5 Reasons Homes Sell in Today’s Market
– Or Don’t!
There are plenty of generic reports about how to sell homes – many written by people that have never practiced real estate a day of their lives. So the purpose of this report is to give 5 important reasons homes sell – with examples – so that if a seller followed them, they would be able to sell their home (that’s the idea anyways). This is written in terms of working in a buyer’s market, which describes 90% of Massachusetts for 2008 (and possibly even into ’09)*.
*The other 10% comprises homes that have little or no competition (similar homes in a similar area) and there is at least some level of demand market.
However, that still only accounts for about 10% and for the other 90% we’re still in a buyer’s market so let’s begin:
1. PRICE
By far the # 1 reason any home sells in any market. Obviously all buyers, in any market, want to feel like they got good value for money and there aren’t many sellers who want to leave money on the table. So what the ‘right’ price is is something only an insightful & informed agent and seller can determine.
Knowing Where to Start
How much competition is there? How does it show? What is the current ‘buyer’s mentality’ (which can change from area to area, price range to price range and market to market). Are there buyers out there right now for the property? How would you know that? How well does the neighborhood sell? How about that specific floor plan? Are prices falling? What potential competition is coming on the market soon? How badly do sellers need to sell? What is the foreclosure impact going to be? What might it be in three months? And on and on and on.
All of these are used to determine price. For example, I recently listed a town home in Saugus. At the time there were over 100 properties for sale in Sagus and only 2 re-sale homes in escrow. In the particular housing tract, there were 32 for sale and zero in escrow. So this is obviously an area where prices will decline further, perhaps significantly further. The competition was priced between $415,000 and $465,000. The unit I listed had a good location within the tract and the home was in nice condition. The most recent sale was months old and was over $415,000. Foreclosure rates in the area were higher than other parts of South Eastern Mass.
Knowledge is Power
With this information we add the fact that today in South Eastern Mass. there are two types of homes that are selling; the 10% that we talked about earlier (desirable, popular area, rare amenities, little competition), and secondly the homes in good condition that are priced under the competition. This particular property fell under the second criteria, and so we determined to price the home at $399,900. We marketed it aggressively and it sold within a month. After two months, it was still the only sale in the tract. I can say with reasonable certainty that six months from now that seller will look back and be thankful because he priced it right in the first place.
2. TIME
Few people are truly patient. It is a rarity for a seller to have the luxury of being able to take months or years to sell a property. The reality is that most people sell their home because…they need to move! If you realize that there are four reasons homes sell, price, condition, location and marketing it follows logically that the more of those things you have stacked in your favor, the better off you will be for selling your home.
The Stark Reality
However, what many sellers don’t understand is that even with some or all of these things in your favor, in many areas it is completely normal for a home to take as much as four to even seven months to sell. I don’t like that and neither do many sellers, but short of drastically reducing the price (which nobody wants) it must be accepted. Especially in today’s market, buyers simply don’t have a sense of urgency to buy quickly.
Weighing the Options
For example, I sold a home in Canton this year in which I first showed it to the eventual buyer in mid-July. They, like many buyers, were concerned with the value-stability factor (rightly so) and they wanted to make sure that had seen enough to be confident in their purchase. Also like many buyers, they used the internet and became fairly knowledgeable about what choices were out there in their price range. But the internet can only do so much and now they had to physically see the homes and they looked in about a dozen neighborhoods throughout Canton, Milton, Westwood, Sharon and out to Easton before coming back to the very first home I showed them!
The only difference was that now they were confident and motivated buyers because they knew this is what they wanted, and a confident motivated buyer is what any seller wants.
Patience is a Virtue
The point is that the process took almost three months from start to finish, and though I kept the seller fully updated throughout the process, they were getting ready to give up when the offer came in. Of course it’s a hassle to show a home for months, yes it’s discouraging if few buyers look, and no one knows more than I do about how some real estate agents can be difficult when they don’t show up, or show up unannounced. All these things make having your home on the market about as pleasant as a root canal – but unfortunately both are sometimes required. There are few that are truly patient, but as long as the agent is spending time and money to market the home and is updating the seller on market conditions, and acting accordingly, in time you will sell.
3. STAGING
As I mentioned earlier, condition is one of the 4 reasons any home sells. Smart sellers have learned over the years just how important emotion is in attracting a buyer over the competition. In a hot, ‘sellers’ market this concept gets less attention. Because of a lack of inventory, virtually everything sells.
It’s the smart seller, though, that understands the importance of staging in any market because it will always lead to more money. And in today’s ‘buyers’ market, it often means the difference between selling your home and getting no offer at all.
The Basics
So what is staging? In the 1990’s it was me and a seller discussing simple things such as new carpet, paint, landscaping and de-cluttering. Today real estate is much more of a business – the stakes and the money involved are much higher. Because of this we now have professional staging companies that will come in and make your home look like a professionally decorated model. They have furniture, props, pictures, towels – everything! They rent this to you on a monthly basis until the homes sells.
In the ‘good old days’ we would only see staging in 'upper end' areas like Newton, Chestnut Hill. Today there are at least 6 companies in Boston alone. The way I see it, their very existence gives merit to the idea of staging; after all, people wouldn’t spend money to do something that didn’t work.
Knowing What Works
Here is the tough part though – many sellers insist that their home is ‘fine’. They don’t see it or smell it the way a buyer does. Sometimes a thorough cleaning and de-cluttering would make a huge difference. Bathing or possibly removing pets, dispelling cooking odors, replacing carpet, and other tidying efforts all make a difference. Some sellers say, “Can’t I just offer them a paint allowance or carpet credit?” The answer to this is, ‘yes, you can do that, but then instead of the potential buyers seeing clean carpet or fresh paint, all they see is a neglected house with a lazy seller anxious to slough off all the maintenance to them.’ In other words, pride of ownership goes a long way. Unfortunately, it’s often hard for agents to have these frank discussions with their sellers, but smart agents, like good doctors, know that good medicine often tastes bad.
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4. MARKETING WITH A LOCAL AGENT THAT NETWORKS
The Power of Networking
In 1992 the market was very slow for sellers. The number of Realtors had dropped from about 1.8 in 2006 to just under 800k. Many agents that were left simply didn’t know how to work in a tough ‘buyers’ market and it seemed like the same 70 or 80 agents were out showing property, going to MLS realtor meetings, and writing offers. A group of us decided that we would invite the top agents in town from different companies to a weekly network meeting where we would try to put our buyers and sellers together. We found that in a buyer’s market sometimes it was just a matter of an agent working with a buyer who was overwhelmed with the flood of inventory and a group of motivated agents pitching their best listings. Sometimes an entry level buyer would make a purchase decision, and that seller would move up in the area and one networking contact would trigger a chain of activity in a slow market.
An Unfair Advantage
We have been doing this since the 2002 and the group functions like its own company – we network buyers and sellers, get more showings for our listings & share information about other agents from respective agencies, buyers and sellers that we might mix in with our buyers and sellers to produce multiple transactions.
This focus on our listings can mean the difference between selling and not selling in a tough market. And in a hot seller’s market it means our buyers hear about great homes before the hit the market.
Is this fair to all the other agents and other listings that may be as competitively priced as ours but aren’t in our group? Not really, but it’s not my job to be fair, it’s my job to give my clients the best service they can get, and this is the way to do it.
The Domino Effect
For example, I recently had a buyer for a starter condo in Easton. That buyer bought my ($450,000) listing. Then that seller, who suddenly became a buyer, moved up to a Realty Executive agent’s listing in Raynham ($700,000), and that seller moved up to another network agents listing in Westwood (1.2 million). This is what we mean when we talk about the domino effect, and it happens when a group of seasoned and successful agents are working together. The great part is we have done this literally hundreds of times in the last 8 years!
5. WORKING WITH AN AGENT THAT KNOWS YOUR NEIGHBORHOOD!
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There are a dozen reasons why this is so important. Some are obvious – an agent from out of the area can’t network with the producing local agents & utilize them to show your home.
A Smaller World We Live In
Some are not so obvious. Because of the internet & changes with real estate boards, basically all of South Eastern Mass is one big MLS (multiple listing service). What this means is that agents from Boston have the same access to area information as local agents do, and I have seen agents from Boston, Rehoboth, Springfield, and even The Cape and Islands list homes in South Eastern Mass.
This is a trend and one that will likely continue for a while, but it’s a really bad idea for sellers. Simply stated, there is no possible way an agent from Boston or Cape or Redding can know the nuances and intricacies of the market like a local agent can. They may be able to input your listings for sale in the MLS and order a sign up from a sign delivery company, but they will never see the competition, know where potential buyers are, know if prices are stable or declining, by how much, have the knowledge when it comes time to negotiate an offer, and on and on.
Trust the Experts
It is always nice to be able to let your second cousin in Springfield or your real estate mogul Uncle in Dennis have your listing, but it is rarely a good business decision. After all, you wouldn’t ask your neighbor to deliver your first child because she has two years of nursing school under her belt would you? Trust the experts.
Proof in the Pudding
Here’s a typical example: in my neighborhood, North Easton, there are usually buyers waiting for new listings to view and possibly purchase. It is a small area, and many of the homes are built on larger-than-typical lots when it comes to newer construction these days. In other words, a desirable area. I usually have at least 3 or 4 potential buyers any time a new listing comes up in North Easton & I sell nearly a third of the homes in the area. Recently, a seller had listed her home with an agent she had previously worked with from Suffolk County that she knew and trusted. Unfortunately, the agent did not put the house in the MLS under the right ‘tract code’ or area. A minor detail yes, but now any agent searching “North Easton” in the MLS had no idea this home was even up for sale!
Because I am in the area regularly I only knew because I saw the sign in the yard. On top of that, the agent didn’t even have a lockbox on the door, so agents who did see the sign had no way of getting in because the house was vacated.
It took months to sell and I estimate it sold for $75,000 less than it would have if an agent that was experienced in the area had represented the seller.
The bottom line is this: selling your home in a buyers market (now) is tough. As real estate marketing gets increasingly varied and real estate agents become increasingly scarce, it takes a nice home, expert marketing, wise counsel and sometimes a little bit of luck to get homes sold today.
Luckily I’ve done it for over 8 years, and have had the great fortune of being the number 1 agent in Keller Williams for the past 5 of them. Give me a call and let’s talk about how we can sell yours.
Deric Lipski
