Real estate conditions are generally described as either a buyer’s market or a seller’s market. But what’s happening in Washington now, insiders say, is downright strange, with some homes for sale lingering (like in a buyer’s market) and others getting embroiled in a bidding war (common in a sellers’ market), sometimes without us being able to discern it. reason.

“Since about the third week of September 2023, the market is what it is and we’re just in it for fun,” says Brett West, an agent at McEnearney Associates. “Homes that were expected to sell quickly sometimes sit on the market for 10 days or two weeks, and sellers get worried. I tell them to take a breath and not rush to reduce the price if it seems appropriate.

One of West’s listings sat for 79 days last summer, despite being priced lower than similar homes nearby, while a comparable listing sold in four days. A one-bedroom condo in North Bethesda listed by Morgan Knull, associate broker at RE/MAX Gateway, had no interested buyers for weeks, then sold at full price to a cash buyer.

The usual sales drivers come into play (location, price and neighborhood), but high mortgage rates and limited inventory are also factors. “Everyone just has to get used to market changes,” says Corey Burr, senior vice president at TTR Sotheby’s International Realty.

Despite the apparent quirks of residential real estate today, there are a few tips buyers and sellers can follow to try to take advantage of this quirk.

Opportunities in a changing market

Several agents we spoke with said buyers’ concerns about crime and the district’s schools have contributed to a weaker market in the city compared to the suburbs.

“People now feel a diminished sense of safety in the city, and shoppers with children are dependent on the luck of the (school) lottery system’s drawing,” West says. “Some DC sellers are moving to the suburbs for schools.”

He also notes a downside: “For buyers who want to live in Washington, this is an opportunity. Many neighborhoods have a significant real estate stock and prices that are more relaxed than in recent years.

For example, in mid-summer, West sold a renovated five-bedroom single-family home with four and a half bathrooms and a two-car garage for $1.45 million. The original asking price for this 16th Street Heights property was $1.975 million, and he expected it to sell for $2.1 million or more. Another property in the neighborhood sold for $1.1 million, but West predicted it would sell for more than $1.2 million.

“Right now, a house that receives multiple offers in Washington is an exception,” says West. “Buyers coming from highly competitive markets like Northern Virginia will likely breathe a sigh of relief that they don’t have to leave out all their contingencies or increase their offer.”

High-density neighborhoods that were starting to take off before the pandemic, like Trinidad and the H Street corridor, are now undervalued, West says: “A lot of the upside value we saw in these Neighborhoods declined as restaurants and retail businesses were supported. with the pandemic.

The weakest part of the real estate market is that of condominiums, particularly in the District. “Condominiums are often an entry point into the market for first-time buyers, who tend to be more mortgage-sensitive,” says Ericka S. Black, an agent with Coldwell Banker Realty. “Another problem is that DC ran out of funding for HPAP (the Home Buyer Assistance Program) and won’t have any more until October. I’ve seen two buyers cancel their contracts because they couldn’t get this down payment assistance.

Even newly constructed condos are slow to sell, Black says. One in Brentwood, near the Rhode Island Avenue subway station, took seven months to find a buyer, and another in Columbia Heights, nine months. Some sellers give up and rent out their condo to avoid losing money.

The oversupply of condos is helping buyers, however, says David Shotwell, an agent with Compass. “Once rates drop, there will be a lot more buyers competing, so it pays to get in now and refinance later,” he explains. “Now buyers can negotiate price, have the home inspected and negotiate for sellers to buy price. »

For buyers with deeper pockets, there may be opportunities at the high end. While luxury homes always take longer to sell than cheaper options, the market is particularly slow in the $2 million to $3 million range, Knull says: “It’s hard to know why, but it could be a source of concern for the future. elections, because of rising house prices, or simply because buyers in this price range moved between 2020 and 2022.”

Five Secrets Salespeople Need to Know

1. You need to get your house back into tip-top shape.

“Buyers have higher expectations than ever because they’re spending a lot on the home and don’t have extra money,” Shotwell says. “Everyone is busy and no one has time to prepare a place.”

Lilian Jorgenson, an agent with Long & Foster in McLean, agrees: “Sometimes sellers may think their house is better and should sell it for more than their neighbors, but they aren’t always willing to put it back in the market.” state desired by today’s buyers.

She recently helped some buyers negotiate repairs and a lower price for a home in need of work. “I knew the house couldn’t be insured with an old roof, so we negotiated to replace it,” Jorgenson says.

2. Without staging, a house will not sell for the best possible price.

“A bare house will reduce value, as every flaw and outdated feature is highlighted and spaces shrink. Staging will modernize a home without the full cost of a renovation,” says James Nellis, CEO of The Nellis Group and licensed real estate salesperson at eXp Realty. Another reason he says staging is important? “Today’s buyers have lost their ability to visualize and spatially see themselves living in the home.”

Staging, he says, typically costs $3,000 to $5,000, but can result in seller offers of at least $15,000 to $25,000 more.

3. There is disagreement over whether to raise the asking price of a home or undercut it.

“Salespeople need to eliminate wishful thinking and get realistic,” says Burr. “Instead of adding 5% to their price, they should offer a reasonable price and hope to attract more buyers. »

Burr doesn’t recommend deliberately underpricing to generate a bidding war, but other agents do.

“When we price it lower than we think it’s worth, it always generates multiple offers and drives the price up,” says John Ippolito, a Redfin agent in Frederick. “It works like an auction to build momentum for the sale. Psychologically, the fact that other people are interested in the same house validates people’s interest.

Ippolito recommends pricing a property about $30,000 below the estimated sale price. A price lower than this figure may generate multiple offers, but some may not reach the seller’s desired price.

If a property persists on the market, auction is an option. “We had a three-acre property in Montgomery County that wasn’t selling, so we strategically launched it at $500,000, even though we knew it was worth around $600,000,” Nellis says. “We said we would accept offers by a certain date and we would not accept less than $500,000. It sold for $580,000.

4. To avoid a contract falling through and a house having to be relisted, ask a potential buyer for a larger deposit, or even ask that it be non-refundable.

“Sellers can negotiate a non-refundable deposit to ensure buyers don’t back out of the contract and to avoid the black eye of a home going back on the market,” says Nellis.

5. Pre-registration marketing can help generate a bidding war.

“Agents can leverage the ‘coming soon’ marketing tool to generate interest,” says Nellis. “You can’t physically show the property to buyers, but you can encourage more people to view it from the first day it’s on the market. »

Six tips and tricks for buyers

1. “Coming soon” listings also provide an opportunity for buyers.

“You can make an offer during ‘coming soon’ with a one-day, zero-only contingency, which allows you to view the property and cancel your offer,” says Nellis. “This way you become ahead of other buyers. The agent doesn’t need to update the listing for 48 hours, so the status never changes if the buyer abandons within 24 hours.

2. Buyers can add an escalation clause that automatically increases their offer over others.

“Make the incremental amount of your escalation clause significant, such as offering $5,000 more rather than $1,000 increases,” says Shotwell.

3. A down payment of more than 20 percent and an offer covering any gap between the sales price and appraised value helps buyers be competitive when a home is expected to receive multiple offers.

Before making such an offer, Ippolito suggests buyers do a “walk and talk” inspection – a visit and discussion of a home with an inspector – to get an informed opinion on the condition of the property.

4. Buyers should look for a lower price range during their initial search so they have more room to increase their offer if necessary.

Burr also says that waiting ten days to two weeks after a listing goes live gives buyers more breathing room during negotiations.

5. Buyers using VA loans should offer a larger down payment if they have the necessary funds.

Nellis says that’s because these buyers have a hard time competing if sellers don’t trust no-money-down financing. “At closing, you are allowed to change your financing, so you can move to a 0 percent VA loan,” says Nellis. “This is legal and ethical, since sellers always receive full payment for their property.”

6. Research lenders.

The slowdown in sales and refinancing means lenders must compete for borrowers, Black says. Buyers should compare rates and terms and look for down payment assistance as well as the ability to refinance in the future for lower fees.

This article appears in the October 2024 Washingtonian question.

Michele Lerner ((email protected)) covers real estate, interior design and personal finance.