Show Me a Five Dollar Bill,

And I'll Show You Why Your Listing Expired


This piece is admittedly "tongue-in-cheek", but there's some important lessons to be learned nonetheless!

Sometimes it's hard for sellers to understand why their listing expired. Sellers typically enjoy many fine years in their home, so they sometimes price their homes subjectively.

To understand why listings expire, it helps to imagine a listing expiring on something we understand has an objective price. So let's imagine for a minute that you had a five dollar bill, but -- perhaps for some twilight zone reason -- five dollar bills were suddenly more difficult to sell. Because of this, you give a bill-salesman a 90-day listing on your five dollar bill, but it doesn't sell, and the listing expires.

Now let's imagine I'm there with you and you show me your five dollar bill and say, "John, why did my listing expire"? Here are some possible reasons based on my experience.

• You wanted six dollars for the bill. One of the bill salespeople told you it was worth five, another told you she could get you six because she "sells so many bills every year". You hired the salesperson who told you she could get you six dollars.


• You listed the bill for five dollars, but insisted that your bill seller not show the bill to anyone unless you were there.


• You listed the bill for five dollars, but told your bill seller not to put a sign up on the bill, because you didn't want the other five dollar owners to know anything about your business and chat about you in the neighborhood.


• The bill was torn in half and had maple syrup on it. Your bill seller suggested $4.75 but you knew other bills sold for $5.50, so you agreed to list it for $5.25.


• You owed $4.00 to a lender for the bill, and wanted to buy a bill for $7.00, so you felt you needed to get $6.00 for it. With this in mind, you instructed your bill seller to list it for $6.00.


• Someone down the street got $10.00 for a "similar" bill with Alexander Hamilton on it. Based on that, you figured your bill should be worth at least $8.00.


• You paid $20.00 for a wallet for the bill.


• Eight months ago, people were getting six dollars for such bills. Your bill person told you that the most recent sales of such bills were for five dollars. You listed your bill for six dollars.


• You list the bill for $5.00. Your bill salesman doesn't enter any marketing data in the MLS, and puts up a sign in the yard and a flier box with no fliers in it. You get an offer at $4.95 and want to accept it, but your bill salesman writes a counter-offer asking for a different title company, and the transaction falls apart.


• You wanted eight dollars for the bill. You don't really need to buy another bill. You told your bill salesman to list it for $9.00 to "see what happens".


• Your bill salesman lives 300 miles away from the bill, so they can't be there readily to let buyers in or help answer questions from other agents.


• Your bill salesman is a family member, who's going to not only give you a break on the commission, he's going to list the bill for $6.50 for you.


• You know bill salesmen get too much money for what they do, so even though many bill salesman are getting 5% and 6% to list bills, you save money by hiring Help-You-Sell-Your-Bill. You agree to pay them 3% total. They offer 2% to the bill-buyer's agent, who won't show your bill because they can get 2.5% and 3% to show other bills. Nevertheless, a buyer is interested and is ready to see your home, but you hired Help-You-Sell-Your-Bill, so your agent doesn't show it for you, you have to show it yourself. You make an appointment to show the interested buyer your bill on Saturday. On Thursday they see another bill they like better, call the agent on the sign and see the bill that day, write the offer, and they're in escrow on Friday. They don't call to cancel the Saturday appointment, but when you call to ask why they're not there they tell you how excited they are about the bill they bought. Aren't you excited for them?


• You wanted eight dollars for the bill. Your bill salesman suggested selling it for five. You listed it for $7.50 and told your bill salesperson that if someone wants it they could "make you an offer". No one makes an offer.


• You wanted eight dollars for the bill. Your bill salesman suggested selling it for five. You listed it for $7.50 and told your bill salesperson that if someone wants it they could "make you an offer". Someone offers you $5.00 and you're insulted by this "lowball" offer, so you reject it. Two months later you ask your bill seller if that buyer is still interested, but meantime they've purchased another bill for $4.90.

John Lockwood is a California Real Estate Broker and author of http://www.sacramento-home.com. Article Copyright, 2005, John Lockwood. Published by permission under John's Free Content License Copying, publishing or distribution of the article without the author's express permission is forbidden.

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Vacation Home Sales Rise

If you're a White Mountains Arizona vacation home owner, you're still in the driver's seat! Although you may have to concede a little price-wise in acknowledgement of the perception of an overall buyers' market, your chances of selling are greater than new construction or existing neighborhood homes.

In 2006, more than one million people bought vacation homes. These million home sales represent an increase of 4.7 percent over the preceding year. This according to the National Association of Realtors (NAR), industry experts who say that this data from NAR is good news for people who want to buy a vacation home.

According to Christine Karpinski, author of "How to Rent Vacation Properties by Owner", 2nd Ed: The Complete Guide to Buy, Manage, Furnish, Rent, Maintain and Advertise Your Vacation Rental Investment (Kinney Pollack Press, 2007), vacation home sales and investment home sales together accounted for 36 percent of all new and residential transactions. With these results, is it really a good time to sell a vacation or investment property?

The general public tends to view the real estate market as a whole. But Karpinski points out that that there are different segments to the real estate market, and not all of the segments respond in the same manner or at the same time.
Residential sales, i.e. a house bought as a primary residence and investment purchases are two separate and distinct markets. So don't let the gloom-and-doom-sayers discourage you, and don't let the sluggish real estate market in your area do so either. You are on a whole different playing field, says Karpinski.

While vacation home sales are up, investment home sales are down by nearly 30 percent since 2005. This can be good news for vacation homebuyers because fewer speculators in the market means less demand and lower demand equals a drop in prices. Get realistic with your pricing, and ensure buyer attention. It's what they expect-- so don't violate their expectations by digging your feet in, demanding yesteryear's prices. Capitalize on the rising vacation home market!

Buyers buying a vacation home for personal use, not having to compete with speculators allows buyers to take their time and make a thoughtful purchase that they can feel good about. To vacation home sellers, that means careful pricing, and much more patience waiting for buyers to make up their minds. Bruce & Pam Wachter with Sell Properties, LLC, will counsel you on your wait and watch approach, and also give you valuable information about making your vacation home stand out. How to negotiate successfully with hesitant buyers is an art form, too. Bruce & Pam can give you invaluable support and help with negotiating successfully.

Vacation homes that can be rented typically hold their value better because more people are able and willing to buy such a house. Think about offering your vacation home furnished or partially furnished. Think about selling your vacation home complete with tasteful cabin decor-- make it look more like a mini-resort!

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Selling In a Buyers' Market

Most reliable reports across the U.S. suggest that in most areas of the country real estate is no longer appreciating at the rates seen in the past few years. But, admittedly, the past few years were unusual, and the real estate market is correcting. The National Association of Realtors reports that nationwide August 2006 existing home prices were actually down 1.7 percent from a year earlier. The beginning of the correction, it would seem.

None of this news is dreadful or exceptionally bad unless you bought last year and you now need to sell. For those who have owned for several years and are considering selling now, the current market puts you well ahead of the curve in most communities.

Consider that in the year 2000, according to the National Association of Realtors, the typical existing home sold for $111,800 versus $225,000 in August of 2006. About double. Not surprising.

So, what constitutes the most likely successful scenario to insure a sale in today’s market? Consider these high-notes:

1. Buyer scarcity relative to home supply. (A buyers’ market).
Sellers have been in the driver’s seat for the past few years; but that’s no longer the case in most markets, let’s just face it. And so, sellers need to adjust, it’s that simple. But make a positive adjustment by making your home the most attractive, best-priced home in the neighborhood.

In the recent past, we noted that pre-market “prep” of homes was pretty much just a lick and a promise, if not totally ignored. In today’s market, painting, clean-up and repairs, large and small, all must be made prior to listing. Your home must stand out from all the competition like a buyer beacon. We have many valuable tips for just that purpose here in our Insight Blog. Check them out and employ them.

MLS pictures must be selected with care. Now more than ever, real estate is a visual medium first, via pictures that prospective buyers can and do view and scrutinize via the Internet. We cannot emphasize this one successful sales ingredient enough. If your Realtor or real estate agent takes lousy pictures OR no pictures at all (read this important post on the “no pictures” agent gambit), you’re dead right out of the gate, period. We cannot tell you how many worthy homes have been discarded from the mix of buyer choices because they don’t care for the pictures of the home. Nothing we can say or do can overcome this initial objection to a showing. And the more good pictures, the better. Buyers want to see as many pictures as possible. Make sure that your Realtor or real estate agent has a portfolio of pictures to send prospective buyers in addition to those permitted on the MLS.

2. Remember cash is always an issue. Use this to your advantage.
While home prices may have become only slightly more reasonable, real estate purchases will always be an extremely expensive proposition for most buyers—especially first-time buyers who lack much equity from prior sale. Answer that need in your offer. You can counter a reduced sales price by offering to pay buyer closing costs and lessening the dreaded out-of-pocket buyer cash requirements. Look like an angel to buyers. And, put this offer in your public offer. State an amount that you will pay towards closing costs.

3. Choose the right Realtor.
Choose a Realtor who demonstrates market savvy in attracting buyers. A Realtor or a broker who simply has lots and lots of listings may not actively market to buyers. It’s one thing to put a lot of inventory in your front window and just sit back waiting for buyers. It’s another thing entirely to be able to attract buyers. The only thing you need for selling your home are buyers, and lots of them.

In a slow market picking the right listing agent becomes especially important. Not only does the listing agent have to possess a keen knowledge of the area market in general, he must know what buyers are looking for and why. He must have active buyers feeding him information about price ranges, amenities desired in price ranges, buyer turn-ons, turn-offs. He must have lots of buyers who would consider YOUR home.

4. The numbers game.
Real estate sales are directly related to exposure. If the odds of selling a home are 100 to one, and it takes 100 inquiries and visits to get that one buyer, then the quicker you get those inquires the better. If you can get more than the 100 inquiries the odds of getting a top price and terms ratchets up.

That means that when you consider a listing agent, you need to review the proposed marketing methods with care. What is the listing agent going to do in terms of advertising, open houses, MLS placements, online marketing, broker relations, etc.?

Marketing plans that work for one property may not work for another. Your listing agent needs to be a skilled marketer. He needs to be able to pinpoint what makes your property unique and attractive, and he needs to market heavily. He needs to be thoughtful and energetic in his marketing plans. He cannot rest on recent past selling models. He must be imaginative.

5. It's a business deal. Unemotional and practical.
Things that don’t work:
• "I have to get this amount out of this sale because I need it to purchase the new property." The truth: Prices are established by the marketplace, not seller needs.
• "Similar homes across the way (in that subdivision or area) command this particular price; my house should sell for the same price, too." The truth: What is happening elsewhere is irrelevant. What is happening in the immediate neighborhood/area is what is really happening.
• "The people down the street got $750,00 for their home so I should be getting at least that much." The truth: This is not about the people down the street and your ego. It’s about bricks and mortar. The people down the street may have had an objectively better house. Face it.
• "The buyers’ offer asks that we leave the pool table – Who do they think they are asking for our “stuff”." The truth: Homes are all tied up with our psychological identity, who we are, our social status, etc. The market simply reflects supply and demand. It’s a market with a lot of inventory and lots of lookers, few takers. Leaving the pool table may be a lot cheaper than not getting a sale for months and months and months.
• "Last year this house would have sold for $750,000 and we will not accept a lower price!." The truth: It's not last year. It's now and the marketplace reflects current supply and demand.

Sellers can be successful in any market so long as they clearly understand the conditions and dynamics of the marketplace.

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Declutter! A Must for Successful Home Sales

Your home may be in very good condition, well-built and attractive-looking. However, simple clutter will create feelings of chaos, confusion, and disorder. One of the most important things a home seller needs to keep in mind is that the decision to purchase a new home is both an emotional and intellectual response. You want your home to imply trust. When buyers see clutter, they consciously or subconsciously register that the home has been neglected, with more to fix than meets the eye. This undermines your home's marketability.

So, declutter. Before you put your home on the market, have a garage sale, throw things out, and box stuff up. Use off-site storage. Your potential move will be easier, and you will create that open, spacious, simplified look that buyers love. We’ve said it before: When it comes to marketing your home, less is more.
Front Yard

Carefully mow and trim your front yard. Remove all toys, clutter, pots, etc. Fertilize the grass a month or two ahead of time for that green grass buyers love. Trim and/or remove dead, tired growth. Make sure no shrubs block interior light by blocking windows. Place all tools out of sight, and coil all hoses neatly. Remove any extra cars, boats or trailers.
Mulch your garden. Keep flowering pots to a minimum, keep them large and bountiful with healthy plants.

Entryway

The buyers' first impression is critical, and shapes their attitude throughout the showing.

Put down a brand-new welcome mat. Clean all stains, repair all scratches on entryway. If the front door is worn, dirty, or mildewed, in need of refinishing, this is one of the most important care areas for you. Fresh paint or stain will make a great difference.
Consider having your whole house power washed to remove stains, spider webs and other clutter. If the paint is shabby, outdated or worn, invest in paint. It’s the quickest and easiest way to improve curb appeal.

If the entryway has a foyer, it needs to be spotless, clear of shoes, coats, etc. Create a focal point with an attractive table or a simple, yet attractive painting or artwork.
Living Areas

Keep rooms sparsely furnished. They will appear larger and brighter. Move large pieces of equipment, such as weight benches, treadmills, drumsets, ect. - off-site.

Do not allow furniture to impede traffic patterns or block windows. Do not permit stereo/tv wires to be seen or to cross traffic patterns.
Choose one or two elements as the main points of interest in a room - wood floors, a view, a table or piece of furniture, a nicely made bed, etc.

Remove ALL personal items, family pictures, memorabilia, collections, hobby/craft things, trophies, hunting trophies, etc. This is crucial. Remove any and all things that lend YOUR personality and interests from the home. Buyers are put off by YOUR STUFF. It’s hard for them to imagine themselves in YOUR home. Many times hunting trophies “taint” a home for buyers. Remove and store these.
Only the most healthy and vibrant of houseplants should be permitted. And, keep these small.

Bookshelves add a warmth to a room, but remove most of the books. Leave lots of empty space.

Open window blinds/drapes/curtains and leave on a few lamps for warm, low, pleasant lighting.

1.   Kitchen

The kitchen is the heart of the home and plays an important role in attracting the heart of a buyer. This area needs special attention.

Clean, finished cabinetry is a must. Add new paint or stain, if necessary. There are products that will restore finishes to marred or worn cabinets. Invest in these.

2.   New cabinet pulls are inexpensive and can help tie the room together in terms of colors and finishes.

Remove purely functional items - such as baking pans, small appliances, vitamins, phone books, plastic bags, etc.

Remove all notes or photos or magnets from the door of the refrigerator.

Clean and clear the counters completely, then add back a few decorator items.

Choose decorative pieces that contribute to a warm, elegant, organized look.

Organize and clean the areas under the sink. Store these items in the garage in boxes.

Remove all trash containers.

3.   Bathrooms

It is important to de-clutter bathrooms to give them a touch of elegance or romance.

You will give up some privacy during the marketing phase.

Remove everything from the counters.

Remove any toilet brushes or bathroom cleaners that are visible.

Put items that you use daily - toothbrushes, soaps, razors - in a container, and place the container inside in a cabinet.

Decorate with fresh soaps, flowers, bowls, photos, or designer bath items.

Invest in new towels and fold them carefully.

Never leave medicines on display.

Remove all lingerie, bathrobes, slippers, etc., from hooks.

4.   Bedrooms

Bedrooms should appear restful and serene. Sparsely furnished is best.

Use your best covers, or invest in new ones if yours are worn.

Clear off bedside tables, and add back just a few books or nice items.

Bedside lamps add a warm ambience for showings.

Remove excess paintings or photos from the walls.

In some cases, old curtains do more harm than good. Take them down and clean the windows for a fresh look.

Children's bedrooms usually need to be simplified. Take down posters and box up toys. Avoid an overcrowded look.

Never leave jewelry, adult magazines, guns, medications, etc., on display.

5.   Closets

Organize your pantry with everything facing forward. Remove excess food and containers.

Relieve your closets if they are stuffed. Leave only your favorite shoes, pack items that are not needed for this season. Make closets as roomy as possible.

The laundry room often functions as a spill over room with junk on the shelves. Clear everything out, and have just a few soap boxes visible. Paint the laundry area with a bright, happy color. Make sure it is spotless.

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Lowering the Asking Price - Asking for Trouble Part III

When you start out with an over-priced asking price, then drop it later -- your house becomes sad "old news." You won't be able to experience the initial activity you would have had with a realistic price. Your house very well may take longer to sell.

But let's just say you've been successful selling at an inflated market price to an uninformed buyer. The buyers' mortgage lender will call for an appraisal. If comparable sales (which you were shown originally but rejected) for the last six months and the market conditions don't support your sales price, the house won’t appraise and your house falls out of escrow. You could chase the buyer, offering to renegotiate, but for him/her, the deal is tainted and they most likely will respond with an even lower than appraisal offer.

Your house could go "back on the market."

Either scenario (dropping the price or failed appraisal) means your house sits on the market month after month and it's harder to get a good offer. Buyers will think you might be getting desperate, so they will make lower offers. By overpricing your home in the beginning, you could actually end up settling for a lower price than you would have normally received.

Realtors talk to each other. And if your selling agent has "bought" your listing by telling you what you wanted to hear, they will know. This can mean two further problems for you: other Realtors may not want to "do business" with your selling agent because of his practices, and/or they may not want to do business with you because they worry you are inflexible and demanding and that negotiations might be unpleasant. After all, you've had to lower your price and you are not very happy about your experience.

So, when a Realtor backs up a proposed selling price with comparable sales, market conditions, etc., and gives you his/her professional and honest advice on how to price your home, it's best for you to listen to his/her professional advice. It will save you money and heartache!

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Setting the Asking Price Too High - Part II

Asking Price Too High - Asking for Trouble!

What's Going on Behind the Scenes

It's important to know that the listing agent does not usually attempt to sell your home directly to a homebuyer all by him/herself. That would be inefficient.

Instead, Realtors market and promote your home to the multitude of other local agents who are also working with homebuyers, and this increases your "personal sales force" exponentially. That's the beauty of the MLS Service! Hopefully, during the first couple of weeks a home is on the market, buyers' agents may be calling and coming in to preview the home so they can show it to their inventory of clients.


If the price is right.

If you and your agent have over-priced your home, fewer (if any) agents will preview your home. As Realtors it is their job to know local market conditions and home values and they know when a home or property is overpriced. If your house is dramatically above realistic market values, why waste time their time, and more importantly, why do a potential disservice to their homebuyers? Their time is better spent previewing homes that are priced realistically.

Even if Realtors don't typically preview new listings, they do scan the MLS for suitable listings for their buyers and your over-priced home will be completely passed over for consideration time and again. Think about it: How many Realtors would think about showing your property when they are bound by their Code of Ethics to protect their buyer by giving them their best advice and that advice would be to offer you a much lower price? They know they run the risk of insulting you and exposing the buyer to a potential flat rejection or worse. So, they just pass you by. You're somebody else's problem. Your Listing agent. And he/she has plans to ask you to lower your price when you call and ask, "What's going on?"

Lowering The Asking Price - New Troubles

TO BE CONTINUED...

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Selling Your Home - Setting the Asking Price Too High - A Series

So you’ve decided to sell your home and have your idea of what you think it's worth. Armed with this you call at least three area Realtors and schedule appointments. And one by one, they stop by, each coming prepared with a "Comparative Market Analysis" and other supportive documentation for setting the asking price of your home.

But, to your anger and disappointment, two of the Realtors have come up with prices that are lower than the figure you had in mind. And although they back up their recommendations with recent sales data of similar homes, you remain convinced your house is worth more.

When you review the third agent’s figures, they are much more in line with your own figures or maybe even higher. "Ah ha," you say, "Now that's more like it!" And you list with the highest "bidding" Realtor and start counting the money you're going to make on the sale. But, have you really just shot yourself in the foot?

"Buying a Listing"

If you’re like many people, you pick Realtor number three. This is an agent who seems willing to listen to your input and work with you. This is an agent that cares about putting the most money in your pocket. This is an agent that is willing to start out at your price and if you need to drop the price later, you can do that easily, right? After all, everyone else does it!


The truth is that you may have just met an agent engaging in a questionable sales practice called "buying a listing." He "bought" the listing by suggesting you might be able to get a higher sales price than the other agents recommended. Most likely, he is quite doubtful that your home will actually sell at that price. The intention from the beginning is to eventually talk you into lowering the price.

Why do some agents "buy" listings this way?

There are basically three reasons. A well-meaning and hard working agent can feel pressure from a homeowner who has an inflated perception of his home’s value and feels uncomfortable "insulting" the seller. Or, the agent simply wants lots and lots of listings to appear to be very popular. On the other hand, there are some agents who engage in this sales practice routinely. However, over-priced homes are a recipe for disaster.

TO BE CONTINUED - What's going on behind the scenes

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