Tuesday, July 28, 2009
Many home owners that are trying to sell their homes have come to me and expressed concerns about how hard it is to sell their home in this horrible market. Even though they already have their home listed by another real estate professional I will listen and even provide some verbal help if the unhappy seller asks. As a side note, Realtor ethics prohibit me or other Realtors from soliciting sellers that already have their home listed by another Realtor (unless I have their permission). However, the seller can approach other Realtors and can ask questions or plan a future listing with a different Realtor.
Now, every city and even specific neighborhoods have their own market and, as a seller, you must become very familiar with market activity, especially what homes sold recently (3 to 6 months ago). You need to determine what they listed for, what they sold for, how long it took to sell, and what these homes have that yours doesn't (or vis versa). The easiest way to get this info is by finding and working with a Realtor.
The bottom line is that PRICE is the MOST IMPORTANT factor in selling your home. If you price to high your home WILL NOT SELL. There are other important factors that affect your home sale, such as condition, location and marketing, but price is by far the most critical. You, as a seller SHOULD NOT just throw a 'For Sale' sign in your yard and price it based on: 1.) what you think its worth; 2.) what it was worth 2 or 3 years ago; 3.) what you paid for it multiplied by (x) years of appreciation; 4.) what your neighbor got for his house last year; 5.) your current mortgage balance plus the cost of upgrades or improvements. Believe it or not many sellers price their home based on one of these items and it is a BAD IDEA as these methods DO NOT tell you anything about what your real estate market will allow or what buyers will pay! The real estate market is just like any other market (e.g. the farmers market, the stock market, etc.) where supply and demand drive it. I wont bore you with examples of a farmer trying to sell his oranges or Supply/Demand curves, but remember that your home will only sell for what a buyer thinks it worth based on perceived value from HIS (NOT YOUR) perspective of value.
Here in Charlotte, most homes are selling for approximately 12% to 15% less that what they originally listed for. The average time to sell a home is over 6 months and much more in many cases. In addition to the above, many sellers are also paying some of the buyers closing costs and providing home warranties, appliances/personal property and other concessions to get the buyer into escrow. Why is this happening? Because sellers are over pricing their homes based on incorrect pricing methods. What are sellers to do then? Well, if you are a seller or if you are thinking about selling then you need to research your real estate market, and find a quality Realtor that can help you establish a listing price based on recent market activity and not your emotions! Most agents will provide a Comparative Market Analysis (CMA), which will show you what's 'Active - For Sale' and, most importantly, 'Recent Solds' at no additional cost if you sign a listing agreement or they might charge you a nominal fee for this service. Either way you need to interview and get the price opinion of at least 2 Realtors and you need to enter the market based on this information and NOT what you THINK your home should be worth. Keep in mind, if you decided to base your list price on EMOTION then you should expect your home to NOT getting much interest or showings, negative 'Feed Back' if you do get a showing, and a 'low-ball' offer if you get one at all. Prepare yourself for a long and painful process.
How to sell your home quickly (this applies to ALL SELLERS):
1.) Take your predetermined-emotional based list price and reduce it by at least 20%. Period. However, if your Realtor gives you a market range of recent comparative 'solds' and they are ranging from $195,000 to 2o5,000 then price on the lower end of the market. Period. Remember, this is a consumer market and you are competing with many, many other homes and very few buyers.
2.) Clean your home. If you are going put your home on the market, then stage it as if it is the model home of the neighborhood. Get ride of junk, excess furniture, excess books, pictures, cd's, toys, etc. Fix and repair damaged items, stains, worn-out flooring, etc. Plant some flowers, mow your yard, paint, clean, paint and remove junk then clean again. Let in natural light and remove tacky and out-dated drapes and fixtures. Bake some cookies before a showing to get a sweet, fresh smell (don't leave them out as this could be a liability) and turn on some classical or smooth jazz music. Leave creative info flyers or DVDs so buyers will remember your place. First impressions are so important and often lead to offers from buyers. Let your home sell its self!!
3.) Fix any major issues (plumbing leaks, roof leaks, damaged siding, broken windows, termites, foundation cracks, etc.) or reduce your price to take into account these major issues. Get a pre-listing inspection by a licensed home inspector so buyers now the condition of your home prior to making an offer!
4.) Select a honest and trustworthy Realtor to help you market the home properly to the right buyers. This will cost you any where from 6% to 1% depending on if you use a full-service or limited service listing agent and if you have to compensate a buyer's agent (the selling agent).
You may find yourself in a position where you simply can not afford to take the above steps to sell and meet your bottom-line. If this is so, then you need to prepare to wait out the slow market on the side lines. Do not just throw your home out there hoping for a miracle buyer to come along. If you truly need to sell due to financial hardship then consider a lease/rental option with a property management company. And, don't hesitate to call your mortgage company and discuss your situation and attempt to establish a "short-sell" situation. This is where the bank will accept less than you owe upon selling your home. There are, also, many government programs that can help underwater home owners get through tough times.
The bottom line is get help and advice from a trustworthy Realtor, mortgage broker, financial advisor and look into government programs that can help home owners decide what's best for you. We are here to help and protect your best interests. You do not have to go it alone in this tough market, and believe me its tough out there. The good news is that homes are still selling (if priced right) and that the market is showing signs of a recovery (it might just be temporary though). Its hard to find clear positives at this time, but be smart and take action if you are planning or are needing to sell your home. Give me a call I will be happy to help! Here are some helpful links discussing market trends. The one on the bottom is specific for the Charlotte, NC market area , but most local MLS's have similar information posted.
Wednesday, May 20, 2009
As a Realtor I get asked this question at least 50 times each day so I decided to post my official comments on the state of the market here on my blog for all to see. You might sense a bit of frustration in my "blog tone" but I assure you I am not frustrated, but simply trying to warn you, the layman, about where this simple, yet loaded question might lead you. Also, I want to summarize my responses to the many people who are truly concerned about the state of my business, the market as it pertains to you, and to those who just want small talk.
Many people are curious to know my response because they are considering buying or selling a home and need to know what to do. However, many times this question comes up and it is simply asked to fill in the silence during a social gathering and my response ultimately wont matter. Many times when I start to answer this question the person whom I am talking to will start to look away due to the sheer lack of interest or because he already knows the answer. The truth is that it is a tough question to answer and can get pretty boring especially if you get me into supply and demand theory. The problem is that there are two facets to this question. The first is that there are many Realtors who's lively hood depends on this answer and if they respond based on how there business is doing then you might get a skewed answer based on how little money they are making and not pertaining to how it might affect you and your home sell or purchase. The other facet is that many people need to know if the market is worth entering and are truly seeking your professional opinion. You might not be interested nor care about your Realtor friend's business "numbers", but chances are this is what you will get. My advice to you, the leman, is to be more specific with how you phrase this question.
For example, if you are truly wondering how the current downturn in the market is treating your friend's (the Realtor) real estate business then word your questions appropriately and please pay attention because this is a personal question that many Realtors struggle with. If you ask me this question my response will sound a bit like this, "Hey thanks for asking, but considering that I am here sharing a drink with you at this lame social/business networking group then it must be pretty bad and that I'm hard up for clients, huh?" Actually, I am being somewhat sarcastic but all the same there is truth in that response and of course the answer is pretty obvious by this remark (for most agents), times aren't good. The truth is that Realtors are hurting all over and many are being driven out of the business due to a lack of clients (buyers especially) and listings that wont sell or at least not for the amount the sellers want. It is tough time now and many consider the downturn a necessary evil that must follow a "housing bubble". This downturn forces many agents to reconsider their goals and business models and only the best and most resourceful will figure out a way to succeed. So, the honest answer I might give will sound something like this, "Hey, I appreciate you asking. The market is definitely slower than what I would like, but I am still in business and have figured out some creative ways to help people get in and out of this tricky market successfully". I know it sounds canned, but hey I'm in sales and canned is what I do best. But actually its very true and I want to give people an honest answer that sets a positive tone about my company. Be very leery of any Realtor that paints an overly emotional (positive or gloomy) picture.....probably best to walk away immediately.
Now, if you, the layman, want to know if this is a good time for YOU to enter the market then phrase the question similar to this, "Hey [Agent Name], I'm thinking about selling my vacation villa and figured this is an awful time to do so, what do you think?" Now, I know that you are seeking my advice and I will respond with this, " Yes, [Rich Friend's Name], I'm glad you thought to direct this important question to me, but it appears you answered your own question. Unfortunately, I am unable to give you the answer you deserve because the slow market has forced me to charge for all advice given. Here is a client contract, fee schedule and business card. Feel free to call me at home after 9am to set up an appointment as I recently closed my office and laid-off my office manager." Again, this response is laced with sarcasm, but as you can see it answers the question perfectly. Many agents will tie their personal business or beliefs into your situation so be prepared to read between the lines and be ready to ask specific questions on how your neighborhood is doing or how certain homes in a certain price range are doing. In other words, the agent's personal business might be down, but water front property in Wilmington could be doing well. In this case you'd never get that answer you were seeking. Again, you probably already know the answer and are only looking for the agent to respond in kind. Keep in mind, this question is essentially asking for you Realtor friend to provide a professional opinion/advice, and as anal as it might sound I charge my clients money for this answer. In other words, its a bit like asking your attorney friend about a potential legal situation you might be facing. Again its not that I don't want to help or be friendly, but my response would be somewhat vague yet positive and would sound like this, "Wow, I didn't know you had such an incredible vacation home?!? Now is a great time to sell! I would love to be your Realtor and I would have invited you to my New Year's Bash if I had known that! " Just kidding, but this a typical response from a hungry Realtor.....beware! I would respond like this, "Hey, thanks for seeking my opinion on this question. Actually, thats a pretty tough question for anybody to answer because real estate is so dependent on the type of home, condition and location. Even though popular media (CNN) says the market is down, it is very possible that it could be an incredible time for you to sell, but I would need to do some research to be able to give you my best opinion. If your serious about selling lets set up an appointment and we can discuss it." Note: I would quickly address and neutralize any preconceived negative biases and will always let people know that real estate is so specific to each individual transaction and that it is not so bad for some folks. It just depends on so many factors. If you truly want your Realtor friend's professional advice be prepared for him to ask some personal questions and/or to invite you over to his office to discuss your situation.
Many people ask the aforementioned question already with an understanding that the market is bad and they figure that you will answer in a negative way providing some frightening examples of how mortgages have dried up or how foreclosures are pilling higher. Some savvy 'question askers' might even be waiting for you to give the canned "sunny side up" response which goes a bit like this, (Realtor) "Oh, I'm so glad you asked because this is actually a great time to be in real estate! I have more listings than ever and I also have buyers calling me left and right looking to buy and take advantage of this opportunity!!! So, what do I have to do to put you in a new house today?". With a response like that the savvy 'question asker' will tear into a unsuspecting Realtor and question their business and their education due to such a chipper and fabricated response. Once again, be leery of emotional Realtors, but also understand that they are doing their best to portray a positive image about their business.
Now, for the folks who simply want to "small talk": Most people are aware of the tough times and are also aware that many Realtors are not doing well overall. So, on occasion, I will feed people a dose of sarcasm when presented with the topic question knowing that many people just want to talk "shop" and are simply looking for a general market view. In this and in most cases when I get the, "So, Hows the Real Estate Market these Days?", I usually ask if they want my Bernakesque view (this will require a few hours of your time and will ultimately fill you full of bullsh*t), the CNN gloom and doom speech, or if they are really considering buying or selling? In the latter case I will give you my card and tell you to call me tomorrow after the Poison Reunion Concert.
Tuesday, February 12, 2008
This is a common question and the answer from your favorite Realtor is 'Yes', but please be realistic! Charlotte is lucky in that we did not see the over inflated home prices that many cities in the country saw a few years ago and then watched the bubble burst (i.e. Miami, San Fran, etc.). This means that for the most part our home values have remained fairly constant and in some studies prices have actually gone up. All of the media hype and scare of recession shouldn't necessarily affect whether you sell now or not, but you need to educate yourself on some of the issues, you as a seller, and your potential buyer might face. To generalize, home sales are down, supply is very high and credit is more restrictive. But that doesn't mean you wont be successful selling your home. Read on.....
Three main questions should guide you when it comes to determining if its a good time to sell: How bad do you need to sell? Are you facing financial hardships that require you to sell? How much do you need to get out of your house after it sells? Once you've determined that it is necessary or important to you to sell you need to find a good Realtor that will guide and market your home properly. The 4 factors that affect the successful sale of your home is: 1. Price, 2. Location, 3. Condition and 4. Marketing The only item that is out of your control is location, the other items can be adjusted and controlled (to some extent). In order to determine how much you should list your house for consider find a competent listing agent/Realtor that will provide you a market analysis on your home and local market. How bad you need to sell will determine where you enter the market price wise . If selling your home quickly is crucial then you will want to enter on the low end of your market. If maintaining equity is important and time is not, then consider listing at the high end. Most sellers usually fall somewhere in the middle of needing to sell quickly and maximizing equity, so pricing right can be tricky balancing act. Once you've priced your home then you need to consider making any obvious repairs or updates and stage your home....make yours the best. It is a buyers market and buyers have a lot of homes to choose from. And because supply is high prices tend to drop, so don't be too surprised if your Realtor suggests a lower home value then what you expected. Overall, it can be a good time to sell, but anticipate a lower market value and a higher time on market. But, if your realistic, price correctly, make a few updates and stage your home and use a Realtor then you can expect to have a successful home selling experience. Check out this article for more info on the market http://money.cnn.com/2008/02/07/news/economy/homeowners_views/index.htm?postversion=2008020717
Monday, February 11, 2008
If you are buying a home, regardless if its new construction or re-sale, you should have a licensed inspector check the house for potential flaws and issues. A general home inspector will check to make sure the house structure is safe and that its systems (electrical, structural, plumbing, HVAC and its appliances) are functioning as intended. Even if you are comfortable with your Realtor or your spouse opinion of the house its important to have an additional and trained pair of eyes looking out for your interests. Home inspections are not required by law and are solely your decision, but remember that once you close on your home you will inherit all of its wonders, as well as its flaws. The point is to make sure you know exactly what you are buying and you are getting your moneys worth.
You must realize that there is no such thing as a flawless home and all homes will require some amount of repair and updating. By the way, there is a difference between the two. In most residential real estate transactions a buyer will typically make an offer on a house prior to inspections and without knowing the exact condition of the home. Yes, sellers are required to disclose any "known" problems with the house, but some things might "slip" the sellers mind.....Buyer Beware! Repair issues will most surely affect the value of your purchase and this is your chance to not only discover them before you close, but to negotiate for the repair and/or compensation of these issues with the seller. If the repair issue is covered by the terms of the contract and the seller decides not to make the repair then you can terminate the contract and walk.
Every buyer is different and has unique tolerance for handling repairs. A particularly "handy" buyer might be in the market to find a "fixer-upper" and will most certainly be expected to make any and all repairs. The goal here is to find a home that is priced below market value and that can absorb the pricey repair/remodeling job in store. On the other hand, a busy urban buyer might be seeking a newer, low maintenance home and is comfortable paying a premium for its stellar condition. Flaws uncovered by an inspector will most definitely bring the parties back to the negotiating table in order to make amends to the value of this property.
To summarize, talk to your buyer's agent about what you are looking for in terms of home condition and your comfort level with potential repairs. Also, familiarize yourself with both typical and major home repairs and set your home search accordingly. When you make an offer on a home make sure you hire a licensed inspector to have the house checked out from top to bottom. If repair issues are uncovered, have your Realtor ask the seller to make the the critical repairs that are covered by the contract. One important note, make sure you put your repair request in writing and that you are very specific on how you want a flaw fixed. A seller might not see eye-to-eye on a repair and could take a short cut in remedying it. Repairs can be a touchy subject and can cause some contracts to fall apart. Its important to know what your rights are and to set a "bottom line" on all of your terms. If you and the seller cannot agree on the repairs be prepared to walk away. But at the same time, don't let a cracked roof shingle and pride keep you from your dream home. Purchasing a home is a business decision and requires a bit of "give and take" from both sides.
Every state has its own standards for inspectors and you should check to see what is required for the inspector licensure in your state. Visit http://www.ashi.org/customers/state.asp for more info. Most inspections will charge around $150 to as much as $500 depending on the company you select and on the size of the house. Shop around and interview a few inspectors and ask them why you should use them versus another company. Another thing to consider is having a professional system technician come out to inspect specific items (i.e. heating and air mechanic to check the HVAC, a contractor or roofer to inspect the roof, structural engineer to inspect the foundation, etc.) in addition to the general inspection. It all depends on your comfort level, finances and terms of the contract as to how detailed you might want to be during inspections. Spending a few hundred dollars upfront may save you from buying a "money pit" and spending thousands of dollars on repairs you could've avoided to begin with.