Home Seller Tips, Part Three - Pricing (and Reality)

This is part three of my three part mini-series on how to sell your home for the most amount of money in today’s market. (If you missed them, click here for part one and click here for part two). This part deals with the number one most important issue when it comes to selling your house - pricing - as well as the issue of reality.

Pricing

In most cases, the reason why a home does not sell is pricing. If it’s not priced correctly, it will simply sit on the market collecting dust while other properties that are priced correctly sell all around it.

Folks, you can not fool today’s home buyer nor a good Buyer’s Agent.

In today’s day and age, there is an abundance of information available to every home buyer with an internet connection (which around here is pretty much everyone). Buyers can get information on recent sales, historical sales, tax records, assessed values, market trends, market statistics, photos, virtual tours, videos…the list goes on.

Buyers can and will quickly and easily figure out what the fair market value of your property is. If/when a buyer sees that you are priced above market value, they are typically very quick to pass on even seeing your property and will look at another similar property that is priced more attractively. Even if there are no properties similar to yours on the market, if a buyer thinks yours is overpriced, they will wait until one comes on the market that is priced well.

Even in the off chance they have no internet connection or don’t do the research themselves, any Buyer’s Agent worth their weight in salt will let them know whether a property is priced at, below or above market value based on the current market conditions. The Buyer’s Agent will share their opinion with their buyer clients (that’s part of what they’re getting paid to do) and once they do, the buyer will most likely pass on your property.

Tip: Once a buyer gets a list of properties that meet their general criteria, they first sort them by what they look like based on photos, virtual tour, etc. Then they sort again based on price. The remaining properties are then put on the “to see in person” list. If you are not priced correctly, you won’t make that list.

How do you price your property correctly?

Check the comps. Find out what similar properties have sold for within the last 90 days. This will show you exactly what buyers are willing to pay for similar properties. And also find out what similar properties that are currently under contract were last priced at before they went under contract. That will give you an idea of which asking prices are leading to offers from buyers.

Once you have the comps in front of you, add/deduct value based on what your property has versus what the other properties have/do not have. For example…if you have an in-ground basement while the other property has a walk-out basement, you need to deduct for that.

Another example…if the other property has an unfinished basement and yours is finished, that could be a difference of tens of thousands of additional market value for your property (depending on the square footage of the basement, quality of build, etc).

Check the current market conditions. Are prices appreciating, declining or steady? Is the home inventory increasing, decreasing or steady? Is buyer demand on the way up, way down or steady? Is the inventory mostly traditional resales, foreclosures or short-sales and what percentage does each type of property comprise? How many properties similar to yours have sold past month…3 months…6 months? And the list goes on…

Market conditions is very important when it comes to pricing correctly. This is where an experienced and knowledgeable Realtor who has his/her ear to the ground comes in. If they are on top of the market and what’s going on, they can spit out accurate statistics, advice and guidance at a split second even if you wake them up at 3am from a dead sleep.

Check how much competition you have and do some recon. In many ways, this is a battle. Your competition is made up of other sellers with similar properties that have their homes on the market as well. Home buyers that come across your property will most likely come across your competitors’ properties too. If a buyer feels that your competitors’ property is a better value than yours, they will probably place on offer on their house before they place one on yours.

This is what us Realtors call, “Selling your neighbor’s house” - a buyer comes across your house, then sees your neighbor’s house, yours makes theirs look like a better deal so they buy theirs. Congrats! You’ve just helped sell your neighbor’s house and lost a potential buyer for yours. This is the last thing you want to do - especially in a declining market.

Important: If prices are declining, you will probably get less for your home now that your neighbor has sold their house. And the less your neighbor accepted for their house, the less you’ll get for yours (see paragraph 3 above).

And do some recon. Have your listing agent take you through your competitor’s homes so you can see them with your own eyes and in person. This will help you see exactly how they compare to your property and you will know what buyers are comparing your home to and how, which helps tremendously come negotiating time.

Reality

You have to be realistic. If the comps and market conditions all point to a market value between$500K and $520K, don’t list it at $575K. Your property will just sit on the market until A) you lower your price or B) market values appreciate $55K to$75K (and we all have a pretty good idea of how long that could take).

You may say, “But I want $575K!” or “I think my home is worth that much regardless of what the comps/you say.” That’s great.

But it doesn’t matter.

Your home is worth what a ready, willing and able buyer will pay for it today. And the comps illustrate what a ready, willing and able buyer has been willing to spend on a property such as yours in the last 1 to 90 days. If you are not willing to sell your home for what it’s worth in today’s market, you may not want to list it for sale in the first place.

On a related note…If you figure out that what you owe is more than what you’ll make from the sale of your home based on your property’s current market value, you have three options,

1. Don’t sell it.
2. Do a short-sale (click here for more on that).
3. Foreclosure (I strongly urge you to avoid foreclosure at all costs for a variety of reasons).

So there it is folks…my three-part mini-series on how to get the most money for your home in today’s market.

If you have any questions or concerns about anything, click here to contact me at any time. And if you’re considering selling your home and/or are interviewing several Listing Agents in the area, I would love the opportunity to interview with you and see if we would work well together.

Home Seller Tips, Part Two - Marketing

This is part two in a three part mini-series for home sellers on how to sell your home for the most amount possible in the shortest amount of time. The first part dealt with “The Three C’s” (click here if you missed it). Part two deals with Marketing.

Who is your audience?

The first step is to determine who your audience is. Your audience consists of ready, willing and able buyers. This means buyers who are looking for a property such as yours in your area, can afford a property at your price point and are ready to make an offer on a property and can settle within the next 30 to 90 days.

How does your audience search for and find properties for sale?

In the Washington, DC metro area including Northern Virginia, approximately 90 percent of buyers start their search for real estate on-line. They search through a variety of real estate listing sites, as well as Google, Bing, Yahoo, AOL, etc. This means that you focus heavily on on-line marketing. This includes putting your property on the appropriate web sites and making sure that your property listing stands out from your competition (other similar properties for sale in your area).

Approximately 40 percent of buyers find the property they ultimately buy through a real estate agent/broker. This means that you must put your property listing in front of as many agents/brokers as possible. The best way to do this is to market your property on the MLS as well as word-of-mouth marketing by your agent/broker to other agents/brokers (via phone, email, in person, social media, etc).

How do buyers get more information about the community, amenities, proximity to major routes, etc?

Buyers don’t just buy your property. They buy the community, amenities, location, proximity to major routes, transportation, etc. The amount of information allowed by the MLS and real estate listings sites is limited. There is no place to put links or much information about amenities, the nearest shopping centers, major routes, etc.

That is why having a single property site specifically for your property is so important. Your property’s site should provide potential buyers with all the information they need to make an informed decision about not only your property, but the subdivision, town and general area it’s in.

To see what I mean, check out a few of the single property sites I have created for my sellers:

• 21377scaraplace.com
• coloniescondo.com
• 44039risingsun.com

Do yard signs work?

They used to work much better once upon a time than they do today, but they still help. The statistics a few years ago showed that 15 percent of buyers found the property they ultimately bought by seeing the sign in the yard. That statistic is now in the single digits.

Nevertheless, they do still work a bit so having a sign that stands out and mainly provides information about the property, not the agent or brokerage firm is key.

Let me repeat… The sign must stand out and mainly provide information about the property, not the just the agent or brokerage firm.

Too many real estate signs are the same size, just say “For Sale” and have the brokerage firm’s name, agent’s name and contact information in bold lettering - nothing else. Maybe I’m wrong, but I don’t believe having nothing about the property itself makes a buyer driving down the street say, “Wow! That sounds like a great house on the inside! I want to see it ASAP!”

That’s why a custom signs specific to your property listing is important. Put some photos of the interior of the house on the sign. Point out the main selling points of the property. Share some special features of the property and/or community. Make the sign odd sized. And put a link to your property’s web site. This will make the sign and your property stand out above the rest.

Every sign I create for my listings is unique and specific to the property. All of the things I just mentioned along with some others help my signs stand out and help sell the property. After all, I wasn’t hired to promote myself or my brokerage firm - I was hired to market and sell my clients’ property.

Do Open Houses work?

The answer to this question depends on where you are. If you’re in a market such as New York City, open houses are very effective. In areas such as Northern Virginia, they are not. Statistics shows that about one percent of buyers found they home they ultimately bought through an open house.

So why do agents still do open houses? Because it appeases their clients and they’re afraid to “lose the listing” if they don’t agree to do an open house regardless of whether they’re effective or not. Another reason they do it is to get future listing and buyer leads.

All of your nosy neighbors that come through your open house to see what you have inside, how you’ve decorated and how your property compares to theirs are potential seller/listing clients. Your agent hope to chat with them and get their information at the open house so they have a shot at being hired by your neighbors when they decide to sell their home.

The consumers that go through open houses are typically in the very early stages of house hunting and are usually 6 to 12 months out from actually buying a home. Remember, your target audience is ready, willing and able buyers - not, “not quite ready, not quite willing and not able to buy yet” home browsers.

The next and final part of this three-part mini-series will focus on pricing, which is the most important aspect of selling your home in today’s market.

Related Articles

Home Seller Tips, Part One - “The Three C’s”

Home Seller Tips, Part One - “The Three C’s”

This is the first in a three part mini-series for home sellers on how to sell your home for the most amount possible in the shortest amount of time. The first part deals with the “Three C’s” - Cleanliness, Clutter and Cohesiveness.

Cleanliness

If you’ve ever been house hunting, you know how it is to walk into a dirty home. I’ve heard my buyer clients say things such as,

• “Ewwwww”
• “I can’t believe they can live like this”
• “If the house is this dirty, they must not take care of the rest of the house much either”

These are not things that you want potential buyers saying while going through your property.

Here are some of things that my buyer clients say while going through a very clean house…

• “Wow! They really take good care of their home!”
• “The carpets and hardwoods are in great shape!”
• “The house looks much newer than it really is!”

What a difference in buyer perception, isn’t it?

The cleaner your home is, the more attractive your home will be to potential buyer. And the more a buyer will perceive the house being in good shape which translates to the buyer seeing more value in the property and offering a higher price for it.

Clutter

Though your definition of clutter may be different, the definition of clutter when it comes to real estate is,

• No more than one to two items on any one piece of furniture or wall
• Having no more furniture or items in a room than is necessary to fill it up and make it look lived in

An example of the first would be one lamp on a nightstand…or… two items on the fireplace mantle…or…one item on top of the dresser…or…one painting on the outside wall of the family room.

An example of the second would be a medium sized couch in a medium sized room rather than a huge “L” shaped couch that takes up 1/2 of the room’s floor space…or… a small circular table and two chairs in a small eat-in-kitchen rather than a medium-sized square dining room style table with four chairs that takes up the majority of floor space in the eat-in-kitchen and makes it looks formal when it shouldn’t.

Clutter clouds a buyer’s mind and makes them focus on the items creating the clutter rather than property itself. The less a buyer notices the actual property, the less they will remember the good things about it let alone the property itself. This translates to less of a perceived value by the buyer and less of an offer price - if they make an offer at all.

Cohesiveness

Cohesiveness is how well everything flows together throughout the entire property - furniture, decorating, paint schemes, landscaping, outdoor decorations, etc. If things do not flow, buyers will focus more on that then the  physical property itself. This doesn’t help their perceived value of the property and hurts your chances of getting a high offer price.

For example…Buyers are thrown off when one room is burgundy and has contemporary furniture in it while the next room over is burgundy and has traditional or country style furniture.

Stick with one theme and try to make things match as best as possible.

• If you have contemporary furniture in the family room, do the same in the kitchen and dining room
• If you have neutral paint in two of the bedrooms, do the same or something very similar in the other bedroom(s)
• If you have lots of bright flowers and bushes as part of your landscaping in the front of the home, plant some in the back of the home as well

If you would like to find out how your property does in a “Three C’s” test, call or email me - danilo.bogdanovic (at) gmail (dot) com - 703.582.6900. I would be happy to stop by, give you my professional opinion and be of help.

The next part of this three-part mini-series will focus on marketing, a topic often misunderstood or taken too lightly by many sellers and agents.

Because Now is Much Better Than Later

An increasing number of blog readers, sellers and buyers have been contacting me for real estate help and advice. I’m glad to help whenever I can, but many contact me after the problem has already occurred. Contacting me after the fact is often times too late - the damage has already been done. Here are two examples…

My parents just relocated from Delaware and bought a house in [city removed for privacy reasons], VA. On their 2nd look at the house they noticed the stove was different than what was pictured on the online listing.

It was at that time their agent then told them the house was “as is”, however, come to discover after the purchase and moving in and comparing the online pictures to the actual home, all of the kitchen appliances were switched, ceiling fans were removed, the replaced dishwasher wasn’t properly attached and hooked up - it leaked and damaged the hardwood flooring, and the upper air unit had serious problems (due to the “fix” the selling agents inspector supposedly made).

They only had limited time to preview homes and were basing their decision largely by the online pics. Anyway, just seems the out of town “old folks” were taken advantage of.

Your wise thoughts are appreciated. Seriously, I value your input. Thx!

“T”

I have a question that I hope you can  answer.

We just purchased a home in Loudon county…we are actually from out of state & were not familliar with any inspectors. Our agent recommended an inspector that she uses all the time. Well, he missed some obvious things such as rotten plywood for the roof & a rotten water damaged  huge window that is totally shot.

Now these are basic things for the envelope of the  house…how could he have missed them?

To top it off I had asked our agent if he was licensed,insured & bonded she said that he wass. I have since found out that he doesn’t carry any liability insurance for  what he misses–he only carries workmens comp for himself. I also have not been able to find his license# & have asked my agent to get it for me  & she has not responded to my request.

What would your recommendation be at this point? Should we file a claim with the Real Estate firm for sending us to someone who quite possibly is unlicensed & definitely not insured properly? I do not feel properly represented by our agent.

“A“

Though I would love to help “T” and “A” as well as everyone else who has contacted me, I can’t always do so. In “T’s” parents’ situation,  the problem could have been avoided had I been involved in the process in the beginning. But now, they have to battle it out with the real estate broker, lawyers, etc. The same holds true for “A” and her situation.

In many other similar situations, many folks are already working with a real estate agent and/or they are too far into the process and can’t go back and fix the issues that are costing them money and grief now.

Avoid getting yourself into the same situation as these and other sellers and buyers have. And avoid paying the price that they now are (literally and figuratively).

If you’re considering selling your house or purchasing a home in today’s market, allow me to help you now - because now is much better than later.

Click here to contact me now.

What Do Major League Baseball Players and Real Estate Have in Common?

What happened to this once-great major league baseball first round draft pick’s potential profits is very similar to what happened/is happening to some sellers who followed the wrong advice…

Matt Harrington (born February 1, 1982) is a pitcher in baseball and a former first round pick in Major League Baseball’s First-Year Player Draft. He was considered good enough to be a possible first overall selection in the 2000 Major League draft, but excessive contract demands by his then-agent Tommy Tanzer caused him to slip to the seventh overall, at which point he was drafted by the Colorado Rockies.

Harrington, acting on his agent’s advice, rejected the Rockies’ offer of $4.9 million, refused to sign a contract, and waited for the next draft. Meanwhile the inactivity caused him to lose speed and effectiveness in his once-prized fastball.

The San Diego Padres, the next team to draft him a year later, were aware of this and offered him barely $1 million, which was also rejected. Harrington was drafted three more times, each year slipping further down the draft board and offered substantially less money than the previous year.

He played on various independent league baseball teams the whole time, and had a tryout with the Chicago Cubs in 2007 after he finally fell off the draft board, but was quickly released. He retired later that year and now installs tires in a Costco in Texas for $11.50 per hour.

Much like Matt Harrington, some sellers ended up selling their property - IF they sold it - for much less money than what they could have gotten had they followed good advice and listed at the correct price to begin with or accepted the first offer.

Many people claim to know what they’re talking about, but make sure you listen to someone who really does know.

H/T to Chris

Photo Credit

Loudoun Increases Cost of New Homes for Builders and Buyers

While neighboring counties and their officials are trying to help developers, builders and consumers weather the recession, Loudoun County is doing the opposite. In doing the opposite, Loudoun is taking money right out of the pockets of buyers, sellers and homeowners.

Here is what neighboring counties are doing:

• The Montgomery County Council is considering delaying a proposed 3.5 percent increase in impact fees
• In Prince George’s, the County Council has lengthened the life of development approvals and held off increasing impact taxes
• Fairfax County has reduced the amount a developer must put up in surety bonds to guarantee a project’s completion
• In the District of Columbia, lawmakers are allowing regulators to lengthen from two to five years the time developers have to begin work on projects in southwest Washington

What is Loudoun County doing?

• Loudoun just raised proffers (the amount of money a builder must the county to build a home) by as much as 22 percent - $59,470 per single family home. The increases per type of property are $5,000 per apartment/condo; $11,000 per town home; $13,000 per single family home)

Who bears the brunt of these decreases and increases?

In the end, it’s consumers.

Here’s why…

If it becomes less expensive for a builder to build a home, the builder may offer greater incentives and/or lower base prices to create increased demand for their homes. The consumer wins and sales pick up.

If it becomes more expensive for a builder to build a home, the builder will most likely increase the base price and/or decrease incentives to make up for the additional cost. The consumer loses and sales slow down.

Sales picking up is better for homeowners and sellers. Sales slowing down is bad for homeowners and sellers.

Loudoun claims that the increase in proffers in necessary to pay for schools and public facilities. Ok…I get it. You need to pay for those things.

But why must those costs fall solely on the shoulders of home buyers? And why would Loudoun “OK” an increase in proffers (aka increase in the cost of buying a home) at a time when everyone and their mother is trying to lower the cost of buying and selling a home in order to stimulate the housing market?

Seems a bit backwards to me…

P.S. Supervisor Eugene Delgaudio (R-Sterling) was the only board member to oppose the motion.

On a side note, the increase in proffers is only for Eastern Loudoun. The proffers in Western Loudoun remained relatively unchanged. Hmmm…interesting.

The Sins of a Seller (from a Buyer’s Perspective)

As a seller, you have to remember that your target audience is home buyers. Therefore, you have to make the property as appealing as possible to the greatest amount of buyers in your area in order to have the best chance of selling and for the highest amount possible.

Your real estate agent and/or professional stager should be helping you out with this. But it seems that not all sellers have agents or stagers that know what they’re doing. This is obvious by what I see on a daily basis as well as by the comments my buyer clients have as they’re previewing properties for sale.

But you don’t have to believe me…check out what this buyer had to say in his post entitled, “The Sins of a Seller.”

Here’s an excerpt:

- The “Pet-Owner Moaner” – The over-all assumption that since the seller loves their pets more thanchocolate, so does everyone else. Here are a couple of quotes I heard directly from the sellers mouths: “Awwww, my cat must really like you to nestle into your neck like that.”; “I know he looks big, but he is really just a teddy bear.”; “We were able to clean up everything in the house except the cat room.”; “I cant remember if my son put away the ferrets or not, but feel free to look around downstairs.”
a. Ok…first and foremost, Im allergic to cats. I don’t mean that cats make me sneeze. I mean that I quit breathing and require adrenallin shots to keep from dieing. That thing is lucky I didn’t toss it out the open window that was next to me.
b. The “teddy bear” they were referring to…Yeah, that was a 158lb Rotweiller with a googlie eye and a broken tooth on the right side. His chain was tied to a cinder block that he happily drug around and tossed into the air during “playtime”.
c. The “cat room”??? Oh Lord in heaven!!!
d. If you cant figure out if your son left out a pack of rodents in the dark rooms down the creaky stairs without a safety rail and a working light switch, you can be damn sure Im not going to find out for you.

- Photog Fog – Everyone should take pride in their family photographs. I do. But, Im not trying to sell my house! I went into one home where, I kid you not, the entire living walls…every square inch…was covered in frame pics of family. There must have been 100 pictures in that room. Frames mounted together like a patchwork quilt of memories and bad matting jobs. Love the sentiment…love the family pride. But, I was COMPLETELY distracted from seeing the actual house.

- “I collect them” – No kidding, really??? Nothing would have made me realize you collect dolls were it not for the fact that Im now suddenly very aware of the fact that 226 eyes are now following me through your house like Chucky with an ax to grind. Yeah, I couldn’t tell that you collect Vegas casino ash trays since they are on every flat surface in your entire house including 4 separate 6-ft tall bookshelves, your coffee table, the top of your TV, the end-tables, and the extra two shelves that you put up encircling the entire living room. But, worse than that, you have them on your toilet tank, your dresser…and in an amazing twist, you have drilled holes in them and replaced half of the doorknobs in your house with them. In case your agent hasn’t told you this….PACK THIS CRAP UP!

Want to know what to do/what not to do to make your home look and feel the best to home buyers? Drop me a line and we’ll chat.

Can Low Commission Hurt Your Chances of Selling Your Home?

Steve, a home seller in Williamsburg, VA posted the following question on Trulia, “Can low commission hurt my sale?” It’s obviously a hot topic because there have been 506 responses (and counting) since June 4.

Here’s my answer:

No agent/broker should ever “steer” or “sort” listings by commission amount. That harms the buyer and is therefore unethical without the expressed permission from the buyer client (in writing).

Buyer’s agents who take it upon themselves to shy away from listings that are offering less than what is written into their Buyer’s Agency Agreement with their buyer clients,

1) don’t have a Buyer’s Agency Agreement signed in the first place

and/or

2) haven’t spoken in detail with their buyer clients as to what happens when a seller/listing broker is offering less than what is agreed upon in the Buyer’s Agency Agreement.

There are plenty of ways to legally and ethically negotiate a contract to cover the difference in commission between what is being offered by the seller/listing broker and what is in the Buyer’s Agency Agreement prior to contract ratification (with the buyer via seller subsidy). Unfortunately, not many agents know how.

And if you’re wondering why many consumers don’t like Realtors, answers such as, ” Many people look though MLS email updates. Some agents secretly filter their searches so that the automated service won’t send their clients listings unless they are 3% listings. “ is one reason why. Those agents should all have their licenses revoked immediately.

Since I spoke a bit about what a Buyer’s Agent should not do, I’d also like to talk about what a Buyer’s Agent should do…

A Buyer’s Agent should be looking through every property on the market for a property that meets their buyer client’s needs regardless of the commission amount being offered by the seller. This includes properties that are “For Sale By Owner” (FSBO).

I have been asked by my buyer clients many times if they could look at FSBO properties and if I could represent them on the purchase of a FSBO property. The answer is “yes.” There plenty of ways to deal with the issue of commission and they’re all pretty simple, straight-forward and easy if you ask me.

So what’s  your response to Steve’s question, “Can low commission hurt my sale?”

Understanding Closing and Settlement Costs

If you are buying or selling a house and are curious as to what closing and settlement costs are for, check out this short video entitled, “Understanding Closing and Settlement Costs” (click here if you can’t see the video)…

Hat tip to Midori Miller