Some straight-talk advice from a real estate professional with over 10 years in the business.
Your home is gorgeous, so why hasn't it sold?
1. The Toughest Thing To Hear -- Could Be The Price: The features of your home, its curb appeal, and the effort you go to make your home look like a model are the bait to bring in interested buyers. But above everything else, price is the single most important factor you can control for a successful outcome.
2. We Are All Naturally Biased: It is human nature to believe that your home is worth more than the others. After all, you selected it for some very good reasons. Sellers are emotionally involved in their homes and not likely to be an objective judge of its value. They do not see the flaws and frequently place too much value in minor or unique improvements - like the fresh bright yellow paint in the kitchen or the Gothic chandelier. There is also a tendency not to see where improvements and updating are needed. But what determines the value? It's the market, and the market is controlled by what a buyer is willing to pay - and can get a mortgage to purchase.
3. There May Be Some Confusion About Value. So lets review: Fair Market Value: This is the price your home is likely to sell for. Fair market value reflects the price a property will bring if it has been adequately exposed to the market, assuming a qualified buyer and motivated seller, without undue pressure or desperation from either side. Under these conditions, market factors of supply and demand will determine the price the buyer is willing to pay and the seller willing to accept. If hundreds of buyers have seen a property on the internet and in person, and no one can come to terms with the seller on price, it is clearly priced above fair market value.
Fair market Value is what your home will sell for, and should not to be confused with any of the following:
Appraised value is just for the bank. It's what a licensed real property appraiser has calculated your home to be worth for a particular purpose, and used to decide if they will give the buyer a loan. It will sabotage your sale if it's not as high as the price a buyer has offered to pay.
Assessed value is for property tax calculations only, and it often varies by 20% from the market value, since it lags behind at least a year.
Investment value is generally based on cash flow of the property, and uses the "cap rate" to calculate value. This method is commonly used for commercial property or apartment buildings.
Now, A Comparative Market Analysis (CMA) is anything from a simple list of properties to a detailed analysis of value. It could be way off if there are no similar sales of homes nearby with similar features, or it was not carefully done. If you are hiring the services of a Real Estate Agent, you have a professional who should be able to give you a detailed analysis of the neighborhood sales and listings, and suggest a listing price range. It is a tool to target your likely fair market value range, not an exact price.
Real Estate Agents use Comps or Comparable Sales to price homes. These are the homes that have actually sold. You need to know what homes like yours have sold for - in your neighborhood - during the last 3- 6 months, and what is now available now, or "the competition". Location is everything, so be sure that the homes compared to yours are similar ones located nearby.
4. There May Be A Misunderstanding of Value Factors:
These Affect Value: The competition -other homes for sale Comparable sold properties The condition of your home The urgency of your sale Availability and cost of financing These Don't Affect Value: Your original purchase cost What you spent for improvements Reproduction cost Assessed tax value How much you need to get out of it Your mortgage balance Asking price of other homes Your lucky number or horoscope
5. Does Your Home Need Some Work?
Very few buyers really want to renovate unless they are buying at a bargain price. For the top price, the main systems of your home should be in good condition and up-to-date: roof, foundation, plumbing, electrical, and drainage are the biggies. Other features such as curb appeal, view, accessibility, parking, floor plan, outdoor space, and finishes such as flooring, cabinets, and counters are also important but won't make up for poor maintenance. Buyers will always overcompensate for needed updating and repairs in their offer price.
6. Don't Be Impatient. It takes longer to sell now, so allow sufficient time for a sale. Don't expect a top Real Estate Agent to take a three month listing. It just isn't enough time to get a marketing program going, wide exposure, offers, and escrow closed. Allow at least 6 months total from start to finish, longer if you start out with a too-high price.
7. Did You Hire A Pro? You hire a stock broker to handle your portfolio, you hire a financial advisor to handle your retirement funds, but you're trying to sell your greatest asset on your own....
Really? Go find a real estate agent, and fast!
If you select a one based on the lowest fees, you will get what you pay for. There are many discount options available for sellers, so if you go that route, be sure you understand what you are getting - and not getting - for the price. Unless your agent cares about your goal in selling, they are not going to take the time (and money) to market and negotiate for your best results. A complete marketing effort requires excellent photos, internet exposure in several sites, advertising, quick access to the property for showings, and complete, accurate property information. This takes time, money, and attention to detail. Assembly-line real estate may not bring you the bottom line that you want even with those lower fees. And don't forget that there are generally two agents involved - yours and the buyer's. In spite of popular opinion, most agents work hard and have many business expenses, so be sure your listing agent is offering an attractive commission to the buyer's agent for a fast sale in a soft market. - this technique can increase the number of showings you get while a substandard commission may put your property at the bottom of the list to show. At the same time, don't get swept away by the agent who says they can get the highest price for your home. This could be a sales tactic to get your signature on the listing. Unless they are buying it themselves, they will be subject to the same market forces that are giving buyers the power now.
8. Clearly Define Your Goal
To be a motivated seller you must establish a clear and realistic goal for selling your home. For example, if you need to sell because you are relocating or retiring, but you won't accept the market value for your home, you are in denial. If you get 3 offers and none of them are willing to negotiate to your expectations, you price is probably unrealistic. Ask yourself, what will you do if you can't sell for what you think you should be able to get? If you are not willing or able to accept the market value, you need to have a viable Plan B. Whether it is to refinance, rent out the property, or put your moving plans on hold, you need another option. Prepare to bring money to the table if you have no other way to sell, or discuss your options with your lender if you are falling behind on your payments. Denial is not your friend.
The market takes time to turn around. If you need to sell, now could be your best time. No market goes in any one direction forever, so this is a part of the natural cycle of supply and demand. Don't wait for an unknown future market. You can and will survive if you make smart choices. Your best decision about selling will be made by consulting with the best professionals with lots of planning and preparation. Don't rely on chance with your most valuable asset!
More Pricing Observations. If you decide to list your home at a higher price "just to see what will happen", it's really quite predictable. You will delay the sale, discourage serious buyers, and lose the momentum of being a new listing. The most interest in your home will be in the first two weeks. After that, many buyers look only at the new listings so you may lose the opportunity to sell. Worse yet, you could end up "chasing the market" as you adjust your price and try to find out the real number. Or your property could be shown just to sell another better-priced one. Experienced Real Estate Agents do not want to waste their time, money or reputation on overpriced listings, but the biggest loser will be the seller. Buyers want a good value now more than ever, and they will go elsewhere.
Not a Science. If you ask several real estate agents or appraisers, you will get different opinions of the value of your home. Pricing is not an exact science! Price per square foot is useful for condominiums, but less so for single family homes. In older Island neighborhoods the value your land is probably greater than the value of the house. So if your home is larger but the lot is smaller, you may get less for it. Buyers can in fact be swayed by cosmetic appearances and the furnishings and décor which create an attractive image. Most make a judgment about a home within the first 30 seconds so make sure your home's charms are not hidden. And a charming price will make up for just about anything else!
FOR SELLERS GEARING UP TO ENTER TODAY'S MARKET, AND EVEN THOSE OF YOU HOPING TO GO IT ALONE... these are just a few points to consider as you prepare to sell. Feel free to call me at anytime to discuss your thoughts on the sale of your home, including any questions you may have about the points raised in the post above. Thank you.