As the R.I. market cools, buyers and sellers learn mutual respect

08:17 PM EDT on Sunday, April 2, 2006

BY MICHAEL MELLO
Journal Staff Writer

Rob Thomson is sure the housing market in Rhode Island is about to heat up again. He and wife Peggy are holding firm on their $1.15-million asking price for a restored 12-room Victorian on Warwick Neck that first went on the market in September.

"I don't see the market slowing," Thomson said, citing among other factors a report from the National Association of Realtors that sales of previously owned homes rose a surprising 5.2 percent in February, compared to the previous month.

David and Nancy Barth were encouraged by the same national report, while vacationing in Florida. They have a different take, however, on what it will take to sell their secluded South Kingstown home, which has been on the market since last June.

"We saw the downturn coming, so it hasn't been a shock," said Barth, who has slashed the price of the ranch-style home on a 3.6-acre lot in the hills above Indian Lake by more than $100,000, to $795,000.

The different approaches highlight the dilemma faced by hundreds of Rhode Islanders trying to sell into a housing market that no longer is red hot.

Some hope to wait out the slowdown, convinced the market will rebound. Other sellers are becoming more aggressive, slashing prices and taking other steps to get noticed in a more crowded market.

Real estate agents, meanwhile, say most sellers need to forget the bidding wars of recent years and accept that it's become more of a buyers' market in many communities.

"It's frustrating to watch the struggle between buyers and sellers," said Heidi Farmer Piccerelli, an agent with Coleman Realtors.

"Buyers are sitting back and waiting for the market to crash, then say 'I told you so,' " she said. Sellers "are looking for an offer, and that is what buyers are not doing" as quickly as they did just a year ago.

The numbers tell the tale of a mixed market feeling the effects of a sharp run-up in prices.

While home prices for existing single-family homes are still increasing in many communities, last year's 6.9-percent rise in the statewide median sales price, to $282,900, lags the double-digit pace of previous years.

Buyers have more to choose from, with 4,871 single-family homes on the market in February 2006, compared to 2997 for the same month last year, according to the Rhode Island Association of Realtors.

Buyers are becoming more selective, leading to homes taking longer to sell. In February, that turned out to be an average of 81 days statewide, compared to 72 days the previous year.

Overall sales for existing single-family homes in the state last year fell by 2.7 percent, to 9,711, according to the realtors' association. The dip followed a record-setting 2004.

"We could not continue on the path" to double-digit price appreciation "without pricing Rhode Islanders out of their homes," said Michele Caprio, president of the state association of Realtors.

Caprio says the market remains solid, particularly in coastal communities such as Jamestown, where the median sales price last year jumped 17 percent, to $556,000.

But overall, "we're moving into a more balanced market," she said. "There are considerably more options for buyers."

So what's a seller to do?

First, make sure the asking price reflects the current market.

"Sellers need to be realistic," Caprio said.

But that doesn't necessarily mean slashing the price, if the property is worth it.

The Thomson's Warwick home, for example, has been fully restored. The couple estimates spending $400,000 over a decade on the house and landscaped grounds.

Thomson, the co-owner of a Smithfield manufacturing company, figures he put the 124-year-old house on the market a little late last year. It was temporarily taken off the market after a contract with an agent expired, but will soon be back on.

Thomson is hoping a new agent can attract out-of-state buyers.

"I just collect my own data and make my own decisions," he said of the market, noting the median sales price in the city was up nearly 9 percent for 2005. The number of homes sold in the city declined by just under 6 percent from the previous year.

The Barths, however, knew their original asking price was more than they were likely to get.

Total sales of existing single family homes in South Kingstown declined 17 percent last year. Median prices, meanwhile, increased 5.5 percent.

"We're down [in price] to where we thought we'd be" when they began planning to move closer to two adult children in New Hampshire, said Barth, a retired small businessman.

Piccerelli, with Coleman Realtors in Providence, expects the market to improve this spring but will continue to encourage sellers to do pre-inspections -- something many balked at in recent years.

She says two Providence properties that were on the market for several months recently sold quickly after the sellers did inspections that they later shared with the eventual buyers.

"Without knowing what they are up against, in terms of unknown structural or mechanical defects, [sellers] are leaving the playing field to the buyers, which could later cost them thousands of dollars," she said.

Sellers can also improve their chances by working with agents or interior designers to "stage" their home, Caprio says.

"They work with what a seller has in the home, to bring out the height of ceilings, or the size of the rooms," she said. "You see this on HGTV, but it is really taking place" in Rhode Island.

While some agents balk at asking sellers to spend money, beyond repairs, to make their home more appealing, Mallory Constantine says it needn't be expensive.

"You just have to nudge the imagination a little," she said while sitting in the kitchen of an eight-room Westerly home she recently sold. Constantine and a partner bought the property about 15 months ago and did considerable work inside and out.

They put the colonial-style home back on the market last summer, with an asking price of $399,000.

They first showed the downtown-area home with the 1930s-era furniture they'd bought with it. They then took the furniture out, but still couldn't attract a buyer.

Finally Constantine, who has staged a handful of properties, decided after feedback from her agent that the problem was an unfurnished kitchen split between two rooms.

Potential buyers "were having trouble seeing what they could do with it," she said.

Constantine brought in an old table, a rug and spent $50 for some shelves, on which she added dishware and candleholders.

She found a buyer soon after for $359,000, just $10,000 under the latest asking price.

So was it the price markdown or the staging? Probably a little of both, Constantine says, though people stopped raising issues with the kitchen after she dressed it up.

Sellers also have the choice of offering incentives to reel in serious bidders, such as covering closing costs and other options.

Despite his already steep price reduction, Barth says he "might get to the point" of offering a deal to close a sale.

He and his wife had been watching a home they like in Laconia, N.H., that's up for sale. But they can't put an offer in until their house is sold.

Barth, however, says that, just like Rhode Island, there's plenty to choose from where he hopes to move.

Even Thomson, who feels his property is priced right, is willing to negotiate.

"We have a lot of antiques we could include in the sale," he said. "Unless you are moving from [another] Victorian, you'd be looking to put a lot of money into the furnishings."