“Know your opponent and know yourself and you need not fear the outcome of a hundred battles. Know one and not the other and you only have half the chance of victory. Know neither and all is lost.” A Chinese philosopher/general, named Sun-Tzu, wrote these thoughts in a book about winning in a challenging environment 3000 or so years ago. Today, they’re still taught in every major military and business school in the world. The book itself, The Art of War, is a treasure from cover to cover.
That quote is the bedrock of success. In the Spring of 2011 Real Estate Market, conditions heavily favor the buyer, so consequently, the seller is at a large disadvantage. There’s a huge inventory of homes available. Foreclosures and short sales are available in most communities. Mortgage rates are low. Desperate sellers are competing viciously to offer the best prices, the best incentives, the best terms etc. Sellers are fighting to win in the most competitive market we’ve seen in decades. It’s not all doom and gloom for the savvy home seller though. The secret is to Know. Know your property, know your market, know your buyers and then act accordingly.
1. Know Thy Marketplace:
Every Market is unique, even at the level of town to town…neighborhood to neighborhood. There’s a bunch of questions that need answers when deciding, first, if you should sell and secondly, how you should sell. How many homes in the area are up for sale? Why? How many foreclosures (on market and pending)? How about short sales? Stay on top of the market. In the current environment, markets are changing more rapidly than ever. A good seller strategy might have lasted months years ago. Nowadays, a seller need to stay updated regularly. Stay updated on monthly sales stats locally. Look at mortgage markets and interest rates. Keep looking at comps, similar properties that sold in the same area over the last two or three months, at most. See the trends and be prepared to react to them in a deliberate, planned response.
Interview real-estate agents. If you’re interested in using an agent or not, many firms, like mine, offer to perform a free comparative market analysis. Collect several firms and get several opinions. Interview them all about listing your home. Ask advice. Why not, if it’s not costing you? Ask them what they would change. How they would market it? What separates them from their competitors. The age of comps is more relevant now than anytime I can remember in the past. For the Spring of 2011, try to get comps from no more than two months ago, three months max. Anything more and the information is out of date.
Pretend you’re a buyer for a couple of weekends. Check the newspaper, Trulia.com or Zillow.com for open houses in your area on similar properties. Find out how things are going for the property. How long has it been on the market? Any cost reductions? Any recent improvements made? How do they advertise?
Set YOUR price. In a soft market like ours on the South Shore of Massachusetts, the typical strategies that worked in the boom years are falling hard now. You don’t overprice your house to leave wiggle room for negotiating. There’s so many properties on the market, that have spent so much more time on the market, the local inventory of homes probably contains a variety of nice houses with nice prices, wrecks priced dirt cheap and a selection of properties falling somewhere in between.
If you don’t have a Realtor, the local paper, sites like Zillow.com and Trulia.com might be a good source of information on what’s for sale in your area. There are some helpful tools to help get a feel for pricing your house. Check the newspapers and see if they publish a list of houses sold. Compare the homes carefully to make sure they’re apples to apples. Then set a realistic figure. Your goal: to maximize the chances that the perfect buyer will actually see it and respond. Pricing is strategy. Even before the condition of the property or it’s location is noticed, Price is the first criterion most buyer’s consider.
2. Know Thyself:
Competition between home sellers is at it’s highest in a buyer’s market. High inventories mean there’s more homes to choose from for buyer’s to buy. First impressions are just as important in showing a home as they are in a job interview. If your home isn’t neat and well maintained, buyers will drive by. There are a few sellers out there who won’t stage their property correctly, hoping to avoid the expense and just take a lower offer. If the buyer’s keep driving, you won’t get even the lower offer. The home, inside and out, should be neat. Remove clutter, clean what’s already there. Display furnishings and incidentals in such a way as to highlight cleanliness, space and good light. I’m not suggesting a complete rebuild, although I have seen properties where that was a necessity. Easy ways to make your home stand out and ease a few burdens:
- Neat, Clean and Tidy Interiors. Treasure accumulated over the years are your treasures. Most should be stored carefully away. Leave some about to hint at the life you enjoyed living there. Remove excess furniture, knick-nacks, etc. Sweep, dust, vacuum, polish and, possibly paint where needed. Fix blemishes like stains, peeling wall paper or paint.
- Neat, Clean and Tidy Exterior Sweep or pressure-wash walkways and porches. Polish the outdoor metalwork, clean the windows and glass, and replace any burned-out bulbs. Trim grass and bushes and neaten the yard’s layout. Add new mulch where applicable. And, if you can, plant flowers.
- Work on a marketing plan. Will you sell your home yourself or use a Realtor? Over the past year, time on market has risen a great deal. Home values have declined. If it doesn’t sell right away, at what point will you seek out a professional? Selling it yourself can save you the paying real estate commission, but at a loss of marketing expertise, positioning and energy that your home would otherwise get. Also, buyers are savvy, too. The vast majority have buyer’s agents themselves. “If the seller’s not paying a commission, I’ll just knock off a percentage in the offer.” Like you, they look for every advantage. Work out a physical(invitations/Mailing) campaign and electronic (Internet, email, text) campaign and a face to face campaign. Get the word out.
- Company Relocation Assistance: A potential source of help might be found in your employer’s HR department. If you’re relocating for work, they may be a great source of all kinds of help from referrals to advice to possibly financial assistance.
3. Know Thy Opponent:
Be relentless in pursing buyers and their agents if they show an interest in the property. I check in with agents and unrepresented buyers for months after we meet at the property. The chase is never over unless the buyer buys something…sometimes not even then.
Not all buyer’s are created equal though. And you want to know who they are, before you agree to anything. Gather information at any opportunity, over the phone, email or face to face. Ask questions. You have a right to know who you’re dealing with, what their goals are and how that affects you. Are they serious or just toe dipping? Is there any little surprises a seemingly innocent buyer has trailing along behind them, like hidden financing costs? Just because your selling, doesn’t mean you don’t have to carefully look at the buyer’s financing. There’s a huge variety of financing vehicles out there to choose from with some pretty wild restrictions and potential costs to the seller. Take some USDA (That’s right…The Dept of Agriculture does have a mortgage vehicle), FHA and VA home loans, the seller pays the points on the loan. Others require the seller to payback of earnest monies the buyer pays at deposit or that the seller covers all the closing costs. Other potential restrictions you need to be aware of are condition of the house. Even cosmetic issues might be required to be repaired, at the seller’s expense, under the conditions of the proposed loan. Planning on flipping a house quickly? Some of these loans require the entity selling the property MUST hold the property for a period of three months from the time of purchase, thereby tying up your capital and exposure while the property just sits…and costs…for three, long months. Understand the different types of financing and what they require of you as a seller, before accepting an offer. It could affect how much profit dollars you net(gross profit-expenses=net profit) in a sale.
Ask your agent or refer to your open house and interview experiences earlier. What incentives might be needed to entice active buyers to respond to you. Besides a low price, incentives for buyers include paying discount points to lower the mortgage rate, paying closing costs or providing flexibility about the move-in date. Eavesdrop on other visitors to open houses to find out if there’s a pattern or an incentive they seem to want — something you could use to entice a potential buyer into a active offerer.
Be patient on lowering the price, if you can. Don’t rush into reducing your asking price. You’ll need to be ready to do it when the time comes. As an agent, that’s a painful, uncomfortable topic to bring up. You’re asking the seller to lower their own property’s worth and by extension your own commission. It’s the duty though. Market’s change rapidly and a successful seller has to be ready to make the tough decisions when required.
Based on all this, your best goal is to offer the best value you can afford to your customer, the buyer. Talk to a Realtor or do the research and outreach yourself and position your property to win. It can still be done, even today.
You need to be knowledgeable, realistic and patient, but ready to act, and you can still sell your home quickly and profitably.
Thinking of selling your home? I have a passion for Real Estate and love to share my marketing expertise! Contact me today for a market analysis of your house!
I service the following towns in South Shore MA: Whitman, Hanson, Brockton, Rockland, Abington, Pembroke, East Bridgewater, West Bridgewater, Easton, Weymouth, Braintree and Quincy MA.