Last spring I attended a dinner party with approximately 15 people in attendance. During the course of the meal, conversation turned toward real estate values. Some people could see the improvement, others saw only the potential for further decline. The home featured in this blog post was owned by one of those less optimistic individuals. In her opinion, the home she raised her children in was not worth very much. She lived in the Carleton Estates Sub just a few steps from Warren Mott High School. She was strongly considering going For Sale By Owner at a $120,000 price point, expecting to have to negotiate down from there. Like most areas, the neighborhood values had dropped significantly during the well publicized housing crisis. Every market has it’s ups and downs and every good Realtor knew the crisis wouldn’t last forever.
Last spring, agents like myself were feeling the heavy burden of demand due to limited supply. This means prices needed to move up to find a balance point. The challenge with all listings is finding the appropriate price point to meet the seller’s needs and expectations. One metric I use to determine value is price per square foot. Of the previously sold homes the highest valuation we were seeing was just over $75/sq. ft. Our client’s 1,808 sq ft home would suggest a $135,000 price point. Don’t forget though, the basic principles of supply and demand suggested an increasing market. Considering the seller was willing to be reasonably patient to find a buyer, we decided to push our price point to $80/sq. ft. rounding our initial list price at $145,000.
In order to maximize the digital marketing efforts we dedicate ourselves to, we arranged to for a time to take some high quality photos. In today’s world, a prospective buyers first impression usually comes on-line, not at the curb. The photography was completed on a Saturday, which allowed us to list the home for sale on Monday. Over the next three days we had a flurry of activity and received 11 written offers! I organized the offers and brought them to the homeowner. Sitting at their kitchen table, we started the process of elimination until we had narrowed down the field of eleven to just two suitable offers. One offer was just a bit under asking price, but was a cash deal. This was a safe option considering no appraisal would be needed and the transaction could be completed very quickly. The other offer was for ten thousand dollars above asking price, but was contingent on a mortgage. This becomes tricky because an offer contingent on a mortgage has several risks that are unique when compared to cash offers. We reviewed these risks, then talked to the agent who represented the buyer to clarify a few items. When it was all said and done, we had secured a written commitment from the buyer to bring up to ten thousand dollars in the event of a low appraisal. With an asking price of $145,000 and an offer of $155,000 with $10,000 cash backing up a potential low appraisal gave our client the confidence to accept the higher priced offer. The appraisal came in at $150,000 and the sale moved on at the agreed upon $155,000 asking price.
In just three days on the market, we had collected eleven offers and secured a buyer that we all felt very comfortable with. Approximately 40 days later, we sat at the closing table to finalize the sale knowing everyone was very happy with the outcome.
The following link will take you to a table that shows every home sold over the previous 18 months in the Carleton Estates Subdivision at the time of the closing.
For information about homes currently for sale in southeast Michigan, visit www.DennisLHubbard.com