After about 5 years in our Denver home, my husband was given a can’t-pass-up opportunity to move to the Seattle area. So, we decided to put our home on the market and hope for the best. We reached out to our friend Jennifer to see if she was interested in listing our home. She indicated interest, but clarified co-listing the house with Alison and John Zuckert from the Cherry Creek (where we are located) milehimodern office. She wanted to have local knowledge on the team, and we agreed.
We began discussions about how and when to list the home, how we would price it, etc. Jennifer stopped by to view our home and gave us recommendations for how to make it “more desirable”. She suggested that we make minor adjustments/upgrades, and we followed all her suggestions. She also stated that it was imperative for us to stage the home, mostly because buyers have very little imagination. This is quite true; as a buyer, I’m the same way. I need to see ideas on how to furnish/decorate a home.
We hired Ivy Lane to stage our home, and they did a lovely job. A house’s personality really changes when kids’ toys are lacking. 😉
I have to give a quick shout out to Jennifer’s director of operations, Lindsay. She is so sharp and really on top of every aspect of a sale. Her objective throughout the entire process was to make things as smooth as possible, and she delivered. She checked in frequently about our timeline, when various vendors would be in and out of our house, etc.
We had an initial discussion on pricing early on (late June/early July), and Tyler was concerned that Jennifer’s list price suggestion was too low. He challenged her on that point, and she responded with a very thorough explanation of how she landed on that price (aside from the obvious comps). Her response:
We were reviewing some market analytics earlier today showing the impact this shifting market is having on listings nationally and across the state, as well as in the Boulder and Denver markets specifically, and so I wanted to share some of this insight as I think it is relevant to your question of pricing.
When we look at sold comps – because the typical real estate transaction takes about 45 days on average from under contract to close – that data is really not a leading market indicator. Closed solds act as a sort of “rear-view” window – which is important – but to know where we are going, we also need to be looking out the front window, if you’ll forgive the labored metaphor. Looking at the leading market indicators – interest rates, showing activities on active Denver listings, buyer engagement, offers written on active listings, average days on market, active listing inventory, how many properties are falling out of contract, how many offers are being written vs accepted, etc. – everything about Denver’s market right now is telling us that it is not the same market we saw in March or even April. When supply was so incredibly restricted in Q1 and Buyers were drawn to the market with rates in the 3’s, Sellers could (to an extent) push price – and because Buyers had so few options, rates were low, and there was pent up demand – the market was letting them get away with it up to a point. With the influx of summer listing supply (which is a typical seasonal increase we usually see in Denver and Boulder both as Sellers like to sell in the summer) and the corresponding hike in rates (high 5’s, low 6’s) – not only is there more inventory, but there are fewer Buyers who can afford our current prices Buying that inventory.
For example – a Buyer who in Jan could buy your house and have a 3k mortgage payment would now be looking at a $4200 payment because of the interest rate hike – that’s an additional 432k over the life of the loan to interest, which is major for a lot of Buyers. Even for financially sound individuals, that is not insignificant. As a result, showings are way down, offers are way down, absorption rate of housing inventory in Denver has slowed, etc. This is not a market Sellers can push price in and win – but it is one where Sellers still come out on top when they price their home correctly. It is still an incredible time to be a Seller because you are still positioned to benefit from the surge in equity in your home and there are still lots of eager Buyers. To yield that benefit, it is imperative we price where the market values your home, not where we wish it were.
As it stands right now, the market is telling us that if we listed today, the list price is solidly 1.25M. If that’s not a price that works for you and you decide to carry the mortgage along with the cost of your Seattle home, and you hold off on selling until the Denver market supports higher, then we will understand that. The market has been changing by the week for the last two years, sometimes very dramatically. The property you’d looked at down the way, for instance, is about as direct of a comp as you have at the moment – similar in finishes and layout, but it sold last fall in an entirely different market at 1.26M. You were spot on that this is a really good comp, and you are doing intelligent pricing by making the mental adjustments per the factors above of “that comp sold when there was more demand and less inventory BUT we have had appreciation the last few months, etc.”.
A major part of my job is to advise you correctly of what the current market will bear. Interest rates right now, as I mentioned, are way up, and they have drastically reduced the buying power of buyers from Q1 of this year and from 2021 to now. The hits on crypto and the stock market have also had a major impact on a lot of Buyer’s financial flexibility in your price point. On a related note, inventory shot up in a very short period of time in Denver. This week for instance, for properties priced between 1M-1.5M (which is your buyer pool) there are over 445 active listings in your area. We are competing against each of them, so we need to price competitively to attract the Buyers to yours rather than to one of those. Price and Condition are the two things that sell the house. One thing that I can tell you after 21 years of working in shifting markets is that when the Buyers start to have more power, if we are overpriced, we sit on the market for far longer – until we lower our price, thus stigmatizing the property.
I am here not to disappoint you – I am here to protect you and help you avoid this really seductive pitfall of over-listing your home and suffering the financial consequences of that. That pitfall basically goes “Seller over-lists the home above what the market supports, Buyers don’t offer (or even look at it seriously) because they see it’s priced too high, so home sits on the market until the listing grows stale and new buyers wonder ‘what’s wrong with it’ that it hasn’t sold, until finally the Seller drops list price to try to correct, which leads to a buyer throwing them a lowball offer”. Often when a Seller pushes price in this type of shifted market, they wind up settling for even less than they would have had they listed at the right price out of the gate. A major part of my role as your advisor is to help you avoid that scenario. We don’t set the price on your home – we help you interpret and understand what the market values it at.
It was our understanding in the initial discussion that carrying the Denver mortgage along with the rent in Seattle was not something you wanted to do for very long. I just want to check in and confirm that is still the case, as from your email it sounds like possibly something has changed in that direction?
As far as who my Denver counterparts might be – I’m in communication with John and Alison Zuckert, who would most likely be co-listing or at least collaborating with us. They have done a pricing analysis of their own on your home and we are all in alignment. The nice thing about pricing a home as a seasoned realtor is that its numbers based – while there is an art to doing it well, ultimately we are evaluating closed comps, taking into account the absorption rates of the listings on market, assessing buyer pools in the relevant areas and price points, and looking at how many months of housing inventory are currently available (and how much of that inventory is competition against yours). Price and condition matter – if we ask for more than the market values your home at, it will sit. If we ask for just right, it sells. If we ask for less than the market values your home at, Buyer’s get very eager and excited and often bid up the price, and it sells.
I know this is a lot, and that a lot of other things are happening in your world. Please think this all through, then let me know what questions you have.
Since my husband is so cerebral and data-driven, this was the best possible response he could have gotten from Jennifer.
Thereafter, we had a call with John and Alison, weighed our options, and determined that Jennifer’s initial listing price would be our best bet. So, we did it. We had 8 showings once we put up a “coming soon” announcement, and went under contract within 4 days of listing the home and slated to close within 45 days.