My daily commute from hell was the deciding factor. After yet another hour-plus delay heading into Manhattan on a New Jersey Transit train, I walked into our foyer that evening and said to my husband, Kevin: "We have to move closer to the city."
That was last May. It seemed a great time to sell. Mortgage rates were low, home sales were breaking records every month, and papers were full of anecdotes of bidding wars and houses selling within two hours of being listed.
Such hype is seductive, of course. And because I failed to recognize this, I made some crucial mistakes. This is not a tale for families who own dream houses. This is for those of us whose house is not the most marketable style or in the best location or school district. My tale is a confession of what I did wrong and what I will do differently the next time--if there is a next time, as our house still has not sold. I have learned that selling a house means you have to be prepared to do legwork, keep an eye on your real estate agent, be realistic about your property's faults, and--just maybe--believe in divine intervention.
Our first mistake was not deciding what was more important to us: time or price. For some sellers, getting the top price is the key concern. They are willing to wait for the right buyer to come along. But for us, moving as soon as possible was paramount. A short selling period was more attractive than getting the best price. We had no idea, however, what that price would be. And pricing is the biggest mistake sellers make. Says R. Layne Morrill, president of the National Association of Realtors (NAR): "People lose perspective when dealing with what is both a home and an investment," he says. As a result, he says, people think their house is worth more than anyone is willing to pay for it.
Kevin and I also failed to size up our competition. Before selecting a real estate agent, we should have gone to open houses in our community of West Windsor, N.J., and in nearby towns. We could have seen what features other houses offered and at what price. Such an exercise would have given us evidence of what our house was worth and how to price it to sell in a moderate amount of time.
Because we didn't do any research, we had no idea what to expect when we first sat down with Anne Borella, our real estate agent. A few days earlier, she had looked around our property and returned with a listing of comparable sites for sale, pointing out advantages and shortcomings of each. It was our fault that we didn't fully realize we lacked many of the features of better houses, such as a two-car garage or professionally landscaped yards. I just listened for the asking price and how long each home had been on the market.
Unfortunately for us, West Windsor is a "growing community," meaning that local farmland is being plowed under for housing developments: Many homebuyers are attracted to these houses newer than ours--and to the reputable school system and the location midway between New York and Philadelphia. And in keeping with the cookie-cutter quality of West Windsor, almost everyone is looking for the same house: a relatively new four-bedroom, two-bath colonial in a development. Our house has four bedrooms and two baths, but is a 33-year-old split-level. Two strikes against us: an in-ground swimming pool (many people don't want the hassle of maintaining one, and families with small children don't want the danger), plus a four-lane road behind our property. Even so, Borella said, "I think you can reasonably start by asking about $258,000."
Imaginary dollars piled up in my mind. Considering that Kevin and I had bought the house for $175,000 in 1992, Borella's suggestion meant that even after her commission, we would realize an annual appreciation of 6.7%. That's a pretty hefty gain when compared with a nationwide appreciation rate of only 3.4%. I was sold. Kevin was more skeptical. "No way this house goes for that price," he muttered after Borella left. But we decided to follow her lead, signing up with her agency for the typical exclusive period of six months.
NO RUSH. That was another error. Because time was a factor for us, we should have asked for a shorter commitment period. In the first few weeks, the only brokers who came by seemed to be from her agency. After a week or so, Borella reported to us that the consensus was that the price was too high, but she suggested we stay with it for a while to test the market.
In hindsight, of course, that was the wrong decision. With only a few house hunters browsing through during the usually hot selling season of late April and May, we should have recognized our price was too high. After almost six weeks, Borella hinted we should cut the price. She also pointed out some of the house's drawbacks. There were a lot more than when we first chatted, leading to this revelation: We should have updated or corrected problems we considered unimportant. "In retrospect, we stayed at $258,000 too long," says Borella. "But it was an unprecedented hot market." She concedes that the pool and the highway were bigger turn offs than she had anticipated. Before listing our house, we had already done many of the tips suggested by the NAR (table). We touched up paint and discarded junk in the garage and closets. But even after we cut our asking price by $20,000, to $239,000, we felt we needed to install new carpeting in the foyer and family room. Then the air-conditioning unit died, and we replaced that. The phrase "you have to spend money to make money" kept rolling through my mind as I wrote out check after check. Then again, the NAR's Morrill compares selling your house to getting married: "You want to look the most beautiful on your wedding day, and you want your house to look the most beautiful when buyers come to look at it."
LONG WAIT. With traffic still sparse and my commute getting no easier, we waited only a few weeks before we cut the price again, in late June, to $229,000. Each price cut brought a spurt of traffic, but no offers. As an economist, I could appreciate the process of the market trying to find the optimal price. As a seller, I found the wait very frustrating. Especially when Kevin and I realized that it was wrong to expect that the agent would take care of what seemed obvious. In May, Kevin logged on to the agency's Web site to look for our house, only to find it wasn't listed. I called Borella, who replied: "I put you on a Web site called Realtor.com. Do you want to be on our Web site as well?"
"Well, duh," I wanted to answer. The key to selling any product is publicizing it wherever possible. Borella said later that the bigger exposure of Realtor.com made her feel that a listing on her agency's site was unnecessary. She said she would take care of it, but it took a further two weeks and another telephone call before our house was up on the agency's site.
Clearly, the Internet has changed the way houses are bought and sold. The NAR's Realtor.com site, which features houses already listed with its member agencies, allows house hunters to peruse listings without the hassle of going to a real estate agent or an open house. "The Internet gives us one of the greatest tools to make information available," says Morrill. Kevin and I had not wanted to go to the trouble of selling on our own, but for those homeowners who do, Abele Owner's Network maintains a site where, for a fee, photos and particulars of your house can be listed. Selling on your own takes more effort, but of course, you avoid the typical 6% sales commission.
Still without a nibble by late July, we cut the price again, to $219,000. Too bad the agency's Web site didn't reflect that. In early August, our house was still listed at the original price. Once again, I had to call Borella for the change to be made. Meanwhile, our neighbors, who had a vested interest in our house selling for the highest price, kept asking about our progress and making suggestions. "You did bury the St. Joseph's statue?" asked one neighbor at a Sunday night barbecue. To speed the sale of a house, some people bury a statue of St. Joseph upside down in the front yard. Why St. Joseph? He's the patron saint of carpenters and builders. Why head down? Who knows?
I was not about to question a religious belief, however--especially one that might help us sell our house. The next day at lunchtime, I walked over to the gift shop at St. Patrick's Cathedral. The shop offered two statues: a $7.95 four-inch version, and a larger one at $29.95. Does size matter in this case? I bought the smaller statue, and Kevin buried it that evening.
Looking back, Kevin and I agree that if we had known in May what we know now, we could have avoided some hassles and wasted less time. After the last price drop, traffic picked up, suggesting we're in the right ballpark. So we may wait to make another cut. But I've decided that if we don't have a contract by late September, I'm going back to St. Patrick's and shelling out 30 bucks for the bigger St. Joseph.