The Wall.St Journal 21Feb2020

THE WALL STREET JOURNAL. Friday, February 21, 2020 |M9

MANSION

Top Seller’s Markets

Counties with the highest

absorption rates

RANK Market

Absorption

Rate

1 Arlington, Va. 65.4%

2 Loudoun, Va. 63.4%

3 Mecklenburg, N.C. 31.3%

4 Davidson, Tenn. 28.1%

5 Plymouth, Mass. 23.7%

6 Wake, N.C. 23.4%

7 Travis, Texas 20.7%

8 Pinellas, Fla. 20.4%

9 Williamson, Tenn. 17.3%

10 Orange, Fla. 17%

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 highest

rate in each county.

forcing resale properties to com-

pete with new construction. That

is the case in Nashville, Tenn.,

both in the city proper and the

upscale suburbs of Williamson

County. Ryan and Jami Miller ben-

efited from the appetite for new

or nearly new construction when

Compass agent Lacey Newman

called them this summer. Though

the home they built in 2017

wasn’t on the market, the Millers

knew Ms. Newman from previous

high-end spec homes they built in

Nashville. Ms. Newman begged

them to let her show the house to

a client from San Francisco.

“I said, ‘OK, but it’s $2 million

and I’m not interested in negotiat-

ing,’ ” said Mr. Miller, 38. The

home closed in August—though

the Millers leased back the home

until November, part of the deal

they struck.

Making money in a smoking-

hot seller’s market isn’t rocket

science, but getting “top dollar”

requires offering something other

sellers don’t, said Ms. Newman.

Comparably sized homes in the

area were selling for about $1.8

million, she said. However, the

buyer loved the design and

wanted all the furniture that Ms.

Miller, a 33-year-old interior de-

signer, had included in the house.

It closed for $2 million.

In Austin, Texas, seller Jason

Havey, 44, was looking for a fast,

uncomplicated sale for a property

owned by the health and wellness

company of which he is president.

The company bought the four-bed-

room home, which was used to

house company associates, for

$900,000 in cash at the beginning

of 2017. In December, Mr. Havey

wanted to raise cash for expansion

plans for the company.

Around Christmas, he reached

out to Compass agent Todd Gross-

man and told him he was thinking

of listing for $1.05 million. On Jan.

3, Mr. Grossman called him with

this surprising news: He had a cash

offer for $1.025 million, which was

scheduled to close in mid to late

February, Mr. Havey said.

Several Austin real-estate agents,

including Mr. Grossman, said off-

market listings give buyers a sense

of getting a special opportunity and

can drum up strong offers.

Zillow announced it was expanding

its Zillow Offers program—through

which it buys property directly

from sellers—to Los Angeles and

Orange counties. In January, the

median sales price in the City of

Los Angeles was $743,900 and in

Orange County was $743,600, ac-

cording to Zillow spokesman Matt

Kreamer. REX, an Austin-based

brokerage that charges sellers up

to 2.5% and doesn’t list properties

on the MLS, has expanded to 27

markets in 18 states since launch-

ing in California in 2016. While

most of its listings hit the midmar-

ket range, it currently has 27

homes over $1 million listed on the

site. A number of websites, includ-

ing industry stalwart FSBO.com,

enable sellers to post their proper-

ties on MLS systems.

Though it is rare, there are

cases of FSBO sales of ultraluxury

homes. Kerry and Mike Gaynor,

small-scale developers of luxury

homes in New York’s Hamptons

area, went into contract in Janu-

ary to sell their under-construc-

tion estate on Shelter Island, N.Y.,

for $9.85 million. They saved

nearly $600,000 by doing it them-

selves, estimated Mr. Gaynor, 55.

They decided to go the FSBO

route after handing a real-estate

agent a check for $720,000 for

selling their $12 million farm in

2018. “It was so painful,” Ms.
      Gaynor said.
      To market the Shelter Island

property this summer, Ms.

Gaynor, 50, hired freelancers to

create a digital ad, which the cou-

ple ran online in major newspa-

pers. A freelancer also created a

website, on which they posted

renderings of the project. They

also posted on Zillow. In total,

they spent roughly $12,000 on

marketing, Mr. Gaynor said. They

spent the fall discussing options

with potential buyers, offering to

either sell all 4-plus acres of land

with the built-out estate for $15

million, or to sell the estate with

less acreage for a lower price.

The buyer read about the prop-

erty in a newspaper ad and came

without a real-estate agent, Mr.

Gaynor said. The deal, which in-

cludes 2 acres of land, will close

when the main, 6,000-square-foot

house and three barns are com-

pleted, he said.

Mr. Clinton, a 38-year-old soft-

ware engineer, said that he and his

husband believed that with their

combined digital skills, they could

market the property themselves.

“If you can put your property

online with catchy pictures, you’re

sort of set in marketing,” he said.

First, they paid $270 for pho-

tography and $250 for a “three-

dimensional walk-through,” Mr.

Clinton said. He hired an ap-

praiser, who determined the mar-

ket value was $1.42 million. The

couple examined MLS data and

comparables provided by Zillow,

and listed the property for $1.7

million in April. The couple paid

FSBO.com $400 to list their prop-

erty on the MLS, where they of-

fered buyer’s agents a 1% commis-

sion on the sales price. They also

created listings for it on Zillow

and Trulia. By August, they

dropped the price to $1.5 million,

Mr. Clinton said.

In September, a couple made an

offer, and the deal closed. Mr. Clin-

ton estimated that he saved

roughly $85,000 on a typical 6%

real-estate agent commission.

was filed in the U.S. District Court

for the Northern District of Illi-

nois against the NAR and top real-

estate brokerages. It accuses the

industry of conspiring to keep

buyer’s agent commissions high

by requiring home sellers to

pledge buyer’s agents up to 3% of

the sales price to list on a Multi-

ple Listing Service. In October, the

Justice Department took the rare

step of issuing a statement clari-

fying, counter to NAR assertions,

that it has never examined the le-

gality of the commission-split tra-

dition.

“The plaintiff’s claims in this

lawsuit are wrong on the facts.

Market forces drive commission

amounts for brokers” and are ne-

gotiable, said a spokesman for the

NAR. Regarding the DOJ’s state-

ment of interest, “the value of the

MLS system also has long been

recognized and upheld by courts

many times over as being pro-

competitive and pro-consumer,”

said the spokesman.

Several industry players are roll-

ing out ways to get around the tra-

ditional system altogether, even for

high-price real estate: In December,

lows in the master bedroom so

complex that Ms. Reed and her

husband slept in the basement so

as not to disturb it, she said.

The payoff came in September,

when they received an offer for

$2.05 million. They closed in No-

vember.

Hot seller’s markets attract de-

velopers, flippers and builders,

Jason Havey got an offer for this

house for $1.025 million. His company

bought it in 2017 for $900,000.

Rendering of the Shelter Island property.

Kerry and Mike

Gaynor sold their

under-development

estate for $9.85

million without a real-

estate agent, saving

about $600,000 in

agent fees.

It took Jason Havey less than a month to find a buyer for the four-

bedroom home, below, in Austin, Texas, a super-hot seller’s market.

• The most important factor
  in marketing a home is
  coming up with the right
  list price.Commission an
  appraisal of the homeand
  use a professional with
  many years of experience in
  the neighborhood. Also, ex-
  amine recent, comparable,
  closed sales. Only include
  homes of the same size,
  quality, condition and loca-
  tion as your own.

•Stage the property.Fix

anything that screams “proj-

ect,” add fresh paint in neu-

tral colors and remove old,

quirky and personal items.

•Get professional photos.

“The first showing is on-

line,” goes the mantra. Con-

sider drone photography for

properties with great views

or acreage, and 3-D tours

for extra online visuals.

• Several companies, includ-
  ing FSBO.com, offer an
  MLS listing for a fee, and
  allow sellers tooffer a
  commission to buyer’s
  agents.

•Create listings on major

real-estate sites.Ensure

that all “home facts” are ac-

curate.

STRATEGIES FOR

SELLING A PROPERTY

WITHOUT AN AGENT

MCGRATH BUILDERS, BRIDGEHAMPTON

AMY MIKLER FOR THE WALL STREET JOURNAL (3)

Jason Clinton and Brandon Ward,

spent $546,000 renovating the

Boulder, Colo., condo they bought

for $745,000 in 2014. After Mr.

Ward, a 38-year-old cybersecurity

program manager, got a job offer

in Silicon Valley, the couple sold it

for $1.425 million in October. The

real-estate commissions they

paid? Zero, as opposed to the

usual 5% to 6%.

It is an irony that even though

property information is readily

available online, 89% of sellers

used a real-estate agent in 2019,

up from 79% in 2001, according to

the National Association of Real-

tors. For-sale-by-owner actually

used to be more popular, accord-

ing to the NAR: In 2001, 13% of

homes were sold that way, com-

pared with only 8% last year.

FSBO sales are a rarity in the lux-

ury segment—such sales tend to

be lower-priced than the national

average, said the NAR.

Some critics see collusion: In

March 2019, a class-action suit

FOR SALE

BY OWNER

The top seller’s market in the Real-

tor.com data was Arlington, Va.

The area has been juiced by steady

growth in what locals call the DMV

(which stands for D.C., Maryland

and Virginia), as well as Amazon’s

2018 announcement that it would

build a new headquarters in Ar-

lington, creating up to 25,000 jobs.

For Stacy Reed, a 52-year-old

homemaker and her family, the hot

Arlington market meant a success-

ful sale—but also a lot of work to

compete with all the new construc-

tion in the area. In 2006, Ms. Reed

paid $900,000 for an older ranch

house, which the family lived in for

several years before they tore it

down. In 2011, they completed con-

struction on a 5,800-square-foot,

five-bedroom modern house they

spent $875,000 to build.

To be closer to family, the cou-

ple decided to relocate to Con-

cord, Mass. They called agent Mi-

chelle Sagatov of Washington Fine

Properties, who listed the house

for $2.29 million. Ms. Sagatov

gave the Reeds a lot of homework,

instructing them to repaint and

remove some beloved furniture,

like a comfy leather chair. Ms. Sa-

gatov’s team of professional stag-

ers created a dreamy scenario of

folded-back sheets and layered pil-

SELLER’S

MARKET

•Test the market.In a strong

seller’s market, property can be

priced around 5% above compara-

bles to seek the next price ceiling.

Be careful not to overshoot, which

can cause a listing to stagnate.

•Compete with new construc-

tion.Resale homes need to look

as perfect as possible or buyers

may opt for builder product.

•Set yourself apart.To push past

existing price boundaries, offer

something special, such as de-

signer furnishings or a long clos-

ing period.

•Understand your goal.If aiming

for a fast close, price right at the

market to drum up the greatest

number of contingency-free offers.

•Stage.Empty homes should at

least be “virtually staged,” using

software that overlays digital fur-

niture into empty rooms. For

maximum effect, invest in full

staging with rented furnishings.

STRATEGIES FOR SELLING

IN A SELLER’S MARKET

In this analysis, a

seller’s market means:

• The market has more
  demand than supply,
  with low levels of in-
  ventory and a high ab-
  sorption rate.


• Sales prices in the top
  5% of the market are
  growing at or above 4%
  year over year.


• Positive yearly per-
  centage change in both
  $1 million sales and ab-
  sorption 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.

WHATISA

SELLER’S MARKET?