M8| Friday, February 21, 2020 THE WALL STREET JOURNAL.
but in general, agents in buyer’s
markets tend to favor pricing
right at market value or slightly
beneath it, to drum up interest in
properties.
In our list of the 10 top luxury
markets in buyer’s market terri-
tory,fourareinNewJersey.The
high-tax state has been hit by a
perfect storm of challenges, start-
ing with the 2017 federal tax law
change that limits the annual de-
ductibility of state and local taxes
to $10,000. Suburban trophy homes
are also being hit by a change in
the types of homes younger buyers
want: They tend to favor smaller
properties in walkable areas with
short commutes, agents say.
The lowest absorption rate—the
number of homes available in a
given market divided by the num-
ber of sales—in the study is in
Ocean County, N.J., where in some
seaside communities there is a
nearly two-year supply of homes
over $1 million. In December,
Shawn Clayton, of Clayton & Clay-
ton Realtors in Bay Head, N.J., rep-
resented both the seller and the
buyer in the sale of a $3.68 million
beach-front home in Mantoloking
that had been on the market for
over a year, starting at $6.2 mil-
lion. The problem: Older homes in
the area worry buyers, who want
new homes that can withstand
storms and are raised up, to pro-
vide both better views and flood
protection. The buyer will likely
spend $1.5 million to $2 million to
lift and modernize the property,
Mr. Clayton said.
Only a hair above Ocean
County’s absorption rate are mar-
kets in Monmouth County, where
the Sprauers sold their home. Tom
and Cara O’Hara are hoping to take
advantage of the situation and buy
a roughly $1.5 million “downsizing”
house now that they are empty-
nesters. But first, they need to sell
their 7,400-square foot, five-bed-
room waterfront estate.
“Value at the luxury level is
great,” said Mr. O’Hara, a 52-year-
old display and packaging sales-
man. “But yeah. It’s hard as a
seller.”
In late January, Elaine Eadon
with Heritage House Sotheby’s In-
ternational Realty in Rumson, N.J.,
designed a new strategy: Instead of
just offering the entire property for
$4.88 million, where it was listed
last May, she suggested they list
just the house for $2.99 million, an
additional, buildable lot for under
$1 million, or the whole package
for $3.85 million.
Bobby Claybrook, a 53-year-old
technology executive, kept a close
eye on the luxury market in an-
other New Jersey buyer’s market:
Jersey City, in Hudson County,
where he had purchased a pent-
house in 2013 for $1.6 million.
Though he loved living amid the
renaissance of Jersey City, Mr.
Claybrook sold in July, before he
actually wanted to move out.
“I saw the market peaking and
starting to turn down,” he said.
About a year before he sold, he
called Sotheby’s agent Megha
Moza, who he saw handled many
sales in the building, and asked herwhether she thought his unit would
increase or decrease in value. She
told him that some brand new
buildings were just coming onto
the market, which would create
price competition for his slightly
older unit, and counseled him to
list. To get ready, she recom-
mended he spend about $5,000 on
fresh paint, new finish for his
kitchen cabinets, and a staging
company. Ms. Moza also recom-
mended a list price of $2.6 million.
“I accepted that only begrudg-
ingly,” said Mr. Claybrook, who
believed he could get $2.8 million
or even $3 million. He sought sec-
ond opinions from the building
manager and home association
president, and was convinced
when they threw out figures close
to Ms. Moza’s. He listed and had
an offer in two weeks for $2.514
million.
Sellers who price far above
market value in a buyer’s market
will find their property lingering.
That was Judee von Seldeneck’s
position when she put her condo
and one parking spot at the Ritz-
Carlton in Center City, Philadelphia,
on the market in late 2018 for
$1.995 million. She ended up chang-
ing listing agents, offering a second
parking space, and gradually lower-
ing the list price to $1.645 million.
Ms. Seldeneck, the founder of an
executive search firm, said she was
“really surprised” by the cold re-
ception to the property, because
she paid $1.7 million for the unit in
2011 and put at least $100,000 of
custom cabinetry into it.
The situation illustrates the co-nundrum for sellers in a buyer’s
market: Sell for a song? Pull it off
the market and wait? Either move
could trigger waves of regret. In
this case, Ms. Seldeneck’s patience
paid off, said Melanie Stecura, her
real-estate agent at Kurfiss So-
theby’s International Realty.
Though the Center City market
appeared soft in the fall, she got a
cash offer for Ms. Seldeneck’s unit
in January. Ms. Stecura wouldn’t
disclose the price, but said it is
under the asking price.
Marvin Gilliam, a 63-year-old re-
tired coal-mining executive, owned
a townhouse in Hilton Head, S.C.,
located in the fourth-most-chal-
lenging buyer’s market in the
study, and sold it last spring for
$2.5 million. That was a $1 million
loss on what he paid for it in 2009,
but he accepted it. The SALT de-
duction change, plus the mainte-
nance, utilities and association
dues, were costing Mr. Gilliam
about $100,000 a year, he said.
Mike Rowen, a 58-year-old
semiretired e-commerce execu-
tive, also owns a home on Hilton
Head, which he first listed in 2017
for $2.875 million. It is now listed
for $2.295 million.
Instead of chopping the price
more, Mr. Rowen is marketing the
home on the basis of its strong in-
come in the short-term rental
market—it nets him $170,000 a
year, he said. He is offering owner
financing to any buyer who can
put $1 million down, and provides
a spreadsheet that demonstrates
how the rental income can offset
the expenses.MANSION
Tom and Cara O’Hara have listed
their 7,400-square-foot waterfront
New Jersey home for $3.85 million.The 2020 Seller’s Guide
Sellers of luxury real estate in
Monmouth County, N.J., are facing
a strong buyer’s market. But that
didn’t stop Michele and Scott
Sprauer from selling their house
for $1.22 million in under a week
without even using a real-estate
agent or putting it on the Multi-
ple Listing Service. Instead, the
couple—somewhat accidentally—
did everything right.
Ms. Sprauer, 50, said she and
her husband “love real estate,” and
enjoyed slowly building onto the
home they initially purchased in
2005 for $665,000.
They eventually developed it
into a roughly 5,500-square-foot,
four-bedroom home with a finished
attic. Despite their emotional bond
to the house where they raised
their children, Ms. Sprauer coldly
looked up comparable sales in the
area and priced her home slightly
under what a nearby, slightly
larger property had recently
fetched. This strategy—pricing
right on or slightly under the esti-
mated market value—is one many
sellers abhor, because they want to
be sure to get top dollar for their
properties. But Ms. Sprauer calcu-
lated that she wouldn’t pay a tradi-
tional 6% real-estate commission,
which enabled her to offer a
tempting price. She hired a pho-
tographer, created a Zillow listing
that said “buyer’s Realtors wel-
come,” and had an open house.
Within a week, Kathleen Galano,
an agent with Re/Max Gateway in
Asbury Park brought the buyer. Ms.
Sprauer gave Re/Max a $20,000 fee
and closed in January.
Selling into a buyer’s market is
one of the great challenges in real
estate. When there is more supply
than demand, buyers perceive that
they have the upper hand in terms
of price, time and contingencies.
Pricing property strategically re-
quires strong insight into what
buyers are paying for competing
properties, what newly built
homes are coming onto the mar-
ket, and what the majority of buy-
ers in the market have to spend.
Pricing strategies vary widely,
Continued from page M1
•Accept reality on pricing.
Carefully scrutinize closed
comparable sales—not list
prices—to determine market
value. Get second opinions
from knowledgeable insid-
ers, such as local real-estate
agents, building managers
and HOA board members.•Price at market valueor
slightly below to bring in
the maximum number of
home shoppers.•Edit “home facts”on Zil-
low, Redfin and other on-
line assessment tools so
that their digital estimates
match your home’s reality
as closely as possible.•Eliminate objections.Paint
walls, refinish cabinetry, and
make handyman fixes to
any visible imperfections.•Remove furniture, clutter,
and anything old fashioned,
highly personal or quirky
from the home.•Invest in staging.Agents
say sellers should do the
maximum amount of stag-
ing that they can afford.
The top-shelf approach:
Spending $5,000 to
$10,000 to rent trendy fur-
niture for two months.•Start working on listing
the house in February.The
largest buyer pool will
emerge in the spring.•Offer more.Does the
property come with an ex-
tra parking spot? Strong
short-term rental income?
Furniture? Add to the offer
and spell out the value.STRATEGIES FOR
SELLING IN A
BUYER’S MARKETIn this Realtor.com analysis,
a buyer’s market means:- The market has more sup-
ply than demand, with high
levels of inventory and rel-
atively low levels of sales. - Luxury sales prices—the
top5%ofthemarket—
were growing less than 1%
or declining year over year. - Negative year-over-year
percentage change in both
$1 million sales and absorp-
tion rates - Markets have at least 30
monthly listings on average
and at least one monthly
$1 million sale. - Realtor.com analyzed data
from June 2019 to Oct 31,
2019, excluding August.
WHAT IS A
BUYER’S MARKET?BUYER’S
MARKET
Top Buyer’s Markets
Counties with the lowest
absorption rates
RANK MarketAbsorption
Rate(^1) Ocean, N.J. 4.3%
(^2) Monmouth, N.J. 5%
(^3) Walton, Fla. 5.2%
(^4) Beaufort, S.C. 5.4%
(^5) Philadelphia, Pa. 7.2%
(^6) Clackamas, Ore. 10.9%
(^7) Hudson, N.J. 13.4%
(^8) Union, N.J. 13.9%
(^9) District of Columbia 14.2%
(^10) Montgomery, Md. 16%
Source: Realtor.com
Absorption rate: number of sales a month
divided by number of listings./ Rate listed is the
average of the three ZIP Codes with the lowest
rate in each county.
Sold for $2.5 million in 2019.
Purchased for $3.5 million in 2009.
WAYNE C. MOORE/BACK RIVER PHOTOGRAPHY (2)
The O’Haras are attempting a novel marketing strategy to sell this home in a buyer’s market: They will sell the
home and land for $3.85 million, the house alone for $2.99 million, or a buildable lot for just under $1 million.
Marvin Gilliam took a $1 million loss on the sale of his Hilton Head, S.C.,
home last spring. He felt it was an acceptable loss—he was spending over
$100,000 annually on homeowner fees, maintenance, utilities and taxes.
Mike and Lori Rowen are marketing their Hilton Head, S.C., home, below,
for $2.295 million, and touting the property’s net short-term rental
income of $170,000 a year. They are also offering owner financing.
KELLI BOYD FOR THE WALL STREET JOURNAL (2)
NETTIE EINHORN (2)