Are You Shelling Out Too Much for Renters Insurance?
By Shannon Ireland
There's a lot to be learned from your neighbor's home sale. Let's say you live in Texas — if the home down the street is comparable to yours in some basic ways (square footage, for example), it could give you a great sense of what Dallas home prices are really like in your neighborhood. But if the neighbors have put in some strategic upgrades — or even struggled to sell! — there are lessons to be learned there as well.
1. Be a nosy neighbor at open houses
If you're friendly with your neighbors, you might be able to get the inside scoop by asking what kind of reactions they've been getting to their home. Or better yet, ask if you can attend their open house. Take note of the feedback you hear. For example, if you have the same outdated built-in kitchen desk as your neighbor (used for writing checks and holding a corded landline), you might want to start putting away your pennies now so that you can transform this feature into more coveted counter space with storage underneath (maybe even a wine fridge?). Or your neighbor might tell you that buyers are disappointed when they discover the enormous 1980s whirlpool tub taking up prime bathroom real estate. As long as you have a bathtub somewhere in the home, consider turning your own seldom-used supertub into a walk-in shower.
Another example: It probably comes as no surprise that everyone oohed and aahed over your neighbor's outdoor living space. If you're neglecting your deck or concrete pad, start thinking outdoor living room. Even doing little things, such as setting a lantern on a table beside a seating area or putting up a wall of potted plants to create an enclosure, can charm potential buyers.
2. How long should a home be on the market?
In a hot real estate market, a home could sell in a matter of days. In a more stagnant market, it could take as long as six months for a home to sell. It's beneficial to know how long it takes for your neighbor's house to sell, especially if their house is similar to yours. Al Cannistra, a Texas real estate agent, suggests you keep tabs on the following when looking at neighborhood comps:
Whether the house sold quickly or lingered.
The final sale price.
Whether the asking price was close to the selling price.
Whether there was a need to come way down on price after a long time on the market.
Whether urgency by the sellers led to a lower price (career move or financial distress).
How your neighbor's home sale, regarding price and length of time on the market, compared with other nearby homes.
What sort of impression the real estate agent made.
One big takeaway from this list is to track the home until the deal is done instead of looking at the listing price and calling it a day. The more important number (by far) is what the house actually sold for, not its listing price. Anyone can set a home price; the key is getting that price. "That sold price cannot be considered a valid comp until after it closes," says Bill Golden, an Atlanta, GA, real estate agent. "The closing info should be verified by either a professional [real estate agent] or by public record. Homeowners can sometimes inflate the value when boasting to their neighbors."
3. How to time the real estate market
If your neighbor priced competitively and the house sold in a flash (within a couple of weeks after putting it on the market), it might be your time to sell too. But if you're on the fence about selling, and it's looking like a buyer's market based on a lack of interest in your neighbor's home and lots of competition, you might want to stay put awhile. "Your neighbor's home can tell you a lot about how yours will sell," says Daniel Blatman, a New York, NY–based broker with Douglas Elliman. "It can inform you about ... perceived value, how active the market is, and how quickly your home might sell."
4. Demographic trends can affect home sales
Neighborhoods sometimes take on a type of persona: young families, retirees, singles, etc. If you really want to dig in, check out some detailed demographic data through Trulia. For example, Trulia's San Francisco, CA, real estate market overview reveals everything from the average commute time and type (5% commute by foot!) to which schools are best and where crime is a factor.
Once you understand the appeal of your neighborhood, you can target certain groups when you're ready to sell. "Learning how the seller's agent positioned the home is very important," says Blatman. "It should be targeted toward a specific buyer." After you get the 411 on your neighbor's digs, you should have a pretty good idea of what you should and shouldn't do when you're ready to sell your house.