Real-estate conditions are usually described as being either a buyer’s market or a seller’s market. But what’s going on right now in Washington, say insiders, is downright odd, with some homes for sale lingering (as in a buyer’s market) and others getting snapped up in a bidding war (common in a seller’s market), sometimes for no discernible reason. “Since about the third week of September 2023, the market is what the market is and we’re just here for the ride,” says Brett West, an agent with McEnearney Associates. “Houses that were expected to sell fast sometimes sit on the market for ten days or two weeks, and sellers get worried. I tell them to take a breath and don’t rush to reduce the price if it seems appropriate.” One of West’s listings sat for 79 days this past summer, despite being priced less than similar houses nearby, while a comparable listing sold in four days. A one-bedroom condo in North Bethesda listed by Morgan Knull, an associate broker with RE/MAX Gateway, had no interested buyers for weeks, then sold at full price to a cash buyer. The usual drivers of sales are at play—location, price, and neighborhood—but high mortgage rates and limited inventory also are factors. “Everyone just needs to get used to changes in the market,” says Corey Burr, a senior vice president at TTR Sotheby’s International Realty. Despite the apparent vagaries of residential real estate right now, buyers and sellers can follow some tricks to try to take advantage of the weirdness.   Opportunities in a Shifting Market Several agents we spoke with said buyers’ concerns about crime and schools in the District have contributed to a weaker market in the city compared with the suburbs. “People feel a diminished sense of security in the city now, plus buyers with kids depend on the luck of the draw of the [school] lottery system,” West says. “Some DC sellers are moving to the suburbs for the schools.” He notes a flip side, too: “For buyers who want to live in DC, this is an opportunity. A lot of neighborhoods have great housing stock and more relaxed prices than in recent years.” For example, in midsummer, West sold an upgraded, detached five-bedroom house with four and a half bathrooms and a two-car garage for $1.45 million. The original asking price for that 16th Street Heights property was $1.975 million, and he’d expected it to sell for $2.1 million or more. Another property in the neighborhood sold for $1.1 million, but West had anticipated it would sell for more than $1.2 million. “Right now, a home that receives multiple offers in DC is an exception,” West says. “Buyers coming from highly competitive markets like Northern Virginia are likely to breathe a sigh of relief that they don’t have to throw out all their contingencies or escalate their offer.” High-density neighborhoods that were starting to hit their stride prior to the pandemic, such as Trinidad and the H Street corridor, are undervalued now, West says: “A lot of the upward value we saw in these neighborhoods retreated as restaurants and retail backed out with the pandemic.” The weakest part of the housing market is condos, particularly in the District. “Condos 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 issue is that DC ran out of funding for HPAP [the Home Purchase Assistance Program] and won’t have more until October. I had two buyers drop out of contracts because they couldn’t get that down-payment assistance.” Even newly built condos are slow to sell, Black says. One in Brentwood, near the Rhode Island Avenue Metro station, took seven months to find a buyer, and another in Columbia Heights took nine. Some sellers give up and rent their condos to avoid losing money. Excess supply of condos, though, helps buyers, says David Shotwell, an agent with Compass. “Once rates drop, there will be a lot more buyers competing again, so it pays to get in now and refinance later,” he explains. “Now buyers can negotiate the price, have a home inspection, and negotiate for the sellers to buy down the rate.” For buyers with deeper pockets, there may be opportunities on the upper end. While luxury homes always take longer to sell than lower-priced 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 concern about the upcoming election, about higher home prices, or just because buyers in that price range made their moves in 2020 to 2022.” RelatedWhat DC Condo Sales Say About the Housing Market Five Secrets That Sellers Need to Know 1. You must get your home in prime condition. “Buyers have higher expectations than ever because they’re spending so much for the house and don’t have extra money,” Shotwell says. “Everyone is busy, and no one has time to fix up a place.” Lilian Jorgenson, an agent with Long & Foster in McLean, agrees: “Sometimes sellers may feel their home is better and should sell for more than their neighbors, but they’re not always willing to fix it to the condition today’s buyers want.” She recently helped some buyers negotiate for repairs and a lower price on a home that needed work. “I knew the house couldn’t be insured with an old roof, so we negotiated to have it replaced,” Jorgenson says. 2. Without staging, a house won’t sell for the best possible price. “A naked home will lower the value, because every defect and dated feature is highlighted and the spaces shrink. Staging will modernize a home without the full cost of a remodel,” says James Nellis, CEO of the Nellis Group and a licensed real-­estate salesperson with eXp Realty. Another reason he says staging matters? “Today’s buyers have lost their ability to visualize and spatially see themselves living in the home.” Staging, he says, typically runs $3,000 to $5,000 but can yield seller bids of at least $15,000 to $25,000 more. 3. There’s disagreement about whether to pad a home’s asking price or undercut it. “Sellers need to cut out wishful thinking and get realistic,” Burr says. “Instead of adding 5 percent to their price, they need to list at a reasonable price and hope for more buyers.” Burr doesn’t recommend purposefully underpricing to generate a bidding war, but some other agents do. “When we price a home lower than what we think it’s worth, this always generates multiple offers and drives the price higher,” says John Ippolito, an agent with Redfin in Frederick. “It works like an auction to gain momentum for the sale. Psychologically, the fact that others are interested in the same home validates people’s interest.” Ippolito recommends pricing a property about $30,000 under the estimated sales price. Pricing any lower than that may generate multiple offers, but some may not hit the seller’s desired price. If a property lingers on the market, auction pricing 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 about $600,000,” says Nellis. “We said we would accept offers on a certain date and wouldn’t take less than $500,000. It sold for $580,000.” 4. To help avoid having a contract fall through and having to relist a house, ask a potential buyer for a larger deposit, or even request that it be made nonrefundable. “Sellers can negotiate a nonrefundable deposit to make sure buyers don’t walk away from the contract and to avoid the black eye of a house that goes back on the market,” Nellis says. 5. Pre-listing marketing can help generate a bidding war. “Agents can leverage the ‘coming soon’ marketing tool to generate interest,” Nellis says. “You can’t physically show the property to buyers, but you can encourage more people to visit the first day it’s on the market.”   Six Tips and Tricks for Buyers 1. “Coming soon” listings offer an opportunity for buyers, too. “You can make an offer during ‘coming soon’ with a one-day, void-only contingency, which allows you to see the property and cancel your offer,” Nellis says. “That way, you’re getting ahead of other buyers. The agent doesn’t have to update the listing for 48 hours, so the status never changes if the buyer drops out within 24 hours.” 2. Buyers can add an escalation clause that automatically increases their offer above others. “Make the incremental amount of your escalation clause matter, such as offering $5,000 more rather than $1,000 increments,” Shotwell says. 3. A down payment of more than 20 percent and an offer to cover any gap between sales price and appraised value help buyers compete when a house is expected to get multiple bids. Before making such an offer, Ippolito suggests buyers do a “walk-and-talk” inspection—a tour and discussion of a house with an inspector—to get an informed opinion about the property’s condition. 4. Buyers should look at a lower price range in their initial search so that they have more room to escalate their offer if necessary. Burr also says waiting ten days to two weeks after a listing goes live gives buyers more wiggle room during negotiations. 5. Buyers using VA loans should offer a larger down payment if they have the funds. Nellis explains that’s because these buyers have trouble competing if sellers don’t trust zero-down-payment financing. “At the closing, you’re allowed to change your financing, so you can switch to a 0-percent VA loan,” Nellis says. “It’s legal and ethical, since the sellers still get the complete payment for their property.” 6. Shop around for 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 help as well as the option to refinance in the future for a lower fee. Related5 DC-Area Real Estate Trends to Watch in 2024 This article appears in the October 2024 issue of Washingtonian.The post DC’s Real Estate Market Is Weird Right Now first appeared on Washingtonian.