How Long Does it Take to Close?

Days to Close

The amount of time between the contract date and the closing varies greatly – every situation is a little different. However, after looking at all of the single-family deals that closed in Hartford County in 2013 we can see some trends.

The peak of the curve is between 35 and 55 days. This is the range that we usually see with our clients. It allows the buyer enough time to secure a mortgage, and the seller enough time to move out. Mentally you should plan for a closing somewhere in this window as you consider a real estate transaction.

Closing dates are negotiable. Buyers usually begin the conversation by proposing a closing date in their initial offer for a home. From there, it may, or may not, get changed depending on how the negotiation proceeds.

Buyers need to be more aware of the time until closing than sellers. Mortgage lenders offer rate locks to buyers and perform other due diligence that has a shelf live. You need to find a lender and get pre-qualified before making an offer on a home, so make a note to ask if they have advice on a reasonable closing timeline.

The closing date will need to be a mutual agreement between the buyer and seller. In most cases it’s within the 35 to 55 day window. Understand what the implications may be if you choose a closing date in less than 30 days or more than 60 days. Your agent should be able to provide more guidance.

Why Does Zillow Hate My House?

Zillow is a fairly popular website among buyers. They have an algorithm they use to provide a Zestimate for any house, whether it’s actively for sale or not. The Zestimate is Zillow’s estimate of what they think the house is worth. This Zestimate is derived from recent comparable sales and a little fairy dust, I think.

I spend a lot of time debunking Zillow Zestimates. I will admit, it kind of pisses me off. I have to provide a buyer with comparable sales for any house they’re interested in, which is perfectly fine and expected as part of my job. But then I also have to go through an additional analysis of why Zillow is wrong with their Zestimate and why the buyer shouldn’t put much stock in that value. It’s hard to do this because Zillow doesn’t really tell you how they get their numbers, and who knows how much fairy dust is worth and figures into the calculation.

My own house is a perfect example of just how wrong Zestimates can be. Zillow started hating on my house in August 2012 and hasn’t given me a break since. In the real world, my house is probably worth around $350,000 given the condition it’s in and updates that have been done. Let’s take a look at Zillow’s data and see what they say, shall we?


ZillowJuly2012

In July 2012, Zillow said my house was worth $314,000. Today it is worth $209,738. Well, they really give a range, so Zillow says it’s worth somewhere between $145,000 and $294,000.

Is this some kind of joke? They’re saying my house is worth less than what foreclosures sell for in my neighborhood. And how exactly do they even come up with the value they’re stating if it’s lower than the lowest of sales in my neighborhood? This makes no sense at all. When I look at the Nearby Similar Sales they tout, they are all within 200 square feet of the size of my house and the lowest sale price is $314,900.

So what exactly have we done to warrant a Zestimate of more than $100,000 less than the lowest comparable sale? I do not know.

Zillow also hates many other houses in my neighborhood, including a house I have listed right now for $395,000. Zillow thinks it’s worth $268,389. The house went under contract in a week and I can tell you that it’s not selling anywhere near $268,389. If it’s any consolation, Zillow does feel that the value of this house increased by $41,971 in the last 30 days. Maybe we should have had the owners list it even higher? How does a house value increase by 18% in just 30 days? The other bizarre thing about this house is that it is very similar to my home, but Zillow uses completely different Nearby Similar Sales for my house and this one, even though it is located only .35 miles (4 city blocks) from my house.

Do you see why I’m confused? Where do these garbage Zestimates come from? And why do I have to keep debunking them?

What has been your experience with Zillow? Do you think it grossly underprices or overprices your home in their Zestimate?

May Contracts: A Classic Look

Activity in the Greater Hartford real estate markets continued to build through the month of May, with a total of 687 Hartford County deals coming together in the Connecticut Multiple Listing Service. Markets are now back in line with the 2009 numbers.

Hartford Country Real Estate Contracts for May 2011

May’s result shows that there are still buyers on the hunt for homes. The peak of the spring market is often the month of May, so seeing the number of deals increase over April is reassuring, providing some level of confirmation that the market is returning to normal patterns.

Hartford County Contract by Town for May 2011Looking at the year-over-year comparisons, May 2011 outperformed May 2010 by 70%, which is a huge number. Although it’s always fun to make predictions and then see them come true, getting this one right (see the bottom of April’s commentary) feels like a hollow victory. There was no real insight here, just a solid understanding of how math works.

The important question is whether buyers will continue to shop through June. We’ve noticed that buyers seem to be coming out in waves this spring. There have been a few very busy weeks with lots of calls to tour homes, and showings scheduled on our listings. Then there have been other weeks that have been surprisingly quiet. We haven’t figured out the pattern, so your guess is as good as ours.

Buyers continue to prefer homes in which they don’t need to make any improvements. Picture perfect homes in popular locations sell quite quickly. Homes in very nice condition seem to find buyers who are excited to live there even if the counters aren’t granite. Properties that are clean and tidy are often more marketable than better updated homes that aren’t as well maintained.

Buyers willing to step outside of the must-be-perfect mindset can find interesting properties at a reasonable price. They just have to be willing to do a little work. Sometimes it’s a simple as painting and cleaning. Other times it’s more involved projects like updating the kitchen and/or baths.

One final thought … a lot of buyers seem to be thinking of their potential purchase as an investment more than a home. I understand that everyone wants to get the best deal possible, and would ideally like their property to appreciate over both the short and long term.

There’s a difficult-to-quantify side to residential real estate that relates to “quiet enjoyment,” or how much you like living in your new home. How much do you value a certain style of home, or layout? How much do you value the neighborhood a home is in? How much do you value your commute time? Are you willing to make compromises in one area to get what you want in another?

How Often Does the Listing Agent Bring the Buyer?

A Lion Guarding Hartford City HallThe other day we were wondering, how often does the listing agent for a home also represent the buyer? This situation is called Dual Agency, and is something we’ve explored in the past. However, we never looked to see how often it happens in our area.

To attack the question we looked at all the single family home sales that have closed so far this year in Hartford County. The data came from the CTMLS, which is deemed reliable but not guaranteed, and was gathered on the afternoon of the 20th.

The same agent represented both the buyer and the seller in about 1 out of every 11 deals. There were 4,678 total sales, and 9.1% of the time the buyer and seller used the same agent.

We really had no idea what to expect as an answer, but 9% seems reasonable based on our experience. Agents have an opportunity to sell their listings to unrepresented buyers (who become their clients) through the advertising of their listings and through open houses. We would also expect agents with a very strong listing presence in a particular neighborhood or town to be more likely to sell their own listings since they would also attract a pool of buyers interested in their territory.

This quick analysis leads to a number of additional questions that would be interesting to research. For example, is the percentage of dual agency deals seasonal? Has it changed over time? Are some agents more likely to sell their own listings than others? If so, are there any hints as to why? If there are agents who do a disproportionate number of dual agency deals, should sellers seek them out or shy away? What are our percentages and how do they compare?

Hmmmmmm. Maybe some answers to these additional questions will even make it into a future post.

Buyers: When You Also Have a Home to Sell

It’s Buyer’s Week at the Greater Hartford Real Estate Blog. We’ve talked about the current opportunity, importance of mortgage preapproval, and trading up in a down market.

Many would-be buyers already own a home … a home they have to sell in order to buy a new one. Buying a new home while also selling an existing home can be a tricky situation. The biggest question is the order in which the sale and subsequent purchase take place. It’s best to have all of your ducks in a row before you start down the path. Here’s how you might want to go about it…

Will This Be Your Next Home?Start with the mortgage. As we mentioned earlier this week, it’s a good idea to understand what you can afford for your next home. This applies to both trading up and trading down. Additionally, a mortgage lender is going to be able to tell you if you NEED to sell your home first in order to buy. Some people are understandably averse to the thought of carrying two mortgages at once, while others are not. A lender is going to tell you what’s financially feasible for you. Based on that information, you can figure out what’s comfortable and determine your strategy for selling your home and your search for a new home.

Have a real estate agent, or agents, come visit your home. Maybe you have an idea of what your home is worth, maybe you don’t. Maybe you think you know what needs to be done to your home in order to get it ready for the market, maybe you don’t. Getting a few sets of eyes to come assess it should help you down the line when it’s time for your home to go up for sale. Agents should be able to give you a price range where they think your house will sell. Additionally, and sometimes more importantly, they can help you understand the things you should be doing upfront to make your home sell faster. Staging and addressing potential inspection issues are important steps that shouldn’t be overlooked, if necessary. Remember, you’re going to be looking for another home to move to in this case. It will be important to have your home sell quickly so that you can move along with your next purchase.

Start looking at homes for sale. Even if you’re thinking that the process may take awhile, it’s important to start learning the market and understanding how many of the homes out there will work for your needs. Also, it’s typically easier from a coordination standpoint to work with the same agent that is selling your home when buying your new home. Unless of course you’re moving to an area where the agent does not work or the agent only specializes in listing homes. As an agent, I’d rather have you look at many homes over a period of a few months and get comfortable with the process instead of looking at just a few homes and feel rushed. If you have the luxury of time, make use of it.

Consider your options for where you’ll go next. What happens if you sell your home before you find your next home? Some buyers have a gap of days, weeks, or even months between the closing on their sale and the closing on their purchase. Do you have a temporary housing solution? Is that even acceptable to you? Thinking about this in advance helps clarify what you’ll need to ask of the buyers purchasing your existing home and of the sellers of the home you’ll buy regarding closing dates. Try to find a solution that will be reasonable for all parties involved and not end up with you on the street with all of your belongings and no place to go…

If you are planning on trading up, trading down or moving to a different town and have a house to sell, it’s best to start the research, planning and preparation a few months in advance, if at all possible. Finding a good lender and real estate agent to help you will make the process a bit smoother and less stressful.