With the supply of houses for sale at near record lows, the Washington area is in the throes of a seller’s market. Still, Lisowski said, sellers — even amid bidding wars that often give them the upper hand — need to stand out to take full advantage of their position in the market.
“We shoot the video as a tool for potential buyers to get a better perspective of the home’s features and benefits, from room size, character, charm and overall layout,” says Lisowski, an agent at Fulcrum Properties Group.
“We feel we’re a little bit ahead of the curve — we hope to get to be as professional as HGTV,” he added. “It’s amazing how many e-mails we get at 2:30 or 3 in the morning from someone pursuing the listings.”
That’s what Lisa and Chris Jollay, who have enlisted Lisowski, are hoping for. Lisowski in late February produced a video tour of their three-bedroom, 21
2-bathroom home on Capitol Hill.
The active listings with videos tend to give buyers a better feel for a property. “You can see what the room looks like,” says Lisa Jollay, 42, a federal employee. “Most people nowadays don’t find their home through an open house; they find it online.”
A squeeze on inventory
The real estate business abounds with stories of the crazy market: a ratified contract within five hours of listing a home; 168 offers on a run-down District townhouse; buyers losing offer after offer and starting to become manic.
Three factors are driving the current seller’s market: low inventory, the velocity of sales transactions and competitive pricing, according to Jonathan Hill, president of data firm RealEstate Business Intelligence, a subsidiary of Rockville-based MRIS. Only 6,092 homes were on the market in the Washington area at the end of February, compared with the region’s 10-year average for that month of 12,173.
Homes in February spent a median of 24 days on market before selling, down from 53 a year before. “As days on market go down, that means the buyers are finding more of what they want, or they settle,” Hill said.
A balanced market would typically have a six-month supply of houses for sale. The supply in the District was 1.92 months in January. It was 2.43 months in Montgomery County, 1.85 months in Arlington and 1.93 months in Fairfax, according to Glenn Kelman, president of Redfin, a Seattle-based real estate brokerage.
One reason for the dwindling number of active listings is that many homeowners who would like to sell are on the sidelines because their mortgages are underwater.
The number of Washington area homes with negative equity is declining, but it is still significant, said Stan Humphries, chief economist at Zillow. In the fourth quarter of 2012, 28 percent of the area’s homes with mortgages were underwater, down from 32 percent in the same period in 2011. The region’s level of negative equity at the end of 2012 was slightly higher than the nation’s 27.5 percent.
“A big piece of the puzzle . . . is loss aversion,” Humphries said. “In January, 27 percent of sales in the D.C. metro area were losses. Most sellers are loath to sell their home at a loss, and many are still anchored on the peak-level prices.”
“Essentially, the housing market has become like a game of musical chairs,” Humphries added. “People won’t get out of their seats because they’re afraid they won’t be able to find another seat to sit down in.”
As a result, sellers who aren’t underwater and want to list often are in a better bargaining position. In February, they were, on average, able to get 97.1 percent of their list price. The 10-year average for that month is 95.5 percent.
Even in a seller’s market, it’s not a given that anyone can simply put up a for-sale sign and expect a wave of offers pushing the property well above list price. Supply and demand — the biggest factors in determining sale prices — can vary dramatically from one neighborhood to another.
Still, with all things being equal, experts say, what can distinguish one house from another in popular neighborhoods are the right pricing strategy and buzz.
Pricing, listing strategies
For Rob and Debbie Seidner, getting ready has meant months of gradually clearing out the toy clutter of their 1-year-old daughter and 4-year-old son and caulking and touching up the paint on their Capitol Hill rowhouse, even though it was gutted and rebuilt two years ago.
“Our house really is move-in ready,” said Rob Seidner, expressing concern about the competition. “We do have a completely redesigned, brand-new house, but most of the ones on the market, you’d be the first ones living there.”
His real estate agent is tracking every listing and sale in the area, making sure that he knows the condition and details of each home, and staying attuned to the changing market. The Seidners have communicated three price points to their agent: the lowest they could possibly accept, the level at which they’d break even and the price at which they could move out immediately.
“We know what he thinks is a really great price, and if someone’s coming in and blowing that out of the water, it’s easy enough to put our things in storage,” said Seidner, 36, who works in human resources at the Transportation Department. The family aims to move to the suburbs, he says, so the children will have better school opportunities.
Whether to list slightly above market, exactly at the market or slightly below in hopes of attracting more interest and driving up the price are hot issues among real estate agents.
Jennifer Nangle, an agent based in the District with Re/Max Realty Services, says she prices homes about 1 percent below the market value in hopes of attracting multiple offers and moving higher.
But Traci Levine, an agent with Long and Foster in Potomac, said, “I’m pushing the envelope with my pricing.” Levine, noting that every listing since January has sold, added: “The good houses are going within a matter of hours to days. There’s just nothing on the market.”
Recently, she listed a Potomac house with an unfinished basement for $920,000 and received multiple offers, when the previous comparable sale from nearly three years ago was $880,000, with a finished basement.
In Northern Virginia, Mary Bayat, broker-owner of Bayat Realty in Alexandria, says she prices houses $5,000 to $8,000 above comparable sales to leave room for negotiation.
“We don’t do that,” Fulcrum agent Tom Kavanagh said. “We try to hit it right on. We don’t want to overprice it.”
The best day of the week to introduce a listing to the market is also a matter of debate. Redfin advised a Friday debut, to land on the top of a buyer’s mobile phone queue when he’s planning his weekend house shopping. Redfin’s historical data show that homes listed on Friday sell faster and closer to the asking price than on any other day of the week.
Other agents prefer to list on Wednesday or Thursday to leave more time to get prospective buyers’ attention.
But in terms of when the buying season will begin, agents and experts agreed that waiting until your flowers bloom may be too late. “We’re in the throes of the spring market now,” said Long and Foster’s Levine. “If you wait until late March or April, you’ll have more properties competing.”
The art of the video
“I’m hanging out in Petworth today right outside President Lincoln’s cottage. He spent over a quarter of his whole presidency here,” says Phil Di Ruggiero in his video on the District’s Petworth neighborhood.
“Let’s go ask him why,” says Di Ruggiero, a real estate agent who owns and serves as marketing director of GreenLine Real Estate in D.C., holding a microphone to the mouth of a statue of Lincoln. “No comment,” he says, then shifts the microphone to the mouth of a statue of Lincoln’s horse. “Let’s go talk to someone who actually lives here now and see what they think.”
Di Ruggiero says he strives for broadcast quality in his seven-minute videos, often employing humor to make them engaging. He says he wants to make house-hunting a fun experience for buyers, rather than drudgery in having to click through photos online.
When he began this marketing campaign in 2009, he said, he paid someone to produce the videos, adding that good ones can cost $5,000. Since then, he has purchased equipment, studied the art of video-making and now produces them himself.
He has produced about 30 videos on D.C. neighborhoods — what he calls mini-documentaries — and on individual properties. One video he produced shows people at an open house raving about a Columbia Heights condo.
He considers 1,500 page views to be a success.
“You can’t fudge with video. For people to give it any credence, they have to feel as though it has the same polish and feel as what they see on television,” he said. Familiarize yourself with “fast editing and fast cuts,” he urges other agents.
Videos are a growing segment of real estate marketing but are not yet widely used, experts say.
In a recent survey by the National Association of Realtors, 14 percent of sellers questioned said their agent used video to market their home, up from 9 percent in 2007. In that same survey, 45 percent of buyers questioned said they found video tours very useful.
“Over the last couple of years, we came from virtually no use of video,” says Paul Bishop, the association’s vice president for research. “Now sellers are looking for creative ways to market their homes. Video . . . is something I can use to really market my home over and above advertising, a mention in the paper, an open house or sign in my front yard. Technology is making it feasible to reach a broader audience.”
Finding the right buyer
Fulcrum Properties Group uses a full-time videographer to make video tours of every home the D.C. real estate firm lists, pointing out different features of the house.
The firm distributes links to the video to brokers, agents and interested buyers, as well as the homeowner’s networks, which with just-listed cards and in-person visits to neighbors will build buzz for the first open house. “That first weekend we’ll get 50 bodies through. It builds a little frenzy,” said Fulcrum’s Tom Kavanagh.
Once the offers start coming in, experts say, it is time to shift from creative thinking to critical thinking.
Remove emotions from the process and focus on your goal: a single, qualified buyer who can consummate the deal in your required time, within your price parameters. As appealing as the scenario of multiple offers and a bidding war seems, that may signal to your buyer’s lender that the home isn’t worth the purchase price — and the financing could fall through, costing you the sale.
“You want one person that’s well qualified, that has a wonderful lender and a great settlement attorney and is going to settle between 30 and 45 days,” said Kavanagh.
Be realistic. Ultimately, it doesn’t matter how hot the market is for other sellers, but for your specific circumstance.
“The market is great, but it matters how you present yourself in the market,” agent Bayat said. “The most important thing is, what is your goal, what do you want to achieve?”
Katherine Reynolds Lewis is a freelance writer.