COVER STORY | Hartford Courant Real Estate

Buying For Resale

Go Mainstream: It's Important To Follow Your Head, Not Let Yourself Be Swept Away (West Hartford)

By VALERIE FINHOLM | Special to The Courant | April 12, 2009

When Joseph Grabicki and his wife started looking for a house, they had a list of what they wanted. One of the most important things: How easy would it be to resell?

"We didn't know how long we were going to be here," said Grabicki, who is a physical therapist. "You never know."

The couple ended up buying a 2,100-square-foot four-bedroom colonial in the Buena Vista neighborhood of West Hartford. The house has four bedrooms, a den, 2 1/2 baths and an attached two-car garage.

In today's shaky economy and slow housing market, buying a house that can be sold easily and at a profit has taken on more importance than falling in love with a particular house, area real estate agents say.

Grabicki is confident that his new house would be easy to sell if the couple had to move within the next few years.

What makes a house marketable?

"Buy a house that appeals to everybody," said Karen Conniff, a broker with Coldwell Banker in Old Lyme.

"We call these mainstream homes," said Grabicki's agent, Rob Giuffria, a broker with Prudential Premier Homes who specializes in homes in Greater Hartford.

Grabicki's house fits the description of what Giuffria and Conniff say is the "safest" house to buy in Connecticut: A colonial-style house with three to four bedrooms, 2 to 2 1/2 baths, and 1,500 to 2,500 square feet.

"That's what 70 percent of the buyers want," Giuffria said.

Outside The Mainstream

Buyers unsure of how long they will stay in a house should steer away from homes outside the mainstream, agents say.

For instance, one- or two-bedroom houses are difficult to sell, because they appeal primarily to single people or couples without children. Also, houses with five or more bedrooms are often considered too big for an average-sized family and raise concerns about the costs of heating and cooling. Houses with bedrooms in the basement are also a hard sell because families tend to want bedrooms on the same floor.

Style makes a difference, too. In Connecticut, colonials rule, although ranches are popular with empty-nesters, agents say.

Location trumps everything else that makes a house highly marketable. Buyers often overlook negatives in a house if it has a great location, particularly if it is in a town with good schools.

"It's always safer for resale to buy a smaller house in a good location than a larger house in a bad location," Giuffria said.

It also is important for a house to be comparable to houses nearby, said Norman Kilcomons, owner of Property Consultants, an appraisal company based in Farmington.

"You never want to [have] the most expensive house in a neighborhood unless you want to die there," he said.

Garages Matter

Other characteristics that help with marketability, agents say, include a two-car garage, a level lot, a quiet street, a dry basement and energy efficiency.

Garages are important. Most home buyers want a two-car attached garage. For an older home, a two-car detached garage will do.

Houses with one-car garages or no garages sell for less, Giuffria said. Adds Conniff: "If a house doesn't have a garage, it's a big deal."

A house on a busy road will be harder to sell than a house on a quiet street.

"If you can hear the cars inside the house it devalues the property," Conniff said.

Conniff knows of a couple who fell in love with an antique house near the shoreline that is within 200 feet of a busy road.

"They did a beautiful job of restoring it," she said, but now they are having trouble selling the house because of its location. Despite price cuts, it has lingered on the market for 10 months without any offers.

If the same house were situated on a quiet, winding road, it would have been sold by now, Conniff said.


She advises buyers to think of a house as an investment as well as a home.

"You can't fool yourself and say, 'I don't hear the noise,' from a busy road, because everybody else does."

She also said that many people don't want to buy a house on a steep lot below a road. "They think of water running into their basement."

As for that basement, buyers want one, but they want it to be full-size and dry so they can use it for storage, she said.

Conniff has found that overall, buyers want "a relatively mainstream house they can upgrade."

She said most of her clients describe themselves as "colonial people." They're not interested in contemporary homes, she says.

But what if you're trying to sell a house outside the mainstream?

"The best thing you can do is make it really 'wow' inside," Conniff says. "Upgrade the kitchens and bathrooms, make it as appealing to everybody as possible. That includes landscaping. And don't paint it a weird color."

She said buyers today feel empowered - and they are picky. Landscaping should be mature and well thought-out. Everything down to the quality of the paving on the driveway is examined.

"If they have to think twice [about a house], they'll go for another," she said. "Buyers are not willing to compromise anymore. "There are lots of things to look at - they can get exactly what they want."

COVER STORY - Hartford Courant, Real Estate Section

Why Has A Home Been On The Market A Long, Long Time? The Price

By ROBIN STANSBURY | Hartford Courant | March 29, 2009                  

It's taking longer for homes to sell in the Greater Hartford area, an average of more than two months. But some homes seem to sit - and sit and sit and sit - on the market much longer than others.

Like the historic home on North Main Street in Suffield that has been listed for sale for nearly 1,100 days, or the house on Avalon Drive in Middletown that has been for sale for more than 1,300 days, according to the Multiple Listing Service.

In both cases, that's more than three years. Yes, three years.

With no obvious flaws, agents say the most likely reason these homes and others linger comes down to one factor: price.

Local real estate agents insist that even in this economic downturn, homes are selling - sometimes within just a week or two of being listed, and occasionally with multiple offers - if they are in good condition and, most importantly, priced right.

"Any house that is on the market that long and hasn't sold, it is the price," said Susie Hatch, an agent with William Raveis Real Estate in West Hartford. "I don't care what town it is in, I don't care where it's located. I don't care if it is in Las Vegas, where there are literally thousands of houses on the market. It is price. If it is the right price, someone will buy it. Always."

But determining that magic asking price - not too high to detract buyers, not too low so sellers feel like they are giving it away- is especially difficult in this market, when fewer houses are selling. Without comparable home sales nearby - homes with similar size, style and condition - it is sometimes difficult to pinpoint the ideal asking price.

"It's much harder in this type of a market. If a home has a negative about it, no matter what it may be, you're not sure how buyers are going to react to that negative," said Charlie Kaylor, owner/broker of RE/MAX Communities, based in Simsbury.

"Say you have a slightly awkward floor plan. How much of an adjustment do you make for that?" he said. "Pricing is just more difficult now and buyers are pickier. A few years ago, you used to look down the street at the neighbor's house that sold, add $10,000 and that's what you'd get. That's not how it is working right now."

But even steep price reductions sometimes aren't the answer.

A home in Westbrook, for instance, has been listed for sale for more than 1,100 days, first with an asking price of $999,000. The four-bedroom home, which is part of a private beach association, is now listed for sale for $695,000 and a buyer has yet to be found.

Location doesn't seem to be a problem in that case, but sometimes a bad location can stop a home from selling. Busy streets and sloping yards can derail a deal.

"Location definitely makes a difference," Hatch said, "but in this market it still comes back to price."

She said a home in West Hartford recently sold despite its bad location - the backyard backed up to Interstate 84 - and in horrible condition.

"Without a doubt, it was about the worst condition I've ever seen in a house," she said. "It was a foreclosure and the people walked out the door. There were open food containers in the kitchen. Clothes and shoes all over the floor. But it came on the market at $106,000, and they had 12 offers because you can't find anything in West Hartford at that price. People said, 'I can deal with the condition for that price.'"

Local agents said certain styles of homes, such as an historic home, and homes priced higher than $1 million naturally can take longer to sell because the pool of potential buyers is smaller than in the mainstream marketplace. In those cases, the agents said, sellers need more patience.

According to the Greater Hartford Association of Realtors, single-family homes in the region took an average of 67 days to sell in 2008, an 8 percent increase from 2007. In February 2009, the average days on market was 81, about 4 percent higher than in February a year ago.

So what's the best plan for sellers heading into the spring market?

Rob Giuffria, a broker with Prudential Premier Homes who specializes in high-end homes in Greater Hartford, said all homeowners need to take a hard look at their homes, identify any flaws and make price adjustments for things that can't be fixed.

"When a home hasn't sold, what I tell sellers is there is almost always a limiting factor impeding the home's ability to sell," Giuffria said. "There is always one factor that will stick out in a buyer's mind the most: a bad location because it's on a busy street, no bathtub on the second floor, no eat-in area off the kitchen.

"As a seller, you have to understand the factor that will most adversely affect the sale of your home," he said. "Once you figure out what that factor is, adjust your price to address it."

Giuffria said he recently sold a four-bedroom, three-bathroom home in West Hartford with a new kitchen and hardwood floors for $364,000. The price suffered, he said, because it was by far the most expensive home on the street. "In another neighborhood, that home was worth $400,000," he said, "but not in the neighborhood where it was located."

April 06, 2008 | The Hartford Courant - The home is in historic downtown Farmington, Connecticut, a 10,000-square-foot mansion built in 1917, with a 2,000-square-foot pool house overlooking the Farmington River.

It was listed for sale in 2005 with a $9.8 million price tag.

Then it was reduced to $8.8 million.

Then reduced again.

And again.

And again.

Now, almost three years later and still on the market, the home has an asking price of $5.695 million -- a more than 40 percent reduction.

How do you overprice a house by millions?

Actually, it's not that the home isn't worth millions. The difficulty is that the home is unusual.

Its style is reminiscent of a small Newport mansion, with silk fabric on the walls, ornate fixtures and lighting, even original details like a hidden bookcase behind oak panels in the library. And while picturesque, the home isn't situated among other multimillion-dollar mansions. Some nearby homes on Garden Street are modest, worth far less than $1 million.

"It's so hard to price a home when there are no similar houses nearby," said Rob Giuffria, a broker at Prudential Premier Homes who specializes in highly valued Connecticut homes and who is familiar with the property. "One of the tenets of valuation is looking at similar houses across the lawn or down the block. When there isn't any, you're left looking farther away for similar homes, and that doesn't always work."

It's almost always a challenge to price unusual homes -- either because of their location, their size or their style (think a log cabin in an urban setting). But that pricing process becomes more difficult in a slowing market, when valuing even average houses becomes tricky as prices spiral downward.

That was certainly the case for Josh Livingston, who is selling his 3,700-square-foot house in Simsbury. The newly constructed home, with five bedrooms and three full bathrooms, is made to look like a historic Colonial-style house from the outside, but with all the modern conveniences inside.

Livingston said he was well versed in the mechanics of pricing a home: First look at comparable home sales in the neighborhood, consider the condition of his own home, and add or subtract for upgrades or problem areas.

So he was stunned when two real estate agents recently evaluated his house.

One suggested a list price of $799,000.

The other suggested a price of $899,000.

"I was shocked," said Livingston, who is selling because of a job relocation to New York. "This is a unique house on a unique street, and I wouldn't have been surprised if they were off by ten to twenty thousand. But $100,000 is a big difference."

Livingston just put the house on the market, as a for-sale-by-owner, at $849,000.

Jennifer Trautman, an agent with Connecticut Prudential Realty in Madison, said pricing an unusual home is sometimes like being a fisherman.

"If you are finding you're not catching any fish because the price is too high, you have to lower the price to where the fish -- or the buyers -- are," she said.

Trautman has been fishing for more than two years for a buyer for basketball player 's house in rural Durham, which was originally listed at $5.995 million. The home is now on the market for $3.799 million -- a drop of 37 percent.

The 12-acre property includes the main house, a 9,300-square-foot Georgian brick colonial with six bedrooms, five baths, five fireplaces, a billiard room, a two-lane bowling alley and a basketball court located in a guest house.

"It's difficult because there's nothing else like it around. You can't compare it to what's for sale in Durham," Trautman said. "We have to look at other large estates in places like Old Lyme and Madison, but those estates are on the water or with a view of the water. All you can do is compare it to other properties that are similar and adjust the price if it doesn't sell."

Trautman said that after the price of Baker's house was lowered, more fish -- or potential buyers -- started tugging on the line.

"When you lower the price you attract a different range of buyers," she said.

Giuffria said sometimes the hardest part of dealing with unusual homes is not pricing the house, but convincing sellers their property is not worth as much as they think.

For example, Giuffria said last year he listed a home in the Farmington Valley for $1.9 million; now the price is $1.3 million.

"The homeowners were not willing to accept that their house was really worth less than $1.9 million," Giuffria said. "The market has significantly changed. There are two to three buyers for every 10 houses on the market, so you have to price your house to make it one of the top three homes in your price range.

"When you overprice a house, your only recourse is to reduce the price, maybe take the house off the market and reduce the price again and now you've shifted the leverage to a buyer," he said. "If you list at a price that is truly below market value you will create a buyer frenzy that will result in multiple buyers."

Contact Robin Stansbury at rstansbury@courant.com.

Price The House Realistically, And Make It Attractive For The Market, Experts Advise

By THERESA SULLIVAN BARGER | Hartford Courant | October 5, 2008

Before listing their Avon house, Joseph Rosamilia and his wife spent several months preparing it for sale. They updated their kitchen appliances and remodeled baths, removed wallpaper and painted walls a neutral color. They installed a new walkway, power-washed the house and deck, and hired landscapers to spruce up their property.

They also listed the 5,233-square-foot, five-bedroom house at $950,000, the price recommended by their real estate broker. That's about $50,000 less than neighborhood comparables. They're hoping for a quick sale.

Agents say there are two crucial steps to selling high-end homes in a soft market - pricing the house realistically and readying it for move-in condition.

"If sellers do everything that we suggest, it sells in less than median time," said Rob Giuffria, a broker with Prudential Premier Homes who specializes in high-end homes in Greater Hartford. "If they don't do what we recommend, it will take them three times as long and they'll get 90 percent of what they would have gotten if they sold it quickly.

"The best chance of getting the most money is in the first 14 days on the market," he said. Ideally, sellers should price their house so competitively that buyers feel a sense of urgency to submit an offer.

While the overall housing market is soft, the market for houses priced at $500,000 and above is even softer, according to appraiser Robert Ficks Jr. and a number of real estate agents. The combination of a weak economy, high energy prices, financial uncertainty, tighter lending practices and growing environmental awareness is causing some homeowners to stay put rather than move to a "McMansion."

Gallons Of Fuel

"I think the McMansions are the real estate version of the SUV," said agent Mick Marsden, whose primary territory is in Guilford, Essex and Madison. "The very first questions I'm asked today - before they look at the house - 'Do you know how many gallons of fuel they burned last year?'"Nationally, after three decades of growth, the average size of a new single-family home has started to decline, according to a June 6 article in AIArchitect. The growth trend had reversed by 2007, and a 2008 survey found twice as many residential architects reporting home size declines as the number reporting increases.

While demand for big homes may be waning, it's still there.

"You still have people who are into the bling of real estate," said Marsden, of the River to Shore Group at Page Taft GMAC Real Estate. "They want that status symbol."

Prudential Connecticut Realty agent Mollie Abend sold a West Hartford house with more than 5,000 square feet in one day for $912,500.

"People are still buying these houses," she said. "A lot of transferees are still coming in."

While relocation clients tend to prefer West Hartford, Avon and Farmington in the Hartford area, agents said, high-end houses in other affluent towns are selling when they are priced at market value.

Sellers of high-end homes in Hartford County towns other than the big five - West Hartford, Avon, Farmington, Glastonbury and Simsbury - generally face a longer time on market, agents said. Since buyers can get more house for the money than they could a few years ago, Giuffria said, demand is higher in those five towns because of their reputations for good schools, good resale value and convenience to Hartford.

"We're not seeing dramatic drops in good towns," Ficks said. "What we are seeing, if there are seven or eight lots in a cornfield in [a less prestigious town], that is a tough sell."

In less affluent towns, Giuffria said, "higher-end homes won't sell."

Setting A Price

Some sellers will look at what they paid, add what they spent on upgrades and add the real estate agent's commission to come up with their list price, Giuffria said. In a declining market, he said, that formula is a recipe for getting burned.

"A buyer doesn't care what you paid for the house," he said. "Anyone who bought a house between 2004 and 2006, they're generally under water in the house. They're going to have a tough time breaking even."

Rosamilia, who bought the house two and a half years ago, figures he and his wife put in nearly $100,000 of improvements. They expect to come close to breaking even, but with the agent's commission, he said, they probably will lose some money.

This is the ninth house they've sold, he said, and they've learned to pick a quality house in a good location that is underpriced because it's cosmetically challenged.

He credited Giuffria and Jana Petano, an Avon real estate agent, who advised them on home fixes. Picking the right agent is another crucial factor in selling your house quickly at an appropriate price, Rosamilia added. "There's a reason 20 percent of the agents are responsible for 80 percent of the sales."

Rosamilia and his wife have one child and they are buying a house in West Hartford so they can be closer to work.

Sellers who are serious about selling their homes should update kitchens and baths more than a decade old and paint the entire house with neutral colors, said Katie French, of Coldwell Banker in Simsbury.

A significant percentage of the buyers shopping for high-end homes are transferees and they don't have the time or the inclination to buy a house that needs work, she said.

"Larger homes are overpriced more than houses at the lower end," Giuffria said. "Houses priced appropriately sell quickly."

By: Rob Giuffria, GMS; 1-860-796-4555; rob@tourrealtors.com; http://www.premierhomeexperts.com/;

Here's another rosey forecast for home prices published by the NAR. Here's an excerpt...

NATIONAL ASSOCIATION OF REALTORS®

Despite some media reports of the worst housing market conditions since the early 1990s, or even since the

Great Depression, the recent home price declines have been negligible at the local level. Unlike past local

housing downturns, which were accompanied by severe job cuts, the local economy continues to add jobs.

Apartment rents have been rising at the highest pace in five years, which will begin to encourage some renters

to seriously consider ownership. Mortgage rates have also been falling recently and stood near a historic low of

6.5% for prime borrowers. Rates could be even more favorable in upcoming months as the Federal Reserve

cuts the fed funds rate in late 2007 and in 2008 as there are clear signs of contained inflation. A revival in FHA

loans, which had lost substantial market share to the risky subprime market, will provide funding for low-tomoderate

income households at much more attractive mortgage rates. If a modernization of FHA loans is

implemented including lower initial payment requirements, higher loan limits, and risk-based pricing then there

could be a surge in FHA loan usage.

The outlook is positive. Homebuilders having drastically cut production will help minimize prolonged

oversupply conditions. Further production cuts by builders, which is encouraged, will help the market to more

quickly return to a healthy state. On the demand side, job gains have added to the number of potential

homebuyers. Historical relationships imply roughly one additional homeowner for every two additional new

jobs. Since the peak of the housing market two years ago, the local market added 10,500 net new jobs (August

2007 vs August 2005). A rise in home sales and a strengthening in home prices appear immiment.

Price Analysis for the Hartford Metro Region

Home prices in the Greater Hartford Region encountered a boom in 2003 to early 2005, but prices have been

falling in recent quarters. Home do not appear to be overpriced. With job gains continuing at a solid pace, a

price increase will likely continue, though not at a frenzied pace. A sharp reduction in new home construction

will help control the overall inventory situation. Resetting loans and the rising number of foreclosures related

to the subprime fallout are clearly negative factors, but the impact will be offset by the fundamentals of the

healthy local economy.

****************

Rob Giuffria, GMS |Top 1% Certified Tour Agent |ERC Appraisal Certified| Vice President | Prudential Premier Homes | c 860 796-4555 o 860 677-1122 f  860 760-6850 tf 1-800-837-2750  Rob@TourRealtors.com http://www.robgiuffria.com/ http://www.tourrealtors.com/ This message is intended only for the use of the individual or entity to which it is addressed, and may contain information including trademarks (logos) service marks or copyrighted information that may be privileged, confidential and exempt from disclosure under applicable law. All content included herein is the property of the sender.  If you have received this message in error or if you are the not the intended recipient, contact the sender and delete it from your records and your computer immediately.

By: Rob Giuffria, GMS; 1-860-796-4555; rob@tourrealtors.com; http://www.robgiuffria.com/

Our number #1 trade group continues to publish inherently flawed data. The latest example, the Days on Market (DOM) calculation, does not include time on market for listings that were previously listed, but not sold. How can a trade group that supposedly has our best interest in mind keep publishing patently false data? These inaccuracies perpetuate NAR's image of a real estate cheerleader, instead of a source for objective data.

Please let me know your thoughts on what you think of the NAR's job during the last year representing us in the media.

Happy selling and let's have a great 2008!

Rob

****************

Rob Giuffria, GMS |Top 1% Certified Tour Agent |ERC Appraisal Certified| Vice President - Relocation| Prudential Northwest Realty   c 860 796-4555 o 860 677-1122 f  860 760-6850 tf 1-800-837-2750  Rob@TourRealtors.com http://www.robgiuffria.com/ http://www.tourrealtors.com/   This message is intended only for the use of the individual or entity to which it is addressed, and may contain information including trademarks (logos) service marks or copyrighted information that may be privileged, confidential and exempt from disclosure under applicable law. All content included herein is the property of the sender.  If you have received this message in error or if you are the not the intended recipient, contact the sender and delete it from your records and your computer immediately.

By: Rob Giuffria, GMS; 1-860-796-4555; rob@tourrealtors.com; http://www.robgiuffria.com/

Abstract

Realtors have differing opinions regarding the effect of buyer brokerage compensation amounts offered via an MLS. I believe that the effects are negligible and have started a study to attempt to quantify the relationship. In order to ensure that the results are/are not regionally influenced, I would like to partner with an agent in other geography outside the Northeast. Please send me an email if you are interested.

Thanks - Rob  

By: Rob Giuffria, GMS; 1-860-796-4555; rob@tourrealtors.com; http://www.robgiuffria.com/

Title insurance (TI) protects a home buyer against claims to the title of their home. A TI policy is generally a good idea, but a home buyer should understand their options when purchasing a policy. The easiest method is to purchase a policy offered through the buyers' attorney. The largest group offering policies in Connecticut is CATIC. See table below for rates.

These rates are approximate, but should give you a good idea of the cost of a policy. Also, you should know that your attorney gets paid 60% of the premium cost and remits the remaining 40% to the insurer.

Rob Giuffria, GMS Top 1% Certified Tour Agent | ERC Appraisal Certified Vice President | Prudential Premier Homes   c 860 796-4555 o 860 677-1122 f  860 760-6850 tf 1-800-837-2750  Rob@TourRealtors.com http://www.robgiuffria.com/   This message is intended only for the use of the individual or entity to which it is addressed, and may contain information including trademarks (logos) service marks or copyrighted information that may be privileged, confidential and exempt from disclosure under applicable law. All content included herein is the property of the sender.  If you have received this message in error or if you are the not the intended recipient, contact the sender and delete it from your records and your computer immediately.

The state of Connecticut charges a conveyance tax (1/2% on first $800K and 1% on additional value) on the sale of a home. Also, the local town charges 1/4% and can charge an additional 1/4% if they are in an economic development zone. The tax is paid by the seller and is collected by the town clerk when the deed is filed. Here's the formula for calculating the tax due:

Sale Price: 0-$800,000, then (SP*.005) + 1% of the value >$800,000.

Example: Sale price of $475,000 (.005+.0025) = $3,562.50

Contact Rob via email at rob@tourrealtors.com or by phone at 860.796.4555 for questions regarding real estate tax issues.

By: Rob Giuffria, GMS; 1-860-796-4555

I believe the case study method is one of the most effective vehicles for learning and I would like to begin a new series for home seller and buyers. This is the first in a series of real world real estate examples that includes actual stories and the associated outcomes. Names might be changed and figures amended to protect the innocent/guilty client. However, these stories are real! Please email me at Rob@TourRealtors.com for questions regarding this series or visit me on-line at http://www.robgiuffria.com/. Thanks for visiting!

Client

A mid-level executive at a local Fortune 100 company. This client said they were familar with quantitative analysis and would like to apply econometric principles and the rigor of six sigma in the valuation model to evaluate their home.

Opportunity

Customer wanted to get a better understanding of the value of his home. He was considering a job change that would require an interstate move.

Recommendation

List price recommendation was $639,000. This would result in a sale price 98% of list (~$626,000) in <= 36 days.

Outcome

Seller did not accept recommendation and chose to list with a competeting broker. Initial list price was set at $667,000 on 6/14/07. Price was reduced to $649,900 on 8/8/07 and $639,900 on 10/8/07. Home was sold on 11/8/07 for $620,000. The seller held the asset for approximately 90 days longer than required for sale at a cost of ~$7,800. (Assest holding costs = Cost of Capital X Asset Value)

Lessons Learned

Effectively pricing a residential home based on the same sales approach is possible if assumptions are made regarding macro economic variables and those assumptions are based in fact, but do not include inherent biases from the sellers.