Having a hard time selling your house?

Now that we have returned to a much more normal market after a brief period of utter craziness, it’s time for a refresher course on what to do if your house didn’t immediately sell.

Real estate has always been about price, location and condition. All three of these must be in balance for a house to sell. Since you can’t change the location of a house, all you can control is the condition and price.

Here is what over 17 years of experience in good, bad, terrible, average, great and crazy markets have taught me:

When you get lots of showing but no offers

This usually means that buyers think the price is realistic based on what they see online so they schedule a showing and come check out your house. If you don’t get any offers, that means their expectation did not match the reality of the house. Sometimes this can be caused by having pictures that make the house appear to be in better condition than it is, bad curb appeal of the surrounding properties, or some negative thing omitted from the listing that buyers won’t discover until they get there. 99% of the time it is just because the house didn’t “Wow” the buyers in person as much as it did online.

An old school rule of thumb is that when you have had 10 showings and no offers, it is time to reduce the price. Sometimes if the feedback from showings is all the same, you can keep your old price and improve whatever negative thing buyers mentioned. I usually prefer a price reduction because often you can spend money correcting that one big negative only to have subsequent buyers find the next big negative. There is nothing more frustrating than spending money solving a problem only to later discover you’ve got another one to solve.

When you are not getting any showings at all

Usually when this happens it is because buyers know the price is way too high and don’t even bother to come see the house. Occasionally buyers can overlook your house if the presentation of the listing was terrible but I don’t see that happen often. Sometimes it can be because you’ve got too much junk all over the house and the pictures, while good, just show a cluttered mess. The thing to do here is reduce the price to be competitive with similar houses buyers may also be considering. Something that is hard for sellers to understand is that buyers are looking at more houses than just their home. To a seller, their home is all they are thinking about. To a buyer, it is just one of several homes they can buy. Buyers have options now. You’ve got to make your house become their first choice if you want to sell.

Over the past 17 years, I have seen sellers refuse to reduce their price or do anything to make their home more appealing to buyers. They usually think the issue is with their realtor…..if only the realtor would do more open houses, if only the realtor would advertise the house, if only the realtor had glossy brochures inside the house for buyers to take home. These sellers usually let the listing expire then pick a new realtor. It is at this time that the new realtor suggest dropping the price. It is also at this time that the seller cooperates. And guess what, with a lower price, the house sells.

Selling a house is not rocket science. All you are trying to do is make your house a buyer’s first choice. Back in 2009-2011 when the market was the worst ever, I would sell houses the first day on the market and have multiple offers. Many people thought I had a magic wand back then. I put the same effort in all my listings. It wasn’t me. It was my sellers. They were realistic and took my advice.

19 0ffers and $40k over list-Fun getting the most for my seller

It’s been an exciting past few days.

This story begins one rainy Friday when I was on my way to a Radwood Car Show in Cleveland with my son. I got a text from a repeat client who I have become friends with. She tells me that her mother is going in assisted living and she wants me to sell her mother’s house.

After a few months, the house was ready to list. Unfortunately the market had really started to cool off since we first discussed the sale.

Full disclosure here…..I don’t think any realtor right now really knows how to price a house unless there are good comparable sales from the past 8 weeks. We usually look back 6 months for comparable sales. Six months ago the market was on fire. That market doesn’t exist today. Gone. Interest rates have nearly doubled. We are all, if we were to be honest with ourselves and the public, shooting from the hip on pricing right now. The market has changed so fast that we lack good data on pricing from this “New” market.

Since the absolute worst thing you can do in any market is to overprice a house, I suggested we put it on at a number I was 100% sure we could get and also expect multiple offers. That number was $185k. I was really hoping we might get multiple offers and I could drive the price up to maybe $200k but I didn’t tell this to my friend.

One investor heard about the upcoming listing and contacted me. I let him and his realtor show it the day before it hit the market. I told them that we wanted to expose the house to the market before deciding. They of course wrote a full price offer and wanted an immediate response. I told my seller that I was sure we could duplicate that offer from anybody since it was nothing special. She agreed.

I put the listing on the market very late Friday night. Immediately it started getting showing requests. By 9:AM the next morning, more than a dozen showings were scheduled. I spent all day Saturday, Sunday and Monday texting and talking to the 72 agents who had scheduled showings on this house. It was overwhelming.

Once the offers started coming it, I went to work on pushing the price up. With every new offer we got, I told the realtor if there was another offer with better terms for price, inspection type, financing type and closing date. The goal is to create the ideal terms for your seller by getting one buyer to change something on their offer so you can use that for leverage to get another buyer to change something.

We ended up with 19 offers. We had two cash ones that were very close (especially after I nudged each one of them to go higher to be competitive.) I think one of them figured out I was using their offer to push the other one up higher, and then come back to push them up again. This agent send me a Confidentiality Agreement. That is where one of the terms of their offer is that you can’t disclose any of their offer terms to anybody else. I won’t violate my integrity. In addition to experience, all I have to offer people is trust. I felt like both would go a little higher. What to do? How could I squeeze a little more money out of them for my elderly seller who needed it to live on? I decided to tell each of those two buyers they had the best offers and to send me their highest and best offer. They had one shot. The seller would pick the best one. This move ended up getting about another $4k for the seller.

In the end, the house sold for $225,750. Just over $40k more than the list price.

The market is crazy but being a realtor isn’t

Everybody knows how crazy the real estate market is right now. Everybody I meet wants to talk about it. Everybody assumes every realtor is crazy busy right now. We are not. The reason is because you need houses to be on the market in order to sell one.

It’s super easy being the listing realtor right now. You put a house on the market and have a busy couple of days getting offers, then it is over. Being a buyer’s agent these days is a lot about waiting for a house to come on the market, then rushing out to see it. I used to show houses 3 nights a week and all day long every weekend when it was a Buyer’s market. I think the last house I showed was mid last week. Back then, people would look at 20-30 houses before making a decision. Today a lot of people are viewing 3-4 houses and picking one. I have sold many where the buyer bought the first house they saw. I’ve got plenty of buyers. Some of them are looking for a very specific home in a specific school district or neighborhood. I have worked with one of them for about a year and only shown them 6-7 houses. That’s because so few houses have hit the market in their price range and in the neighborhoods that will work for them.

So being a realtor right now is a lot of waiting. Waiting for sellers to get their homes ready to list. Waiting for the right house for your buyer…….waiting for something interesting to happen so you can blog about it.

Want to know where the market is, TODAY?

I like to do these market updates every once in a while. When I do, I do them in real time. What do I mean by that? I meant that the info is right now. Most of the time when you are hearing about the real estate market, it is from sources that are a month or more behind, or it is from a national source that is giving you a dated snapshot of the market for the entire country. My data is taken from the MLS in the past 20 minutes and is specifically for the Bluegrass area.

I won’t geek out and break down all this data into price range, which town, or property type, but there were 24 existing home sales that went pending in the past 24 hours. Do you want to guess how many of them sold within 2 days of being listed? You would think it would be all of them based on what your realtor friends post online, or what you read in the news. But, of those 24 houses, only 4 of them sold in less than 2 days. There were 8 that sold between 2 and 10 days. 4 sold between 11 and 30 days. 4 sold between 31 and 60 days. And 4 sold between 61 and 90 days on the market.

Let’s look at the houses that closed in the past 24 hours. While pending sales give us a snapshot of what the market is doing right now, freshly closed sales give us a snapshot of where the market was a month ago since it usually takes 30 days or so to close.

How many of the closed sales do you think got full price, or over full price offers when these sales went pending last month? Again, you would assume all of them, right? Of the 23 closed sales posted today, only 8 of them sold for the full list price. 5 sold for over the asking price. One sold for $10k over the list price in a neighborhood where I have seen this happen frequently. That means 10 of the closed sales went for LESS than the full asking price.

I could go a lot of ways with this blog post, but I think I will take this chance to say that you really need an agent that knows when you need to offer the full price, when you need to go over the list price, and when you can make an offer for less than the list price. The market is so fast right now that I think a lot of buyer’s realtors are not looking at comparable sales in the neighborhood. They are just so focused on getting an offer in fast that they don’t really take the time to figure out what the house is really worth. To me, that is the most important bit of info we have to offer a client. I have had many listings in the past year where I had a ton of showings and didn’t get an offer on the first day on the market. Then the next day a realtor is frantically trying to reach me saying they are about to send a full price offer and are so glad the house is still available. Well, if I had 12 buyers look at the listing and didn’t get an offer, truth be told the house probably wasn’t worth the list price……but I am not going to tell the buyer’s realtor that, I just tell them where to send the offer.

That’s the data. I am by no means saying the market is slowing down. It is after all the middle of winter which is usually the slowest time of the year. I do think the market will stay strong for quite some time. I just wanted you all to know that not every house sells the first day on the market for full price or more. I want to help separate the perception of what the market is like compared to the reality.

Always think about selling in a Buyer’s Market

I am always sad when I see a house sell that has been sitting on the market forever.

Sometimes a house will stay on the market for a long time because the initial listing price was too high, or the house didn’t show well.  Both of those can happen to perfectly good homes.  The reason those don’t sell is because of the seller, not the house.  Often these houses sell once the list price gets reduced into the realm of reality, or the seller does some cosmetic repairs that make it easier for a buyer to want the house.

Any time I show a house like this, my client usually asks me why the house hasn’t sold yet.  If I check the listing history and see that they started out asking a crazy high price and have reduced it, I tell them it is okay to buy it.  If I look through old pictures or see fresh paint, new flooring, etc, I tell them it is okay to buy the house.  Sometimes sellers just need to learn how the market works at the expense of their days on market.

Then there are those houses that don’t sell because of the property itself.  Those are the ones that I advise my clients to not buy.  These houses usually have some odd feature like a crazy floor plan, a poorly done addition, a neighbor whose yard is full of junk or has a dozen dog kennels in their backyard, the house backs to commercial or industrial zoned properties, etc.  These houses eventually sell to somebody who doesn’t mind that particular negative.  Whenever I show one of these houses, I like to tell my client that while they might not mind the negative feature that has kept the house from selling, it will be extremely difficult for them to sell it when it is their turn.   The past 8 years have been a pretty strong Seller’s Market.  If a house took a long time to sell in a hot market, can you imagine how long it would take in a Buyer’s Market?

I have lived through lots of markets.  I have seen seller’s who paid too much in a hot market lose money when they needed to sell.  I have seen people get their dream job and move out of town, only to have to make two mortgage payments until their old house sells.  I have seen people who felt lucky to have gotten their house in multiple offers struggle to sell it in a Buyer’s Market.

I don’t want to see any of my clients go through any of this.  In real estate, you often don’t see the consequences of a mistake until years later when you go to sell.  Helping people avoid this mess is one of the greatest joys of my career.