It's no secret that the days of houses selling like Beanie Babies are over. After real estate appreciated at jaw-dropping rates during the first half of the decade, home prices and sales tallies have dropped precipitously in recent months—tilting market dynamics to favor buyers over sellers. That doesn't mean your house won't sell, just that the playing field has changed. So here are five tips to help you get a timely sale at a fair price in today's reshuffled housing market.
1. Make those repairs. While in years past it may have been enough just to cut the grass and retouch the paint, anyone looking to sell in today's market will have to take care of those more onerous repair projects as well. "The buyer that might have bought a fixer-upper five years ago now has an opportunity to purchase a short sale or a foreclosure," says Ronald Phipps, president of Phipps Realty in Warwick, R.I. "So if you have a property that needs a lot of work, you are competing against real estate-owned [properties] that are compelling rather than interesting." So fix the leaky roof, call the plumber, and rebuild the staircase. "The modest repairs should be done," Phipps says. "Frankly, repairs period should be done."
2. Price to the market. Unfortunate though it may be for sellers, demand for real estate has softened significantly. That means, in many cases, sellers will have to bring down their asking price below what the house might have fetched just a couple of years back. "The best advice that real estate practitioners can give [home sellers] is, 'If you aren't prepared to sell at fair market value, then you probably ought to wait,' " Phipps says. "The properties that are selling are selling at or slightly less than fair market—it is very, very rare to have a premium house."
By setting an asking price above market value, homeowners risk driving potential buyers away. "People think, 'Well, I'll run it up the flag pole at [an above-market] price, and people will come along and make a [lower] offer. That is not really happening in this market," says Elizabeth Blakeslee of Coldwell Banker Residential Brokerage in Washington, D.C. "If people perceive your property is being overpriced, they will just move on to the next." Lowering the price may be difficult, but if you want to sell your home in today's market, grit your teeth and do it. "There is a buyer for every property if the pricing is right," says Lenn Harley, a broker at Homefinders.com.
3. Know your agent's stats: Finding an agent with experience selling homes in your market will help ensure correct pricing. When deciding on a real estate agent, find out how long it usually takes him or her to sell a house. It's best to choose an agent whose properties sell in an average of three or four months, a time frame that indicates the agent understands how to price the market, Harley says. "An agent whose average is six months is too long," Harley says. "Talk to an agent that has experience selling in your market."
4. Be flexible. Ensuring that your house is ready to show at all times will make it easier for prospective buyers to see it. So make your bed each morning and clean up the dishes before heading off to work, just in case someone may want to come by at the last minute. In addition, homeowners should be willing to disappear on Saturday and Sunday afternoons if potential buyers are free to see the property. "Access is very important," says Shari Kruse of Prudential Northwest Realty in Seattle. "Things like limiting the hours of showing or requiring an appointment because you have a pet are reasons for real estate agents to bypass your house when they go to show."
5. Bite your tongue: If a potential buyer comes in with an offer you consider too low, resist the urge to turn up your nose, Blakeslee says. After all, it takes a considerable amount of paperwork to make a formal offer, so even a low bid signals interest. "You need to respond—even though you are indignant and insulted," Blakeslee says. "Do a serious counteroffer. You have nothing to lose by countering, everything to lose by rejecting it out of hand."
Thursday, April 17, 2008
Wednesday, April 16, 2008
8 ways to sweeten the deal on your home as Posted on MSN.com
Offering freebies with your house is almost a requirement in today's market. But forget the Final Four tickets. Buyers want you to help reduce the initial hit to their wallet should they buy your house.
By Karen Aho
Your house has been on the market for months. The for-sale sign, spattered with mud, has tilted over in surrender. As you go to straighten it, you trip over the morning newspaper, and, presumably, your answer: Inside is a story about a home that sold quickly after owners tossed in Hannah Montana concert tickets.
So, do you race inside to see what snazzy perks you can get hold of? A friend with ballgame tickets? A relative with a time share? Your old Harley? Is the age-old marketing ploy -- the incentive – a home seller's sure-fire solution in this dismal buyer's market? The answer is yes … and no.
Incentives help. Some say they're even necessary these days. But not all incentives boost the prospects for a sale, and the options for which ones actually do have shrunk. The free balloon ride? That's probably out. Six months of heating oil and half the closing costs? Those are in.
To understand what works and why, first consider what's happening in the housing market now.
1. There are more homes for sale than there are people buying. Home sales declined 23.4% from January 2007 to January 2008, according to the National Association of Realtors. Sales slowed most in the Western region, with a decline of 28.5%.
The slide has continued month-over-month this year, even as prices continue to fall, and The National Association of Home Builders reports a 10-month supply of new homes on the market, compared with a 4.5 month supply in 2005. Turn on any news show and the pundits are summing it up: Home buyers remain wary.
2. Sellers are turning to incentives. In February, 55% of builders surveyed by the NAHB said they were adding optional items at no charge, compared with 37% in 2002. And 43% said in February that they were paying all or some of the buyers' closing costs.
Jessie Beaudoin, a mortgage broker with American Financial Network, says that he can't track incentives precisely but that in California he sees 60% to 70% of sellers now paying some of the buyer's costs. "The lenders and the real-estate community are encouraging this," he says. "Nobody right now expects to pay full price for any property."
Most bank foreclosure homes and corporate relocation houses are also offering financial incentives, says Ron Phipps, a Rhode Island broker.
3. Buyers need to put cash down. Lenders have reined in those fully financed loans that helped trigger the mortgage collapse. Banks now demand not only better evidence that buyers can make the monthly payments but also that they have a financial stake in the property from the outset through bigger down payments.
In 1989, the median down payment was 20%, says the NAR, and mortgage brokers have reported that institutions are inching back toward such heftier requirements.
Even buyers who qualify for a low 3% down payment with an FHA loan still need to come up with closing costs, which add another 3% to 6% of the home's price.
4. Many home buyers are first-time buyers. Without home equity to tap into, first-time buyers often have difficulty securing a large amount of cash. "First-time buyers can handle the monthly payments; it's coming up with the down payment and closing costs that's hard," says Walter Molony of the NAR.
First-time buyers comprise nearly 40% of the market, he says. Of those, 22% receive a gift from a friend or relative to cover some or all of those costs, and 7% use a personal loan.
Forget the gimmicks
Add these four factors, say the experts, and you get a strong case for offering prospective buyers financial incentives. But forget about the Final Four tickets. Instead, help soften the financial blow associated with a new home.
"That's the time when (buyers) have the least amount of money in their pockets," says Stephen Melman, director of the NAHB's economic services. "They're buying. They're going to closing. They might have moving costs. They're going to have to buy furniture. Anything that helps their cash flow is going to be great."
It's more true now than in recent years, say brokers.
Phipps, a broker with Phipps Realty in Rhode Island, has been offering creative incentives for years. Goods or services associated with the house – a trip to wine country to stock the new cellar, for instance – have always piqued interest. But today's buyers are savvy, he says. They're analyzing price data and aren't distracted "by things that seem like gimmicks."
"Awhile ago (the incentives) were fun, but the nature of the real estate market is more serious now," Phipps says. "Buyers react to those incentives or encouragements that impact their bottom line."
Here are some ways to offer financial incentives:
Pay closing costs
Closing costs include title, application and attorneys fees, and points paid toward the loan's interest rate. They typically range from 3% to 5% of a home's cost. The median price of a home sold in the United States in January was $201,100, according to the NAR. That means typical closing costs start at $6,000.
On a conforming loan, sellers can pay up to that 3%, and up to 6% if the buyer is using FHA financing, says Beaudoin. He says it is the most popular incentive today.
"There's definitely a trend for sellers to pay all or most of the closing costs for the buyers," he says. "It has a much bigger impact than dropping the price."Why? Because the home price will be spread out over the life of the loan. Closing costs are due now.
"It's much easier to pay $30 dollars a month than it is to save $6,000," he says. (If you save $30 a month it would take 16.6 years, excluding interest, to amass $6,000.)
Home builders rate closing-cost assistance as more effective than adding optional items or reducing the sales price, says the NAHB.
Buy down the mortgage interest rate
Instead of knocking down the price, a seller can give money to the lender to go toward the buyer's interest payments for a certain amount of time, usually one to three years.
Here is a rough example from one of Phipps' clients:
Rather than taking $5,000 off the price, the seller gave it to the buyer's bank, where the buyer had a $200,000 loan. The bank used the $5,000 to buy 2 percentage points of the interest payments for the first 12 months and 1 percentage point the second 12 months.
This reduced the buyer's monthly mortgage payments from about $1,400 to $1,100 the first year and to $1,300 the second year. Given that the buyer had been paying $1,200 in rent previously, it eased the transition into the higher mortgage payments.
"We are using the buy downs for the first-time homeowners more than anything," Phipps says.Pay toward the down payment
Lenders won't allow sellers to fund a down payment directly, but they do allow you to help via special down-payment assistance programs as long as those entities do not have a direct interest in the sale of the property. These include government programs, or nonprofit groups such as the Nehemiah Corporation of America, the Housing Action Resource Trust and Partners in Charity. (The U.S. Department of Housing and Urban Development maintains a list of down payment programs whose nonprofit status has been revoked.)
Nehemiah, the largest of the charitable groups, has provided down-payment assistance to more than 250,000 home buyers nationally in the past decade. This is how it works: Nehemiah contributes up to 6% of a home's price for a qualified buyer's down payment. The seller later reimburses Nehemiah to replenish its account for other buyers. The buyer can get help from Nehemiah only if the seller agrees to repay the program, so the seller wins, the buyer wins and Nehemiah gains funds to help future home buyers.
For FHA loans, which require only a 3% down payment, a seller could essentially offer 100% financing by working with a program such as Nehemiah, Beaudoin says.
Buy a warranty
This is a great incentive, say real-estate agents. It typically costs the seller just $400 to $500 and gives the buyer peace of mind that any mechanical or electrical repairs will be covered, minus a small deductible, in the first year. Sellers can add riders for other items, such as wells, spas or washer-dryers.
"Particularly for first-time home buyers, it really is a way for them to control or limit any unforeseen repairs," Phipps says.
Ask your real-estate agent what companies they like to work with. Also, the home warranties don't go into effect until after the sale, so you can prepare. A list of home-warranty companies by state is available here.
Prepay some first-year expenses
Buyers who might have exhausted their savings and entered into steep monthly payments may feel great relief knowing other costs have been prepaid for six months or a year. These could include:
Homeowners association dues
Taxes
Utility payments
Lawn maintenance costs
Housekeeping payments.
Offer owner financing
In this scenario, the seller essentially offers to act as a bank and can set the terms of payment. This is clearly for those sellers who don't need the cash immediately. It is risky, agents say. "The other incentives are one-time fees; this is a long-term relationship," Phipps says.
Sellers should not only check the buyer's credit risk, but also make sure the buyer is financially invested in the house from the outset, through a decent down payment.
"You want to make sure you have good professional advice from your Realtor and your lawyer as to what that means, and what the recourse is if the mortgage isn't paid," Phipps says. "And a pre-approval letter for financing doesn't necessarily mean that you don't want to do due diligence."
Reward your broker
If you're in a hurry, you can always offer perks to your sales broker. This can include a higher commission or a gift. Human nature being what it is, this may work get the agent to move more buyers through the house. (Read more about people who chose to pay their agents extra.)
Nonfinancial incentives
There's no cap to what you can offer. Just make sure you are upfront and disclose transactions to your lender. Incentives can work as a psychological draw, say experts. But keep them fun and related to the house, Phipps says. For instance, he knows a seller seeking a Smart Car, which is hard to find, to offer with a solar house.
Advertise that the incentive will be offered for a limited time, and if it doesn't work, try something else. Steer clear of politically incorrect items that might offend prospective buyers, such as fur coats or energy-hogging cars.
Be wary of paying for inspections or repairs
It's possible to pay for these if need be, but it's not necessarily a good idea.
A home inspector should represent the buyer. If a buyer pays for the inspection, there's less chance someone could cry foul later. You don't want to be accused of being in cahoots with the inspector simply because you signed the check for his work, Phipps says.
Also, if the seller offers to pay for repairs as a condition of sale, the buyer's lender could require that the work be completed prior to funding, potentially stalling the sale.
"It creates a hiccup in the transaction," Beaudoin says. "Instead, what lenders will suggest is that the seller apply that money toward the closing costs. You can proceed and no work needs to be completed before the close."
Stay aboveboard
No matter what kind of incentive you ultimately offer, keep in mind that you'll need to be upfront about the details with all interested parties.
"Any kind of credit that the seller agrees to is ultimately subject to approval, or is limited, by the buyer's lender," says Kenneth Russo, a real-estate lawyer with LaPlante Sowa Goldman, in Rhode Island. Both parties must disclose any transactions made as part of the process.
Real-estate transactions are governed under the federal Real Estate Settlement Procedures Act. Violators can be subject to charges of felony fraud, says Russo.
Also, check with the state's business regulatory office to ensure that incentives are legal in your area. Spell out their value clearly, and have a lawyer review the agreement.
With those caveats in mind, offer incentives. They can send a strong message to buyers that you are willing to negotiate, says Gary Painter, an associate professor at the University of Southern California and research director of the Lusk Center for Real Estate.
"In some cases, buyers prefer incentives over lower prices," Painter says. Just calculate the exact value, "and make it clear."
By Karen Aho
Your house has been on the market for months. The for-sale sign, spattered with mud, has tilted over in surrender. As you go to straighten it, you trip over the morning newspaper, and, presumably, your answer: Inside is a story about a home that sold quickly after owners tossed in Hannah Montana concert tickets.
So, do you race inside to see what snazzy perks you can get hold of? A friend with ballgame tickets? A relative with a time share? Your old Harley? Is the age-old marketing ploy -- the incentive – a home seller's sure-fire solution in this dismal buyer's market? The answer is yes … and no.
Incentives help. Some say they're even necessary these days. But not all incentives boost the prospects for a sale, and the options for which ones actually do have shrunk. The free balloon ride? That's probably out. Six months of heating oil and half the closing costs? Those are in.
To understand what works and why, first consider what's happening in the housing market now.
1. There are more homes for sale than there are people buying. Home sales declined 23.4% from January 2007 to January 2008, according to the National Association of Realtors. Sales slowed most in the Western region, with a decline of 28.5%.
The slide has continued month-over-month this year, even as prices continue to fall, and The National Association of Home Builders reports a 10-month supply of new homes on the market, compared with a 4.5 month supply in 2005. Turn on any news show and the pundits are summing it up: Home buyers remain wary.
2. Sellers are turning to incentives. In February, 55% of builders surveyed by the NAHB said they were adding optional items at no charge, compared with 37% in 2002. And 43% said in February that they were paying all or some of the buyers' closing costs.
Jessie Beaudoin, a mortgage broker with American Financial Network, says that he can't track incentives precisely but that in California he sees 60% to 70% of sellers now paying some of the buyer's costs. "The lenders and the real-estate community are encouraging this," he says. "Nobody right now expects to pay full price for any property."
Most bank foreclosure homes and corporate relocation houses are also offering financial incentives, says Ron Phipps, a Rhode Island broker.
3. Buyers need to put cash down. Lenders have reined in those fully financed loans that helped trigger the mortgage collapse. Banks now demand not only better evidence that buyers can make the monthly payments but also that they have a financial stake in the property from the outset through bigger down payments.
In 1989, the median down payment was 20%, says the NAR, and mortgage brokers have reported that institutions are inching back toward such heftier requirements.
Even buyers who qualify for a low 3% down payment with an FHA loan still need to come up with closing costs, which add another 3% to 6% of the home's price.
4. Many home buyers are first-time buyers. Without home equity to tap into, first-time buyers often have difficulty securing a large amount of cash. "First-time buyers can handle the monthly payments; it's coming up with the down payment and closing costs that's hard," says Walter Molony of the NAR.
First-time buyers comprise nearly 40% of the market, he says. Of those, 22% receive a gift from a friend or relative to cover some or all of those costs, and 7% use a personal loan.
Forget the gimmicks
Add these four factors, say the experts, and you get a strong case for offering prospective buyers financial incentives. But forget about the Final Four tickets. Instead, help soften the financial blow associated with a new home.
"That's the time when (buyers) have the least amount of money in their pockets," says Stephen Melman, director of the NAHB's economic services. "They're buying. They're going to closing. They might have moving costs. They're going to have to buy furniture. Anything that helps their cash flow is going to be great."
It's more true now than in recent years, say brokers.
Phipps, a broker with Phipps Realty in Rhode Island, has been offering creative incentives for years. Goods or services associated with the house – a trip to wine country to stock the new cellar, for instance – have always piqued interest. But today's buyers are savvy, he says. They're analyzing price data and aren't distracted "by things that seem like gimmicks."
"Awhile ago (the incentives) were fun, but the nature of the real estate market is more serious now," Phipps says. "Buyers react to those incentives or encouragements that impact their bottom line."
Here are some ways to offer financial incentives:
Pay closing costs
Closing costs include title, application and attorneys fees, and points paid toward the loan's interest rate. They typically range from 3% to 5% of a home's cost. The median price of a home sold in the United States in January was $201,100, according to the NAR. That means typical closing costs start at $6,000.
On a conforming loan, sellers can pay up to that 3%, and up to 6% if the buyer is using FHA financing, says Beaudoin. He says it is the most popular incentive today.
"There's definitely a trend for sellers to pay all or most of the closing costs for the buyers," he says. "It has a much bigger impact than dropping the price."Why? Because the home price will be spread out over the life of the loan. Closing costs are due now.
"It's much easier to pay $30 dollars a month than it is to save $6,000," he says. (If you save $30 a month it would take 16.6 years, excluding interest, to amass $6,000.)
Home builders rate closing-cost assistance as more effective than adding optional items or reducing the sales price, says the NAHB.
Buy down the mortgage interest rate
Instead of knocking down the price, a seller can give money to the lender to go toward the buyer's interest payments for a certain amount of time, usually one to three years.
Here is a rough example from one of Phipps' clients:
Rather than taking $5,000 off the price, the seller gave it to the buyer's bank, where the buyer had a $200,000 loan. The bank used the $5,000 to buy 2 percentage points of the interest payments for the first 12 months and 1 percentage point the second 12 months.
This reduced the buyer's monthly mortgage payments from about $1,400 to $1,100 the first year and to $1,300 the second year. Given that the buyer had been paying $1,200 in rent previously, it eased the transition into the higher mortgage payments.
"We are using the buy downs for the first-time homeowners more than anything," Phipps says.Pay toward the down payment
Lenders won't allow sellers to fund a down payment directly, but they do allow you to help via special down-payment assistance programs as long as those entities do not have a direct interest in the sale of the property. These include government programs, or nonprofit groups such as the Nehemiah Corporation of America, the Housing Action Resource Trust and Partners in Charity. (The U.S. Department of Housing and Urban Development maintains a list of down payment programs whose nonprofit status has been revoked.)
Nehemiah, the largest of the charitable groups, has provided down-payment assistance to more than 250,000 home buyers nationally in the past decade. This is how it works: Nehemiah contributes up to 6% of a home's price for a qualified buyer's down payment. The seller later reimburses Nehemiah to replenish its account for other buyers. The buyer can get help from Nehemiah only if the seller agrees to repay the program, so the seller wins, the buyer wins and Nehemiah gains funds to help future home buyers.
For FHA loans, which require only a 3% down payment, a seller could essentially offer 100% financing by working with a program such as Nehemiah, Beaudoin says.
Buy a warranty
This is a great incentive, say real-estate agents. It typically costs the seller just $400 to $500 and gives the buyer peace of mind that any mechanical or electrical repairs will be covered, minus a small deductible, in the first year. Sellers can add riders for other items, such as wells, spas or washer-dryers.
"Particularly for first-time home buyers, it really is a way for them to control or limit any unforeseen repairs," Phipps says.
Ask your real-estate agent what companies they like to work with. Also, the home warranties don't go into effect until after the sale, so you can prepare. A list of home-warranty companies by state is available here.
Prepay some first-year expenses
Buyers who might have exhausted their savings and entered into steep monthly payments may feel great relief knowing other costs have been prepaid for six months or a year. These could include:
Homeowners association dues
Taxes
Utility payments
Lawn maintenance costs
Housekeeping payments.
Offer owner financing
In this scenario, the seller essentially offers to act as a bank and can set the terms of payment. This is clearly for those sellers who don't need the cash immediately. It is risky, agents say. "The other incentives are one-time fees; this is a long-term relationship," Phipps says.
Sellers should not only check the buyer's credit risk, but also make sure the buyer is financially invested in the house from the outset, through a decent down payment.
"You want to make sure you have good professional advice from your Realtor and your lawyer as to what that means, and what the recourse is if the mortgage isn't paid," Phipps says. "And a pre-approval letter for financing doesn't necessarily mean that you don't want to do due diligence."
Reward your broker
If you're in a hurry, you can always offer perks to your sales broker. This can include a higher commission or a gift. Human nature being what it is, this may work get the agent to move more buyers through the house. (Read more about people who chose to pay their agents extra.)
Nonfinancial incentives
There's no cap to what you can offer. Just make sure you are upfront and disclose transactions to your lender. Incentives can work as a psychological draw, say experts. But keep them fun and related to the house, Phipps says. For instance, he knows a seller seeking a Smart Car, which is hard to find, to offer with a solar house.
Advertise that the incentive will be offered for a limited time, and if it doesn't work, try something else. Steer clear of politically incorrect items that might offend prospective buyers, such as fur coats or energy-hogging cars.
Be wary of paying for inspections or repairs
It's possible to pay for these if need be, but it's not necessarily a good idea.
A home inspector should represent the buyer. If a buyer pays for the inspection, there's less chance someone could cry foul later. You don't want to be accused of being in cahoots with the inspector simply because you signed the check for his work, Phipps says.
Also, if the seller offers to pay for repairs as a condition of sale, the buyer's lender could require that the work be completed prior to funding, potentially stalling the sale.
"It creates a hiccup in the transaction," Beaudoin says. "Instead, what lenders will suggest is that the seller apply that money toward the closing costs. You can proceed and no work needs to be completed before the close."
Stay aboveboard
No matter what kind of incentive you ultimately offer, keep in mind that you'll need to be upfront about the details with all interested parties.
"Any kind of credit that the seller agrees to is ultimately subject to approval, or is limited, by the buyer's lender," says Kenneth Russo, a real-estate lawyer with LaPlante Sowa Goldman, in Rhode Island. Both parties must disclose any transactions made as part of the process.
Real-estate transactions are governed under the federal Real Estate Settlement Procedures Act. Violators can be subject to charges of felony fraud, says Russo.
Also, check with the state's business regulatory office to ensure that incentives are legal in your area. Spell out their value clearly, and have a lawyer review the agreement.
With those caveats in mind, offer incentives. They can send a strong message to buyers that you are willing to negotiate, says Gary Painter, an associate professor at the University of Southern California and research director of the Lusk Center for Real Estate.
"In some cases, buyers prefer incentives over lower prices," Painter says. Just calculate the exact value, "and make it clear."
Tuesday, April 08, 2008
Seven Suburban Real Estate Myths and Legends
At a time in human history when information and misinformation are often impossible to differentiate, it is important to admit that we make a lot of inaccurate assumptions. Every field has it myths. From the beginning of time, we are taught to have a critical mind and to challenge assumptions. That is our charge today: Obviously we need to start somewhere: So what are suburban legends or myths? According to Wikipedia,
An urban legend or an urban myth is a form of modern folklore consisting of stories thought to be factual by those circulating them. The term is often used to mean something akin to an "apocryphal story". Like all folklore, urban legends are not necessarily false, but they are often distorted, exaggerated, or sensationalized over time. A suburban myth or legend is just in a different locale, a suburb, like East Greenwich. Remember these are not necessarily false, but they are exaggerations. Here are some good ones for suburban Rhode Island Real Estate:
1. New Yorkers or Bostonians will pay more than fair market value for MY house. When preparing to list a house, the best agents will evaluate ‘comparable sales’ as part of an analysis to help the seller determine the list price. Elements include, number of active, competing listings; pending sales; sold sales; mortgage interest rates, governmental regulations, absorption rates, (how many months will it take to sell of the existing inventory based on the current rate of sales.) etc. Often when a seller is disappointed with ‘fair market’ value, he or she insists the property be listed well above reasonable to sell to the one ‘uniformed, price unaware, New Yorkers. Now one might argue that there just might be basis for making that assumption; it is true that many are Yankee fans and some are Giants fans, but that nostalgic exuberance does not carry over to home prices, even when they are coming from ‘uber-wealthy’ Manhattan. In short, Boston and New York home buyers will not over pay for Rhode Island real estate, even your home.
2. If I wait long enough, I will get my price when the market catches up. This may have been true for a while in the early and mid parts of this decade. When the market is correcting, the gentler word for home prices dropping; you will need to wait a very long time. It may in fact be a very, very long time until we pass the water mark of real estate values two and a half years ago. Additionally, if your house is on the market for the four or five years, it is even more unlikely that you will sell if for more than fair value. The longer on the market, the less likely you will sell it at a premium price. Simply said price matters. A well price property will sell. One that is overprices is unlikely to find a new owner. This market is very impatient with sellers who are nostalgic with price, say 2005.
3. Buyers will look beyond repairs, decorating, or ‘deferred maintenance.’ It is amazing how many people say foolish things about buyers: The leaking roof does not matter; it is only a little leak. The toilet does not work, but the buyer will never notice. If you bake cookies or an apple pie, the buyer will never smell the septic system that is backing up. Truth be told, most buyers in 2008 have neither the patience nor the money to make a sellers repairs. There are plenty of houses on the market that are in great condition that will sell first.
4. Everybody will love my dog. There are over 75 million dogs in the United State in 45 million households. We are a nation of dog lovers. Well not necessarily. One of the most common complaints and objections of potential homebuyers is the evidence of animals, most often dogs. If you are not a dog owner, or rather a dog lover, having Bruno sticks his nose in the buyer’s butt or groin is not a good closing technique. Most buyers will not enjoy your dog. They either have their own or do not like them. It is not personal, it just is. I know Bruno does not bite, but the buyers’ fear is not perception. It is real. Yes I too have been bitten by a Newfoundland.
5. The agent who is not selected to list the house will sell it for the competing agent who obtains the listing.. Real Estate is intensely competitive. Many agents work on a contingent fee. If they sell the house they get paid. If they do not, they will not earn a fee. Sometimes when a seller says that they have selected another agent, they close by saying but you can always earn a fee by selling it for the competing agent. The operative word is ‘competing.” The non-selected agent is committed to selling his/her own listing, by contracted fiduciary. Only after they have tried unsuccessfully to close a potential buyer on one of their listings, will they move onto others, but not necessarily your, particularly if it is not priced right. There is a major oversupply. Multiple Listing is a great broker to broker network for cooperation and compensation, but it amplifies and highlights competition. Sold signs are one of the best ways to get future listings. The non-selected agent will want to sell his or her listing first so the sold sign is one on of his/her signs.
6. Which brings me to one of the biggest myths: a great real estate agent can ‘make a buyer’ purchase something they do not want. Great agents are masters at pricing, positioning, pursuing, and persuading potential purchasers. It is rare that a great agent can keep a transaction together through closing, if the buyer does not genuinely want the property. A great agent works tirelessly to identify and introduce a home to potential purchasers. For this to work effectively the buyer must be ready, willing and able. (ABLE has been the biggest challenge lately).
7. Houses sell themselves. This may have been true for a couple of months at the peak of the market, and maybe not. This market requires aggressive marketing, strategic pricing, web-centric marketing, and high energy commitment. If you look at what is selling right now, it is the result of a convergence of marketing talent, careful pricing, and unrelenting Realtor effort. While on one hand experience has major value in this market, it is also true that quick response is important. The National Association of Realtors completed a study that many elements are important for effective marketing, but among the most critical is response time. Often the person who makes the sale is not necessarily the agent with the most experience, best web presence, best logo, most awards, best looking, etc., rather it is the first responder. That needs to be repeated: The first responder most often makes the sale. It is important to have a responsive agent, who is available not merely to market the home, but to available to answer questions and to show the property. Even with digital presentation, the human touch of a Realtor is a very valuable element is selling a home.
We will share other myths and legends with you, but this gives you some good examples. If you want to share more with me, please share them here on my blog: www.phippsrealty.blogspot.com
An urban legend or an urban myth is a form of modern folklore consisting of stories thought to be factual by those circulating them. The term is often used to mean something akin to an "apocryphal story". Like all folklore, urban legends are not necessarily false, but they are often distorted, exaggerated, or sensationalized over time. A suburban myth or legend is just in a different locale, a suburb, like East Greenwich. Remember these are not necessarily false, but they are exaggerations. Here are some good ones for suburban Rhode Island Real Estate:
1. New Yorkers or Bostonians will pay more than fair market value for MY house. When preparing to list a house, the best agents will evaluate ‘comparable sales’ as part of an analysis to help the seller determine the list price. Elements include, number of active, competing listings; pending sales; sold sales; mortgage interest rates, governmental regulations, absorption rates, (how many months will it take to sell of the existing inventory based on the current rate of sales.) etc. Often when a seller is disappointed with ‘fair market’ value, he or she insists the property be listed well above reasonable to sell to the one ‘uniformed, price unaware, New Yorkers. Now one might argue that there just might be basis for making that assumption; it is true that many are Yankee fans and some are Giants fans, but that nostalgic exuberance does not carry over to home prices, even when they are coming from ‘uber-wealthy’ Manhattan. In short, Boston and New York home buyers will not over pay for Rhode Island real estate, even your home.
2. If I wait long enough, I will get my price when the market catches up. This may have been true for a while in the early and mid parts of this decade. When the market is correcting, the gentler word for home prices dropping; you will need to wait a very long time. It may in fact be a very, very long time until we pass the water mark of real estate values two and a half years ago. Additionally, if your house is on the market for the four or five years, it is even more unlikely that you will sell if for more than fair value. The longer on the market, the less likely you will sell it at a premium price. Simply said price matters. A well price property will sell. One that is overprices is unlikely to find a new owner. This market is very impatient with sellers who are nostalgic with price, say 2005.
3. Buyers will look beyond repairs, decorating, or ‘deferred maintenance.’ It is amazing how many people say foolish things about buyers: The leaking roof does not matter; it is only a little leak. The toilet does not work, but the buyer will never notice. If you bake cookies or an apple pie, the buyer will never smell the septic system that is backing up. Truth be told, most buyers in 2008 have neither the patience nor the money to make a sellers repairs. There are plenty of houses on the market that are in great condition that will sell first.
4. Everybody will love my dog. There are over 75 million dogs in the United State in 45 million households. We are a nation of dog lovers. Well not necessarily. One of the most common complaints and objections of potential homebuyers is the evidence of animals, most often dogs. If you are not a dog owner, or rather a dog lover, having Bruno sticks his nose in the buyer’s butt or groin is not a good closing technique. Most buyers will not enjoy your dog. They either have their own or do not like them. It is not personal, it just is. I know Bruno does not bite, but the buyers’ fear is not perception. It is real. Yes I too have been bitten by a Newfoundland.
5. The agent who is not selected to list the house will sell it for the competing agent who obtains the listing.. Real Estate is intensely competitive. Many agents work on a contingent fee. If they sell the house they get paid. If they do not, they will not earn a fee. Sometimes when a seller says that they have selected another agent, they close by saying but you can always earn a fee by selling it for the competing agent. The operative word is ‘competing.” The non-selected agent is committed to selling his/her own listing, by contracted fiduciary. Only after they have tried unsuccessfully to close a potential buyer on one of their listings, will they move onto others, but not necessarily your, particularly if it is not priced right. There is a major oversupply. Multiple Listing is a great broker to broker network for cooperation and compensation, but it amplifies and highlights competition. Sold signs are one of the best ways to get future listings. The non-selected agent will want to sell his or her listing first so the sold sign is one on of his/her signs.
6. Which brings me to one of the biggest myths: a great real estate agent can ‘make a buyer’ purchase something they do not want. Great agents are masters at pricing, positioning, pursuing, and persuading potential purchasers. It is rare that a great agent can keep a transaction together through closing, if the buyer does not genuinely want the property. A great agent works tirelessly to identify and introduce a home to potential purchasers. For this to work effectively the buyer must be ready, willing and able. (ABLE has been the biggest challenge lately).
7. Houses sell themselves. This may have been true for a couple of months at the peak of the market, and maybe not. This market requires aggressive marketing, strategic pricing, web-centric marketing, and high energy commitment. If you look at what is selling right now, it is the result of a convergence of marketing talent, careful pricing, and unrelenting Realtor effort. While on one hand experience has major value in this market, it is also true that quick response is important. The National Association of Realtors completed a study that many elements are important for effective marketing, but among the most critical is response time. Often the person who makes the sale is not necessarily the agent with the most experience, best web presence, best logo, most awards, best looking, etc., rather it is the first responder. That needs to be repeated: The first responder most often makes the sale. It is important to have a responsive agent, who is available not merely to market the home, but to available to answer questions and to show the property. Even with digital presentation, the human touch of a Realtor is a very valuable element is selling a home.
We will share other myths and legends with you, but this gives you some good examples. If you want to share more with me, please share them here on my blog: www.phippsrealty.blogspot.com
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