interesting homes in immaculate shape can be shown empty.
But, in general, “people look for a homey kind of a feel” . And that’s homey, not homely. If the bulk of your furniture isn’t attractive, don’t hesitate to have it staged (propped with attractive rental furniture). We’re even seeing that done in the inexpensive condo market and it makes a huge difference to your bottom line…. The way you list your home is very different than the way you live!
The late Leona Helmsley’s 40-acre estate in Greenwich, Connecticut was originally listed for $125 million. It closed this week for $35 million. (She was the one who was quoted as saying, “only the little people pay taxes.”)
$90 million is some discount – it may be the biggest ever. Some distinction.
Details here: Leona Sells Her House
More than four years after the housing market peaked, many of the nation’s wealthiest homeowners are slashing prices in earnest. The asking price on the late Brooke Astor’s Park Avenue duplex has plummeted to $24.9 million from $46 million. Thursday Peter Sperling, son of the University of Phoenix founder John Sperling, dropped the price on his San Francisco limestone mansion to $47 million; he had been asking $65 million since 2006.
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| $125 million Fleur de Lys near Beverly Hills |
Then there are the ultimate holdouts: a rarefied slice of extremely wealthy sellers who are holding the line on today’s deal-making, price-slashing mentality. Even as their properties have lingered on the market, these sellers haven’t budged on initial asking prices, some of which were set in the waning days of the housing bubble.
Suzanne Saperstein, ex-wife of Metro Networks founder David Saperstein, is still asking $125 million for “Fleur de Lys,” a 41,000-square-foot, French chateau-inspired mansion near Beverly Hills with gold-embossed leather wall coverings and a ballroom. The listing has been on the market since at least April 2007, a month when the Dow passed 13,000. Mr. Saperstein has an equestrian estate that’s been asking $75 million since at least August 2007.
Also sitting on the market is the 600-acre Carmel Valley, Calif., ranch owned by Jim Kirk, who founded rental equipment company NationsRent, which sold for $600 million in 2006. Purchased for about $10 million after a five-year search, the property-with a four-bedroom main house, hiking trails and other structures-has been listed at $33 million since November 2006.
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| Jim Kirk’s $33 million 6,500 acre ranch |
With housing prices off about 28% from their peak in 2006 according to Standard & Poor’s Case-Shiller Index, some real estate agents say waiting is a risky strategy. “Everyone, from bottom to top, got hurt in the financial panic, and it’s reflected in the high-end of the housing market being frozen,” says Mark Zandi, chief economist of Moody’s Analytics. He adds that price declines, originally confined to the bottom of the market, have begun migrating upward.
“We’ve never been in a more price-sensitive market,” says Janet Owen of Sudler Sotheby’s International Realty, who recently got the listing for the Chicago mansion of J.P. Morgan’s Jamie Dimon. Originally listed for $13.5 million in 2007, the home as of August was listed at $6.95 million. It went into contract in late September. “The smart sellers respond to the market,” Ms. Owen says.
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| Tucker Frederickson’s $50 million Florida ranch |
Some holdouts and their brokers defend their prices, arguing that their estates would be difficult, if not impossible, to replicate today. “I feel the property is worth every penny-and probably then some,” says Tommy Hilfiger co-founder Joel Horowitz, who has been asking $100 million for his 210-acre estate in Zephyr Cove, Nev., since July 2006, when the National Association of Realtors’ then-Chief Economist David Lereah said that housing appeared to be headed for a soft landing in most markets.
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| Hana Ranch near Maui, Hawaii |
Mr. Horowitz notes that he and his wife Ann spent a year designing the home and three years building it and bought items for the home on their travels before it was even built-including lighting fixtures, fireplace mantels and 400-year-old flooring from French châteaux.
Others point to recent mega-deals, saying it’s simply a matter of finding that one right buyer. London developers Nick and Christian Candy in September reportedly sold their Monaco penthouse for nearly £200 million (about $314.3 million), believed to be one of the most expensive residential real-estate deals in the world. Since buyers can be expected to come in with lowball offers, cutting the asking price would be akin to negotiating with yourself, says former New York Giants running back Tucker Frederickson who, with a partner, has been asking for $50 million for a 5,000-acre cattle-and-shooting ranch in Florida since 2008.
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| Candy Spelling’s $150 million home. |
While many home sellers can be slow to adjust to the market, the very wealthy can be the slowest of all. “That stratum of the population is not impervious to what’s happening in the market, but they operate by their own set of dynamics,” says Sam Khater,
Still, it’s a rule of thumb that the longer a listing lingers, the less desirable it often seems to buyers. For some of these holdouts, brokers have masked length of time “on market” by avoiding officially listing them or yanking them on and off multiple-listing services. Instead, properties are marketed on brokers’ own Web sites, by word of mouth or through targeted mailings. Candy Spelling’s “The Manor” in Los Angeles officially hit the market in March 2009, for example, but was shown in 2008.
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| Joel Horowitz’ $100 million ‘Tranquility’ Estate |
Drew Mandile of Sotheby’s International Realty, who represents Mr. Saperstein’s equestrian estate, says he and his colleague “go dumb” any time a prospective buyer asks how long the property has been for sale. A response could invite fruitless inquires about how low a buyer could bid. “Do you think a seller has ever told a broker how much he would ever take?”
