I have a client who is interested in purchasing a single family home, priced around $1-million dollars, in Montclair. As a Realtor and long-time resident of Essex County I know Montclair well. I grew up next door in Glen Ridge, and I lived in Montclair for nearly 20 years. I also know that even in normal times Montclair homes are in high demand. But these are far from normal times.
As a Certified Buyer’s Representative, I believe that it’s my responsibility to help clients understand the markets they are interested in. When armed with solid information, the odds of beating the competition go up. With insufficient information, not so much. Take the current situation for example. I can explain that Covid-19 has triggered a migration of city dwellers to the suburbs and especially to towns like Montclair thereby increasing demand. It’s useful information but it doesn’t help much when planning a buying strategy. But hard data helps a lot. Here’s a hypothetical.
My client finds exactly the home she is looking for in Montclair. Asking price is $1,000,000, and it just came on the market. She wants to make an offer, but for how much and how soon? This is where the hard data come in.
I need to know what the Covid-influenced market in Montclair looks like for houses around the price of my client’s target price range ($750,000 to $1,250,000). And, to isolate the Covid-19 affect, I want to look at sold homes that went under contract after March 1, 2020. Here’s what I found out:
- There were 85 sales that met the criteria (no condos were included)
- On average, the houses went under contract in 21 days, but the median days-on-market was only 11 days. That means that the preponderance of deals went down on the short side of 21 days so my client needs to move fast.
- 85% of the homes closed at more than asking price. That means that an offer at asking price or below is more than likely to be a losing proposition.
- The average spread between sale price and asking price was $100,027 and the median spread was $111,000. That means that the preponderance of deals leaned higher than the average.
- Only 13% of the deals advertised an invitation for highest and best offers. In other words, sellers had enough solid offers tendered during the first week or so of on-sale to decide on a winner.
Now we have enough information to arrive at an informed buying strategy:
- This is not a market where a buyer can nibble around the edges and hope to get lucky.
- An offer has to be strong. In this case an offer price of $1,100,000 would not be out of order.
- Assume that you will only get one shot at it so make the offer count!
By the way, here are the numbers for the same date range in 2019.
- There were 104 sales in 2019 rather than 85.
- Houses went under contract in about the same length of time.
- 77% of the houses closed at more than asking price in 2019 rather than 85% in 2020.
- The average spread between sale price and asking price was $57,255 and the median spread was $62,500 rather than 2020’s $100,027 and $111,000.
Importantly, all towns are not the same. I have a different client who is looking for a home, in the same price point range, in a much storied town in Morris County. The numbers are radically different from Montclair. It’s important to know these things.
Shameless Sale Pitch
A certificate says that I am a Certified Buyer’s Representative. What it doesn’t say is that I really enjoy putting buyers and the homes they want together. Dare I say it’s fun? Let’s work together. Call or text me at 973-865-1863 to get started.