Harleysville-Lansdale Real Estate and More

This past June, I wrote a blog targeted towards home sellers and their Reasons to be Optimistic if You Can Lure First Time Buyers.  Within that post, I pointed out that the current market requires sellers (regardless of which type of buyer they are targeting) to compete more for buyers in three main areas: Location (can’t feasibly change), Condition, and Price.  In this post, I want to specifically address the relationship between Condition and Price with some real life examples.

For these examples, I’m using the five most recent sales (within 6 months) in our local neighborhood of Stonegate.  Stonegate is a beautiful, yet affordable, townhouse community in the Lansdale, PA area.  Its popularity stems from a great combination of features; modern construction and styling, centrally located to job centers and major commuting routes, reasonable price point, low association fees, well kept grounds, close to great schools, shopping, parks – the list goes on.

Here’s a summary of the five sales:

The main features (#bedrooms, #baths, garage, etc) of all these homes are identical.  There are some differences in base square footage between the interior and end-units, but they’re relatively small differences.   Nevertheless, end-units historically sell for higher prices (I would say on the order of $5,000) than comparably appointed interior units.

Having shown four and sold two of the above homes (the exception being Hill Dr), I can speak firsthand about their showing condition.

The Cosmetically Challenged - In the case of Hillcrest Ct, the home showed okay but nothing more than that.  The kitchen and baths were very basic and showed some wear.  The carpets and paint also showed wear and the décor was a hodge-podge in terms of color and style.  Home #2 on Bloomfield Cir was challenging; very basic kitchen and baths, worn carpets, a partially completed/partially demo’d finished basement, a whiff of pet odor, and the décor (nearly 100% pink interior walls).  From what I remember of home #3 on Bloomfield, it was also very basic and worn, but the original hunter green carpets are what really stick in my mind about this one.

The Cosmetically Enhanced - Now for the homes that sold for an average of about $20k more.  I didn’t personally tour Hill Dr, but from the photos it looked quite nice.  The kitchen and baths had some moderate upgrades as did much of the flooring in the home.  It also had a neutral yet warm décor, new carpets in many rooms, crown moulding and chair rail accents, etc.  Valley drive had a similar décor and upgraded flooring (hardwood) in much of the first level.   The kitchen and baths weren’t really upgraded in terms of the cabinetry and counters, but they were in good condition and again had that warm, neutral décor (get the idea here).  Both of the higher priced homes did have nicely finished basements which accounts for some of the price difference, but that’s probably limited to around $5,000-$7,500 on resale for these particular finishing jobs.  I also want to point out that these homes did not have extensive kitchen/bath upgrades; no granite, cherry cabinets, high-end ceramic flooring, etc.  In fact, I believe the kitchen cabinetry material was a very similar oak in all five homes.

In my estimation, the price differences were largely a result of how the homes showed.  And the better showing conditions were really achieved with a few moderate upgrades and attention to cosmetic basics such as carpet and paint.

The points are these:

1)      If you spend a modest amount money (or time and energy) improving the showing condition of your home, you can reap significant benefits when you sell.  Plus, you’ll get to enjoy those improvements up until the time you do sell your home.

2)      If your home is lacking in terms of its showing condition, you need to be realistic about pricing relative to homes that have upgrades or have been recently improved.  You home will still sell even in the current market, but you should be prepared to list at and accept a significantly lower price compared to those “improved” homes.

One other interesting note is that the homes on Bloomfield Circle were both bought by investors as opposed to owner occupants; perhaps suggesting that a seller will alienate much of the larger “owner occupied” market with poor showing condition.

Contact Scott Loper, Associate Broker, Realtor®, RE/MAX Realty Group at 215-513-1333 to buy or sell a home in Lansdale, Harleysville, Hatfield, Souderton, Skippack, Collegeville, North Wales and the surrounding areas of Montgomery County Pennsylvania. To Search for Homes For Sale in Montgomery County Click Here.

Copyright © 2009, The Scott Loper Team, All rights reserved.  The Condition-Price Conflict.

Here’s some up-to-date information on home sales in Montgomery County PA and neighboring Bucks County.  Like most areas of the nation, our region has seen declines in both the number of homes sold and in their prices.  Thanks to a robust and very diverse local economy, however, we have weathered this correction much better than most by many measures.  For example, our average selling prices year-to-date are down by approximately 10% (8.9% in Montgomery and 11.7% in Bucks) compared to the same period last year.  Not exactly the doom and gloom of some particularly hard hit areas of the country which the media love to emphasize.

Typical of market downturns, the lower price ranges have actually held up the best while the higher prices ranges struggle a bit more.  I believe this is especially the case in our current downturn due to purchase incentives (like the $8,000 tax credit) for first time buyers.  If your home is in a price range that is likely to attract this market segment, there’s reason for optimism.  Consider these facts…

Number of Homes Pended* – January through May, 2009

*Homes Pended is the number of homes listed for sale that went under contract with a buyer.

As you can see, there is significantly more activity in the $201-$300k price range and prospects for a sale can be quite good if your home is in this range or closer to it.  In our area, this is a market segment that is largely comprised of first time buyers.  Between now and December 1^st, 2009, these buyers may be eligible for an $8,000 tax credit if they purchase a home before that deadline.  That incentive along with attractive interest rates and reduced prices has spurred the first timers into action.

If your home is in a higher price range, you should be prepared to compete with more listings and for a smaller pool of buyers.  But even in these higher ranges, there are still active buyers.  More than anytime in the last two decades, your home will now need to compete for these buyers in three main areas: Location, Condition, and Price.  Despite the current market, homes that show well, are priced appropriately, and have good locations will sell (and often within a relatively short time).  If any one of these three factors is sub-par, however, it could lead to an extended time on market and an ultimately lower selling price.  If you have a less than desirable location, be prepared to price the home more aggressively (lower) to generate a sale.  If your home has outdated features or deferred maintenance, be prepared to address those areas (this will typically result in a quicker sale and higher net proceeds even considering the costs of improvements).  Click here for some helpful information about the home selling process and about preparing you home for sale.

Copyright © 2009, The Scott Loper Team, All rights reserved.  Selling a Home in Montgomery County PA – Reasons to be Optimistic if You Can Lure First Time Buyers

What is a Short Sale?

A short sale occurs when the sales price of a property is too low to pay off the mortgage balance(s) and all other necessary selling expenses (closing costs, other liens or judgments, etc). In this case, a lender may agree to accept less than what they are owed to allow the sale to proceed. Although there are exceptions, lenders will usually require some proof of a financial hardship before agreeing to discount the outstanding mortgage balance. There are also many other criteria that lenders consider in the decision to approve a short sale and that approval must be received for a sale to occur. Approvals are usually obtained by communicating and negotiating with a bank's loss mitigation department. If approved, the lender receives the proceeds from the short sale. Although the sellers receive no proceeds, they are usually relieved of at least a sizable portion (and many times all) of the mortgage debt.

What is Foreclosure?

A short sale is not foreclosure. In fact, a short sale is a means to prevent foreclosure. In Pennsylvania, foreclosure is the legal process that banks must follow in order to have a property sold at a Sheriff’s Sale to recoup the debt owed to them by a defaulting borrower. The Sheriff’s sale is the ending event of the foreclosure process and often takes 4 months or more from the initial filing of a foreclosure complaint by the lender. Because of the legal fees, filing fees, Sheriff’s fees, and months of accruing mortgage interest, foreclosure is a very expensive process for the lender. In many cases, a bank would rather take a smaller loss via a short sale rather than risk an even greater loss after foreclosure. This is especially true if a short sale can be completed before foreclosure is initiated and foreclosure costs start to accumulate onto the debt owed to the bank.

If you are a home buyer interested in purchasing short sales, foreclosures, or other distressed properties, click here to search for these specific properties.

If you are facing financial difficulty, would like to avoid foreclosure, and would like to consider a short sale, Contact Scott Loper, Associate Broker, Realtor®, RE/MAX Realty Group at 215-513-1333 for assistance in Lansdale, Harleysville, Hatfield, Souderton, Skippack, Collegeville, North Wales and the surrounding areas of Montgomery County Pennsylvania.