The Real Estate Survival Guide
Yes, homes are moving, but it’s still a tricky market. Here’s what buyers and sellers need to know
As winter turns to spring and the prime season for buying and selling real estate reaches its high point, our annual appraisal of the local market reveals some positive news. Business is warming up as mortgage rates remain stable and are still at near-historic lows. New buyers have stepped up from their former positions on the sidelines, armed with information they’ve culled from online research. The attractions of New Canaan, Darien and Rowayton—New England charm, good schools, and proximity to water and to New York City—have put our towns at the top of many wish lists.
But it’s a tricky market, with some pricing categories moving briskly and others more slowly. Buyers need to be up-to-date on the action in their price range, and for sellers, the difference between an above-ask sale and a languishing property is a real sensitivity to the fine points of each town’s inventory. That’s why we’ve asked some local experts in the field to weigh in. These pros have helped us come up with some points to ponder if you’re buying or selling, or simply want to stay informed as you consider the potential and value of your own property.
1. Be Cautiously Optimistic
Last year’s extremely quiet upmarket tier may be turning around as buyers of luxury properties dip a toe back into real estate. At Coldwell Banker, Arlene Bubbico, the current president of the New Canaan Board of Realtors, notes that there were five sales of properties priced in excess of $5 million in 2013, with several sales pending at the start of 2014. This uptick bodes well for the market overall, as financial movers and shakers are feeling more positive about investments in real estate. Such optimism can prove infectious. In Darien, a marker of better times—the bidding war—has returned for some well-priced homes in the under-$2 million category. And in Rowayton, which as a section of the larger Norwalk geography is a micro-market compared to its neighbors, Bruce Baker, 2013’s top producer for William Pitt Sotheby’s International’s Darien/Rowayton office, notes brisk movement at the below $1 million segment of the market, with thirty-four units sold in 2013 in this price category, up from twenty-two homes in 2012. Everyone we polled reported tight inventory—well down from multiple-year averages. Jeff Kelly, a vice president at Kelly Real Estate in Darien, notes the need for supply, particularly in the heated under-$2 million category. “Right now [late January], we’ve got eighty-nine MLS listings; a normal market would have 150 to 200.” It’s a statistic that may at last bring music to sellers’ ears.
2. The Sweet Spot for Sales
For New Canaan and Darien, the most desirable price point can be found between $1 million and $2 million. Bubbico says people in New Canaan “are crazed” for a house in this range. Kelly agrees. In the Darien market, the under $2 million category is very active. And in Rowayton, the range between $750,000 and $1 million saw the greatest activity in the past year, with nineteen houses selling, contrasted with just eight sales in the same category in 2012. Gilllian De Palo, a vice president of sales at the New Canaan office of William Raveis, characterizes some typical buyers in this popular price range. “We’ve got those who want to move here from the city or other towns, as well as those who want to downsize from their larger homes to a smaller property that’s close to town, shopping and transportation.” Similarly, Baker notes that the Darien market—which has a large inventory of the desirable 3,000-square-foot, four-bedroom homes on not-too-large lots—could benefit from more potential sellers in this category taking the leap and listing their homes.
3. Sellers: Pre-Market Prep is Key
“You only get one chance to make a first impression,” says De Palo. That means sellers should do whatever it takes to spruce up a property before the first prospective buyer and agent arrive at the door. Pay attention to interiors, especially entry halls and mudrooms. Freshen paint, buff wood floors, clean carpets and de-clutter. As to any structural or mechanical flaws, take care of these before you go ahead and list the house. A residence may be appealing cosmetically, but the unseen problems can cost you. “Even if you had a bidder win the deal above your asking price, small things could come back to haunt you after the buyer’s home inspection,” says Jake Fay, a sales manager at William Raveis in Darien, noting that small problems assessed at closing will affect your bottom line. “Just knock out these things before you list,” he advises. Another critical aspect of pre-market prep is the price-setting strategy. Working with your agent can make the difference between an offer and a pass. “Where your house sits in the price range is key,” says Kelly. “A $3-million house in Darien has more competition than the under-$2-million house because of the current supply situation. It’s important to stay up to date on the details of the market, and a good agent will keep you posted as the market moves or improves.”
4. The Big News is–Smaller
The ever-expanding floor plan may finally be shrinking a bit, as buyers discover they can fit comfortably in an easier-to-maintain, 4,000-square-foot, four-bedroom home, rather than one that is fifty percent larger. In price-conscious times, people are acutely aware that more space necessitates more upkeep, and with working couples coordinating busy schedules, the extra time and costs required for maintaining a big home may not be worth the effort. While some house hunters still like the privacy of multiple-acre properties and larger homes on country roads, others opt for smaller houses on smaller lots. “A four-bedroom on a half-acre is appealing to many Darien buyers,” says Fay. In Rowayton, where lots are small and houses closer together, both he and Baker note that a walkable distance to town, along with compact landscapes that require less maintenance, make for strong selling points.
5. The Hottest House in Town
What attributes make a house move fast in this market? In Rowayton, Baker notes the popularity of what most people call Nantucket shingle-style houses—traditional facades that reflect the relaxed beach-style community that this unique part of Norwalk embodies. He also mentions that in the fast-moving, $750,000 to $1 million category in Rowayton in 2013, buyers chose some properties that needed a bit of work, which makes the community unique among our three real estate areas. In Darien and New Canaan, new or recently updated homes are more popular. “While there are exceptions,” says Bubbico, “most New Canaan buyers aren’t looking for a project. People don’t have the time, and the cost of a renovation is hard to predict.”
Asked to pick his hottest property last year, Kelly showed a 4,800-square-foot house in mid-country Darien listed at $2.495 million. Built in 1970, this pristine six-bedroom Colonial embodied great value—beautifully cared for and recently renovated (2009) to modern standards, with the popular Christopher Peacock kitchen that many buyers admire. Over in New Canaan, De Palo reports many first-time buyers and those who want to downsize are actively seeking homes near town that are updated and in turnkey condition. “We can definitely sell more of these in the under-$1.75 million category,” she says.
6. Buyers: Be Ready for Action
“Successful buyers have all their ducks firmly in a row,” says Bubbico. And De Palo notes that first-time buyers in particular need to be aware that the best way to get a deal is to be the best-qualified bidder. Preapproval for your mortgage, with paperwork done and a home inspector lined up for the moment you’re ready to bid, can put you in the running with those kings of the marketplace—the buyers who are ready to put down cash. Good preparation also can be critical if you find yourself in a bidding war for the home of your dreams. Sellers will nearly always pick the buyer who is able to act with speed. And by the way, the old prequalified status won’t cut it in the current market. Fay reminds prospective buyers that “the documents are endless these days,” so pulling all the financials together and securing approval from your mortgage company before you start looking is the wisest approach. “Having an insurance agent and attorney at the ready to work on your behalf is also helpful,” says Fay.
7. House Candy + Other Attractive Amenities
At the luxury level—$4 million and above—buyers will find amenities to match the asking price. Kelly has seen listed properties with beautifully equipped outdoor kitchens (complete with patios, dining areas and fireplaces) and extravagant fitness areas that are as well designed as the rest of the house. For entry- and mid-level homes, De Palo and Bubbico both remark on the space inside the entry: Many families will appreciate a well-organized, functional and attractive mudroom. “A place to put away all the clothing and equipment that can accumulate in a hallway is very appealing,” says De Palo. That could be why formality seems to be slipping away, as the living and dining rooms shrink to make way for relaxed gathering spaces. “Dining rooms and living rooms have gotten smaller in importance, while a big family room and kitchen with a breakfast area are attractive to young buyers,” says Bubbico.
Another feature on the priority list for many buyers is equipment to keep the house running when a storm knocks out power in the neighborhood. The need for these types of systems has been underscored in the wake of Hurricane Sandy and other locally wild weather in recent years, making them more popular than ever. Says Kelly, “Generators are probably the number one accoutrement in all price categories.”
8. Wanted: More Inventory
And there is more good news for those potential sellers who have been mulling over the idea of listing their homes while still sitting on the fence. In all three towns, agents report too tight a supply in the categories where movement has been brisk. So, what gives? “Many people who would normally contemplate trading up within their community after a few years have simply been staying put. Yet those buyers are typically an important part of a normal real estate market,” says Kelly. Now, with the economic outlook improving to a degree, everything may start to loosen up, with sellers finally moving off the sidelines and creating some as yet unrealized potential for a very good 2014 as pent-up demand encounters increased supply.
9. Bring Your Own Builder
Sometimes buyers are looking for a dream house they can’t seem to find, and so search instead for land to build on or a house that can be gut-renovated or replaced. Because the process will require one or more building professionals, De Palo says her office is noticing a new wrinkle in the house-hunting repertoire: buyers partnering with their builders or architects when they go looking at property with the realtor. Having professionals in the mix so early can be very helpful, as builders or architects can often see more clearly than their clients whether a property meets the requirements of the house that the buyers want to build or change. Taking this approach can speed things up once the purchase is made.
10. A New Reality on the Waterfront
“How did it do in Sandy?” That’s one of the first questions Kelly will hear when he shows a waterfront home in Darien or Rowayton. “Sellers need to address the vulnerabilities,” he says. A redrawn FEMA flood zone map has impacted not only the cost of federal flood insurance, but may also create some skittishness about coverage by primary insurers. Fay advises buyers to get questions about a property’s insurability answered right away, along with an understanding of the costs. While a modification or delay of substantial increases in the cost of federal flood insurance is still being debated in Congress—our local Congressman, Jim Hines, is one of the representatives attempting to deal with this issue—some homeowners have taken concrete measures to fortify their homes against future flooding.
Nick Frate, a partner in Fox Hill Builders in Darien, just completed a job that raised a client’s home above flood zone levels. Using Wolfe House & Building Movers in Pennsylvania, the contractor lifted the house and literally built a new, higher foundation, then set it back on the newly fortified support system. “It can be complex,” notes Frate. A structural engineer, architect, and numerous permits are required, in addition to the building mover. In the simplest scenario, a foundation on a sufficiently firm footing can be added and the house put back into place. When pilings are necessary, the old foundation is removed, pilings installed, and then a new foundation is built, before the house is again lowered into place. Such a process is not inexpensive, but increasingly homeowners on valuable shorefront lots want to protect their residences from potential damage, rather than arguing with insurers or having difficulty selling in the future.