Baltimore sellers - the higher mortgage interest rate has caused the buyer pool to shrink. Now when you list, we have to do everything right - from staging, to professional photos, to writing a captivating description, to pricing appropriately - to be competitive with other listings. But listing strategy isn't enough. The entire sale process is an active one. When you list with me, I actively monitor your market to keep us in front of the competition. Here are the top five data points I'm focusing on to drive our decisions.
I've been in the Baltimore real estate industry since 2008. Prior to becoming a full-time realtor, I spent eight years operating a large rental portfolio consisting of more than 700 single-family homes in the Baltimore Area. During this time, I learned what it really meant to operate real estate, how to boost income and limit expenses to realize the most profit possible.
The landscape of the Baltimore real estate market has changed significantly over the past few months. In March 2022, mortgage interest rates hoovered at 3.5%. Today, in November 2022, the mortgage interest rate has nearly doubled at 6.7%. This has caused some buyers in the Baltimore Area to halt their housing search altogether; a higher mortgage interest rate reduces the amount a buyer can dedicate to the principal on their loan, and therefore a lower housing budget. Simply put, a buyer who started his or her housing search in March 2022, is now approved for a loan that is a fraction of what he or she was approved for just a few months ago. Furthermore, for some buyers - especially those in lower price ranges - renting has become the better option; their monthly housing budget gets them more (more space, nicer finishes) with a rental than with a purchase. With the exodus of buyers, sellers who have to list are feeling the slow down; bidding wars are generally a thing of the past and ‘days on market’ are creeping up. The question becomes – if you’re a seller – how do you get your home sold for the best price possible and in a timely fashion? The higher interest rates have reduced the buyer pool. When selling now, to boost income and reduce expenses, the trick is to price right and actively monitor the market. Time is money and every day that your home is not under contract, you’re incurring expenses for the mortgage, property taxes, insurance, and utilities. The selling process is an active process. I help you zero in on the right price and actively monitor the market using these five important metrics. This data will drive our decisions in getting your home sold for the most money possible and as quickly as possible.
#1 - Price Per Square Foot - It Really Matters When Selling Your Baltimore Home
When I am preparing to list a house, I always pull data on similar homes in the same neighborhood and school district that sold in the past six months. I define ‘similar’ as homes with a comparable bedroom count, bathroom count, home style (ranch, colonial, split-level, etc), home size, renovation level, lot size, basement situation (finished, unfinished, or no basement at all), and parking situation (garage, carport, parking pad, no parking at all). I also take into consideration lot features such as whether a house has a water view, is on a busy street, etc and outbuildings, such as if a home has a detached garage, barn, in-law suite, etc. Zeroing in on ‘home size’, I look at homes that have similar above-grade and below-grade finished square footage and look at what they sold for in terms of price per square foot. For example, if I am listing a home that is 2,000 square feet above-grade, I may review homes that are similar in all the other ways listed above and have an above-grade square footage of 1,800 – 2,200. If a home that was 2,100 square feet above-grade sold for $425,000, it sold for $202.38 per square foot. If a similar home that was 1,950 square feet above-grade sold for $420,500, it sold for $215.64 per square foot. Assuming the homes are similar in all the ways mentioned above, the house I’m listing with 2,000 square feet above-grade should be listed in the $202 - $216 per square foot range. If there are differences in the homes – the house I’m listing has a garage, but all the others do not, I have to adjust the list price accordingly. This really matters. Location is one of the strongest factors when a buyer considers a home. Buyers start to get a sense of how much a certain product costs in their desired neighborhood. Price too high, and they won’t come; the house will sit on the market. Furthermore, any good buyer’s agent is going to do the same detailed analysis on a property their buyer is interested in to protect the buyer from overbidding. Pricing the home correctly is a requirement in getting your home sold timely in this market.
#2 - How Many Homes Are Available In This Neighborhood and Price Range?
Now that I have an idea of what the price will be, I have to look at the competition. If I’m listing the house at $425,000, I will look at homes that are in the same neighborhood and school district that are currently listed within about 5% of the list price. That puts the bottom of the range at $403,750, I’d likely take it down to $395,000. On the high side, the range goes up to $445,250, I’d likely take it up to $450,000. So, now I’m looking at what other homes are currently on the market between $395,000 - $450,000. How many homes are available?
#3 - How Many New Listings Came On This Week In This Neighborhood and Price Range?
In that same neighborhood, school district, and price range of $395,000 - $450,000 – how many new homes were listed in the past week?
#4 - How Many New Contracts Occurred This Week In This Neighborhood and Price Range?
In that same neighborhood, school district, and price range of $395,000 - $450,000 – how many homes went under contract in the past week?
#5 - What Is The Movement Of This Product?
If there were 12 homes in this neighborhood and price range on the market last week, 3 new were listed this week, and 4 went under contract this week, now there are 11 homes in this neighborhood and price range on the market this week. This data needs to be tracked week over week. If the movement stays about the same and ‘new homes under contract’ beats ‘new homes listed’ at a rate of about 1 per week, and there were 12 homes to begin with, then it will take about 12 weeks (three months) to move through the current inventory of homes available. Of course, some homes will move slower if there’s something unique – unrealistic pricing, a dysfunctional layout, odor, etc.
How Do I Beat The Projected Movement?
To outdo the pace of the movement of similar homes in your neighborhood (12 weeks in the above example), your house has to stand out. It has to offer something that other houses don’t. I will help you play up its attributes, openly address its drawbacks and change the narrative of what it is - to what it could be, I will show you what other homes offer that yours does not, we need to consider incentives, or consider pricing just below market so that when the person that’s approved up to $450,000 sees your home and the 11 others, yours is the one that stands out.
Selling Your Baltimore Home Quickly And For Top Dollar Is An Active Process
Selling a home in the Baltimore Area is about so much more than entering the property features into the MLS. That's a passive approach and in this market, will likely cause your home to rack up 'days on market.' It's about understanding exactly what the house is worth, what the buyer is going to think it's worth, and what the buyer's agent is going to think it's worth. To sell your Baltimore home in the current market, I have to overtly show it's value and why it offers more than other homes listed in the same neighborhood and price point. This goes far beyond what we put in the listing. Putting up the listing is just the beginning of the process. Selling a home in the Baltimore Area is an active process that requires having a dialed-in handle on what is happening in the neighborhood and how and why homes are selling. New homes are listed and put under contract daily; the market is constantly changing. To sell your home for the best price and in a timely manner, I have to have a strong pulse on what the market is doing. As your listing agent, I take the lead on this but keep you informed of the real estate market in your neighborhood.