For the past two months, Bob and Sarah Steck have been preparing their 82-year-old Tudor-style home in the District’s Chevy Chase neighborhood for sale.
Bob Steck, a writer and consultant, and Sarah Steck, a psychiatric social worker, have upgraded the home with fresh paint, new kitchen appliances and refinished oak floors. They converted their garage into an office and are marketing the backyard structure as a potential guesthouse, playroom and artist’s studio. For extra measure, they’ve also hired a staging firm to elevate the home’s image with artfully arranged furnishings.
“We had to create something that didn’t look like we had been living here for 26 years,” said Bob Steck, who estimates the upgrades cost about $15,000 to $20,000.
Such preparations have become essential for homeowners who want their properties to stand out in today’s changing market, even as low mortgage rates and slim inventory of homes within some neighborhoods in the District and close-in suburbs are driving up buyer demand.
The reality is that the Washington-area market is varied, with some homes garnering multiple offers and others languishing for months. Increasingly, a major factor determining which category you’re in rests on what neighborhood you’re in. For instance, in April, houses in Fairfax County were on the market for an average of 48 days and sold for more than 96 percent of their asking price, according to RealEstate Business Intelligence. But in Prince George’s County, which has a glut of distressed properties, houses in April remained on the market an average of 112 days, selling for about 93 percent of their asking price.
Still, it’s not a given that sellers in a hot neighborhoods will get their asking price or that those in cooler markets won’t eventually find a buyer. Real estate experts say houses in high-demand areas must be priced right and in tip-top shape to make buyers feel they are getting the best value. Meanwhile, sellers of houses that are underwater may have new options for a short sale.
“Sometimes it seems like a tale of two cities,” said real estate agent Morgan Knull of Remax Gateway.
“Starting in February, every house in Arlington that one buyer client of mine liked ended up receiving multiple offers and usually escalating over list price before it was all over. We finally ratified an offer on a detached house in North Arlington after the first buyer whose offer was accepted flaked out. Meanwhile, this spring I’ve listed three short sales in the Brookland and the Congress Heights neighborhoods of D.C., where housing prices haven’t recovered sufficiently for underwater sellers to do a regular sale.”
As an alternative to repeatedly reducing the price, some owners of hard-to-sell properties are resorting to cash incentives and concessions.
To help move a colonial in Upper Marlboro, Selma Jager, a real estate agent at Long & Foster’s Bowie/Crofton office, said she got the seller to ante up a $4,000 bonus to any agent who could close a deal by June 30.
“Traffic has picked up dramatically,” Jager said, although no deal has been struck yet.
Jager said she’s also recommended to other clients that they offer buyers a one-year warranty, protecting the house’s appliances, plumbing and mechanical systems. “Where there is an abundance of properties on the market, you have to do something to stand out in the crowd,” she said.
Underwater sellers, though, often don’t have the money for such incentives. Indeed, many are looking for their lenders to give them a break in the form of a short sale.
The plethora of sellers of distressed properties seeking short sales has contributed to the high inventory in many neighborhoods, keeping prices low. But Knull said that as short sales become more common, lenders are offering new products to make the process simpler.
In general, to qualify for a short sale, sellers must owe more than the house is worth; must have no money to make up the difference; and must have faced a hardship, such as the loss of a job or a job relocation.
Typically, sellers who are underwater have to reach a proposed price with a buyer. Then they must get the lender to agree to that price. If the lender doesn’t, the buyer most often walks away and the seller has to start over.
But Knull says a new Bank of America program minimizes the back-and-forth.
“Once you’re in [the program], it’s beautiful because the sales price Bank of America is willing to accept is progressively reduced during the four-month listing period until it goes low enough to attract a buyer,” Knull said.
The slow economic recovery has forced sellers to become more realistic about pricing their properties. But some still think they can get more for their homes than the market will bear — about 5 percent more, according to several agents. “That’s not realistic,” says Kimberly Cestari, an agent with W.C. & A.N. Miller, who represents the Stecks. “The D.C. market is seeing about a 2 percent price appreciation over median home prices in 2011.”
Even in neighborhoods where you would expect multiple offers, experts say, it may be best to slightly underprice.
The asking amount should be low enough to attract the most foot traffic within the first few weeks of a listing. “You only have two to three weeks on the market to be the new kid on the block,” says Rachel Valentino, an agent at Keller and Williams. Sellers of houses that linger on the market for longer periods are likely to have to reduce their asking price.
Remodeling a home is an essential part of selling it. But sellers often struggle to find the right balance: If they do too little, they won’t attract a buyer. If they invest too much, they won’t yield a return on their investment.
“Keep in mind that people don’t fall in love with new insulation or triple-pane windows,” says designer and former realty agent David Waguespack of Case Design and Remodeling Inc. in Bethesda. “They get excited about a Sub-Zero refrigerator or cherry cabinets.”
If you can afford it, remodel your outdated kitchen and bathroom well in advance of listing. “If your neighbors have renovated, then it’s a good idea that you do, too,” says agent and stager Michelle Morris of Remax Gateway.
Sellers in less sought-after areas may end up taking a loss on major renovations. Brendan and Kathryn Kiel, who run a graphic design firm, spent about $60,000 over seven years to remodel their 1917 rowhouse in the District’s Brookland neighborhood, but they didn’t recoup their investment.
After deciding to sell, the couple spent another $9,500 to turn a walk-in closet into a new master bathroom so they could have an advantage over comparable properties in the area. The Kiels accepted a bid on their home in March for $8,000 less than the asking price and only $13,000 more than what they paid for it in 2005.
“I rarely advise to renovate just to sell because of the time, money and mess,” says Cestari. “Sometimes it’s optimal to replace a refrigerator, a countertop or cabinet knobs.”
Impressing some buyers may be as simple as getting rid of clutter and painting. A cost-effective way to make interiors feel bigger, lighter and more unified is to paint your walls in neutral rather than taste-specific colors.
“Paint is like magic. It is so cheap and easy and can brighten up a room,” says Elizabeth Lien, who applied Benjamin Moore’s “Mocha Cream” and “Pearl Gray” to the basement rooms of her historic home in the District’s Shaw neighborhood before listing it.
Lien, who works at the Treasury Department, and her husband Fernando Rodriguez, an energy analyst, bought the house for $375,000 in 2007 and, a year later, spent about $18,000 to renovate the kitchen. In April, they received four bids in five days and accepted an offer for the full asking price of $450,000.
Experts recommend paring down and neutralizing belongings to appeal to a wider range of buyers. “Anything that is personal, political or religious has to be removed,” says Monica Murphy of Preferred Staging in Sterling, who also nixes wallpaper, dried flowers and bright paint colors.
“You probably have to remove more stuff than you think,” says Alyssa Cannon of McEnearney Associates in Arlington.
Even before the Stecks listed their house for $949,000, the couple moved out their belongings and hired stager Mike Sandifer to create what Bob Steck calls a “Pottery Barn look” with wicker chairs, white sofas and a mix of antiques. Staging is “about showing to buyers how their stuff can fit into the rooms,” Sandifer says.
Many real estate agents agree that a furnished home sells better than an empty one. Be prepared to spend about 1 percent of the asking price to stage a vacant home for two months, says Murphy. For sellers who haven’t moved out, she recommends a consultation with a stager (cost: $200 to $350) as an effective way to weed out and rearrange furnishings to the best effect.
Because a growing number of buyers use the Internet to narrow their choices, sellers need to focus on posting the most appealing online photos of their homes.
“The more open space, the better,” says Adam Elnagdy of Home Visit, a realty photo service in Chantilly. “Put away toys and get as many things off the countertops as you can.”
Sprucing up the front of the house is especially important in conveying curb appeal and making a good first impression. “This is going to be the first photo people see online, so make sure the lawn is manicured, garage doors are closed and trash cans are removed,” says real estate photographer Denise Smallwood of the DS Creative Group in Springfield.
“Edit the shots to put your best foot forward,” says Morris. “If the basement isn’t finished, don’t post a photo of it.”
Deborah K. Dietsch is a freelance writer. Staff writer Olga Khazan contributed to this report.
Next week: Trends in new construction