🔒Realtors get creative in helping buyers, sellers navigate CT’s hot housing market

With demand for homes surging and inventories plummeting, Connecticut homeowners looking to sell face a conundrum: How do I get the equity out of my home fast enough to bid on that dream house before someone else snaps it up?

Shelton-based William Raveis Real Estate, one of the state’s largest Realtors with operations in nine states, has a solution. In April it introduced a new program called Raveis Purchase. The company pays a homeowner up to 80 percent of their home’s equity, fixes it up, stages it and then sells it at market price. The homeowner then gets the rest of the proceeds minus Raveis’ commission, a service charge and carrying and renovation costs.

“This is just a great tool for our agents and sellers to start to think, ‘how do I address this market where there’s so little inventory?’” company co-President Ryan Raveis said. “Our business model is to help the consumer get into the house that they want and maximize the value of their existing home.”

The program, a response to the exploding demand for homes in Connecticut and elsewhere, already has hundreds of homes in its pipeline, Raveis said.

Raveis’ innovation comes as the state is experiencing its hottest real estate market in more than a decade, said David Baker of KeyBank, a home lender leader in charge of the bank’s Connecticut and Massachusetts loan officers. Baker estimates demand is up 30 percent over last year. South of New Haven is especially hot, he said.

In February, for example, Connecticut home sales were up 25 percent from a year earlier, while the median sales price spiked 22.5 percent to $300,000, according to the Warren Group.

Last year Connecticut home sales reached their highest levels in decades.

“If we had more inventory, God knows how many homes we’d sell,” Baker said. “There’s nothing to buy right now. Houses go in a day.”

Baker attributed the explosion in demand to a variety of factors: People fleeing New York City; pent-up demand caused by COVID-19; cheap money — fixed 30-year mortgages are as low as 3 percent; and the Millennial generation at last having enough wealth to buy homes.

“The Millennials are finally getting kicked out of the basement,” Baker said. “I think people are just prioritizing their lives. They want to get out from on top of each other and have a little space.”

New tools

The market’s craziness means real estate professionals need to get creative to keep up, Baker said.

Another tool some homeowners use to quickly unlock their equity is so-called iBuyers, internet companies that employ algorithms to buy a home outright. Ryan Raveis says that Raveis Purchase is superior because it enables the homeowner to get the full market price for their home.

“It is the nature of their business to buy low and sell high and keep the value they create for themselves,” Ryan Raveis said. “Ours is the opposite. We share 100 percent of the upside with consumers.”

In addition, iBuyers are a poor fit for New England because each home here tends to be unique, Ryan Raveis said. Their algorithmic model is better suited to places like Florida and Arizona, which have large numbers of cookie-cutter tract homes, he said.

Fred Carstensen, a UConn professor and director of the school’s Connecticut Center for Economic Analysis, said many homeowners are getting unsolicited offers for their houses. He said he recently received one such offer, but it was about $100,000 below market value.

“The Raveis approach seems smarter,” Carstensen said of Raveis Purchase, “because it reduces time pressure and assures owners that the property will sell for full market value — there isn't the intermediate buyer who looks to make money by flipping your property.”

Raveis Purchase keeps the seller in the driver’s seat throughout the process, Ryan Raveis said. The up-to-80 percent of equity Raveis provides allows the homeowner to pay off their mortgage and use the leftover cash as a downpayment on a new home.

In the meantime, Raveis spruces up their old home with staging and renovations — anything from new Sheetrock to roofing work to landscaping — subject to the seller’s approval. The firm then sells the house at market value, meaning the seller is not forced to sacrifice top dollar by selling quickly, he said.

“We’re really good at making that house shine in the marketplace,” Ryan Raveis said.

Once the sale goes through, the homeowner gets the difference between the 80 percent equity he or she already received and the full sale price. Raveis subtracts its standard 5 to 6 percent commission plus a 3 to 5 percent service fee. The seller must also reimburse Raveis for costs such as maintenance, insurance and renovations, although they have approval over any work.

The program is another addition to the comprehensive real estate services, which include mortgages and insurance, that Raveis offers, Ryan Raveis said.

“There’s no company that can offer the end-to-end solution that we do,” he said.