The big adjustment is completed

Posted: May 20, 2007

With the spring real estate market more than halfway to its traditional end-of-June close, many agents are saying that they - and the buyers and sellers they deal with - have finally adjusted to post-housing-boom conditions.

"Buyers and sellers are aligning a little bit better than they had been," said Bari Shor, an agent with Prudential Fox & Roach in Center City who has experienced her share of changing real estate climates.

Though it's taken some time, sellers are finally starting to face the fact that they can no longer dictate price, Shor said. "I keep emphasizing that, to sell it, they have to have the property looking market-ready."

And buyers "are starting to realize that they can't lowball everything," she said.

In the suburbs, "sellers are more educated about the realities of the market than they were six months or a year ago," said John Duffy of Duffy Real Estate on the Main Line. "Most know what 'pricing properly' means, although there are a few exceptions."

With so many houses for sale, Duffy said, "buyers are spending more time, and aren't just looking at a property once, but coming back two or three times for each listing."

More than 60,000 units are on the market. Monthly pending sales - those that have not gone to closing, but have had all the contingencies removed - were at 6,000 or so in the early months of the year for which multiple-listing service data are available.

That means a lot for buyers to look at, and it's a good reason why houses are taking two weeks longer to sell this year than they did last year.

The hottest market segment?

Houses in the $300,000 to $500,000 range "are flying off the shelves," Shor said, "especially if they look good."

The higher end of the market - $1 million and above - is much slower in both city and suburbs.

There are still bidding wars in some neighborhoods, "especially if they are priced on the money," Duffy said. He cited a house in Havertown with five offers and one in Gladwyne with three offers, both in the $500,000 to $1 million range.

Although sellers in other regions of the country appear to be panicking, agents and brokers said they see no evidence of that here.

"Today's sellers are more educated than they were in the 1980s, so they hear these reports of doom on the national media and take them with a grain of salt, because they know this area is different," said Diane Williams, an agent with Weichert Realtors in Spring House, Montgomery County.

The eight-county Philadelphia metropolitan area was not as overwhelmed by investors as Florida, Nevada, Arizona and California, so median prices here were not driven up to artificial levels - nor has the bottom dropped out of the market.

In fact, multiple-listing-service figures show that median sale prices ranged between 92 percent and 98 percent of the listing price during the first three months of both 2006 and 2007, although there is no way to tell whether the percentages reflect list prices when houses first went on the market or prices reduced to entice offers.

But Williams said some sellers still cling "to last year's comps" of sale prices.

And Shor suggested that the sellers who would be tough to deal with in any market climate "are still getting angry at the messenger."

"I just tell them the truth," she said. "Most believe it, because I'm still getting referrals."

Many sellers have been fearing the worst, agents said, and have more often than not discovered those fears were not justified.

"A lot of agents who haven't been around for a long time are moaning and complaining about how things are going, but I assure them that this is a normal market, that interest rates are still really low and prices are steady," Williams said.

Though Shor said she hasn't had multiple offers on houses, she had two properties that sold very quickly.

"One seller had bought her condo two years ago at the top of the market for $499,000, and had to sell," Shor said. "She assumed that she would have to sell for less, but a buyer quickly came in and offered $549,000, and she took it."

Another buyer was waiting in the wings for the condo, Shor added.

Williams listed a property in an active adult community that included a "cash escalation clause," and it had two bidders, and sold.

"Too many agents are listing properties . . . for higher than the market will bear, and justify it by saying that it will give them more room to drop the price if it doesn't sell, Williams said. "I think that if you properly price a property, you are likely to get a better offer."

Marketing houses has become very important.

Some agents, faced with houses that aren't selling at the original price, are resubmitting the listings to the multiple listing service with price adjustments rather than as new listings, which reduces buyer interest - even among those who have seen a house and might wish to see it again.

A greater number of buyers are going to Realtor.com to eliminate listings they aren't interested in looking at. But it appears some agents aren't taking full advantage of the exposure the Web site offers.

"You should have six photos of every property [on the site], just as you can do on the MLS," Williams said. "I know it costs me $1,500 more a year to get those six pictures, but the additional traffic is worth it."

Wider choice for buyers means that every house has to look its best, Shor said. That's another sea change from two or three years ago, when, unless a house was just a pile of bricks and dust, someone would make an offer.

A lot of Center City sellers are highlighting the fact that their properties have gardens, which Shor said seems to be second in importance only to parking, especially in the spring.

Williams has developed great faith in staging, for which the National Association of Realtors now offers members an official designation.

"If you have seven houses in a similar range and of similar age, the one that looks the best will sell," she said. "That where staging comes in."

Williams goes through a listing and suggests changes that should be made. Then she recommends three stagers that she uses regularly.

"The stager will then come in and will come up with a plan incorporating those ideas," she said. After the changes are made, the house goes on the market.

So far, so good.

"I had an 18-year-old contemporary house that was so personalized that it was not a good candidate for a quick sale," she said. "The homeowner was moving to Arizona and had no time to make changes."

The seller was familiar with staging, so she told Williams to proceed.

"The house was listed on Friday, and the agreement of sale was signed Sunday," Williams said.

Sale price: $700,000.


Contact real estate writer Alan J. Heavens at 215-854-2472 or aheavens@phillynews.com.

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