How every Buyer picks their house

I often get a Buyer who gives me a very long detailed list of all the features they want in a house. It’s usually things like how many bedrooms, bathrooms, what type of floor plan, what type of kitchen cabinets or flooring they must have.

Then they buy something totally different from what they described?

Why is that?

It is because people pick the home they ultimately purchase based on how they feel while inside a house. It’s the vibe the house gives them. It is an emotional decision.

When I work with a Buyer, I try to notice how they respond to a house. Did they tell me it was too dark inside? Did they think the yard was too bare and needed more trees? Was the backyard not private enough? Did they not like the floor plan and why? Or did they even care about any of this?

These are the type of things people use when making their decision. If a Buyer feels groovy inside the house, they can overlook items such as not having a pantry, not having the flooring they prefer, or if it is missing one of those specific features they said they could not live without. In houses they feel good about, they say things like “We could always change the counter tops later.”

All of which is why I try to create that vibe when I list a house. Buyers also respond to colors, decor, cleanliness and clutter. You can have the most amazing house but if you have wild paint choices, it is going to be harder to sell. Why is that? Truth be told, few of us have vision. We ALL think we do but trust me, there have been so many times where I have told a Buyer that all a house needs is a fresh coat of their choice of paint and they don’t see it. Or I’ll say imagine this house with the flooring you want and they can’t see it. Or maybe I’ll say “Those cabinets could be painted and that mauve counter top could easily be replaced.” And even worse is a cluttered or dirty house. Nobody can imagine what it would look like in better shape.

So the lesson here for Sellers is that you need to make your house feel a certain way for a Buyer to fall in love with it. Another important thing to keep in mind is that people who totally fall in love with your house will pay the most since it is an emotional response and not a logical one.

How can a Seller do this?

The most crucial and obvious ones are to declutter and clean. Not to your standards but to the Buyer’s standards. Then think about how your house looks. Think about how Buyers will tour your house. Ever been in a Builder’s model home? Next time you go in one, notice that there is just enough furniture to make the space feel good. You want your furnishings to compliment the space, not fill it. You will notice that the furniture often has narrow legs and you can see more of the floor. Seeing more of the floor always makes a space feel larger. There is thought about how people will walk around a space. You don’t want to block parts of the room off with furniture nor do you want to make pathways seem narrow. Those things create the vibe that the house is small. Buyers get that same vibe from this as you do when you’re stuck in a traffic jam.

Something else you do NOT want to do is have Buyers leaving the showing with a To-Do list of repairs. If you have unfinished projects, finish them. If you have a stain on your ceiling from a repaired leak, paint it. Buyers will respond to those things logically instead of emotionally. They begin to think about what it would cost to repair it, and they usually estimate high. You want your buyer to leave your house thinking only about how wonderful their lives will be in your house and how they need to rush home and sign an offer.

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.

A good realtor is like using the Waze App

I’ve seen a few sellers lately make some bad decisions.

I get it. Selling your home is something you only do so often and I don’t expect them to understand the market and all the obstacles between sticking the sign in the yard and the closing. All they know is that the market is hot and selling your house is easy.

What they don’t know is that keeping it sold can sometimes be a lot of work.

I recently had a friend decide to list with some less experienced agent who was going to reduce the commission. I was going to reduce my commission to ZERO since this person was a friend and they had some circumstances that required them to move, guess I should have told them that sooner. I had been giving advice and working towards getting this done for close to a year. To this seller, all they were thinking about was saving money. Well, you only realize that savings when you close the sale. The house sold and is back on the market. Usually when a house comes back on the market, it doesn’t get the same attention from buyers. Most buyers in the market have already seen it and either said no to the house or made an offer that obviously wasn’t the best one or they would have gotten it the first time. This is where experience is worth every penny, even though I wasn’t planning on getting any pennies from this sale.

I am currently working hard to keep a deal together for a house where the buyer went to do the final walk through before the closing and found the ice maker had been leaking and has caused $12k in damage to the house. I know if my listing goes back on the market, we will never again catch such a fantastically qualified buyer who was the highest bidder, so I better put on my thinking cap and get this done.

These are just a couple of current examples of where experience can make or break a sale. The goal is to get to the closing. I am thinking about the entire process, not just the beginning. Not just the next step.

As I was making my second cup of coffee and thinking about writing this post, it reminded me of the early days of GPS. You’d enter the destination and take off. I think that is how most sellers view this process…….”I’ve got a realtor and they just stuck a sign in the yard. It’s all downhill from here!” If nothing goes wrong, then that is very true. But how often have you had your GPS take a crazy route or not know about construction, wrecks or other annoying delays? It’s the same with real estate. A lot of inexperienced agents don’t know what to lookout for along the way or don’t know how to negotiate. Sometimes you have to take an alternate route. Sometimes you need to change lanes along the way. A good realtor is more like the Waze app……not only are we watching out for delays, we are looking for speed traps and doing it all in real time as we get you to the final destination, which is the closing.

How to price your house in a Seller’s Market

I have always said a house is gonna sell for what it is worth. I said it when it was a Buyer’s Market. I’m saying it now. Overpricing your house is the surest way to make the process take longer and likely sell for less than it could have. Price it right and buyer’s all rush to see it when it is a new listing, regardless of the market conditions. They are afraid of losing the house if they like it. You want that sense of urgency.

Back in a Buyer’s Market, the goal was to drop the listing on the market at the right price and hope to get multiple offers. It is the same today, only with a few tweaks.

Today the list price is more like when an auctioneer begins the auction with a number low enough that they know they will get that first person to raise their hand. Then the price keeps going up until nobody else raises their hand. The list price is more like a suggestion these days. You still do not want to start off with too high of a list price. I often suggest a list price to sellers. They will tell me how strong the market is and want it to be higher. Then when a house sells for more than the list price, they feel like they left money on the table and undersold it. That is not the case. If you had several buyer’s bidding up your house, that means you got every penny out of it.

What I like to do is examine the most recent comparable sales in the neighborhood. I figure out what the house is worth compared to what other buyer’s have recently paid for houses around my listing. Then I put it on for that price since we know 100% that number will work. The worst thing that could happen is you sell it for full price. Then I drop it on the market late on a Friday. That way everybody sees the listing and starts scheduling showings for the weekend. It is good when buyers see other buyers coming and going. It shows them it is a hot listing and they better decide fast. Once I get one offer, I let all other realtors who have shown it know. You don’t tell them before they show it. You wait until after they have shown it so they don’t assume they won’t get it and cancel the showing. Even if the offer sucks and is not one I can suggest my seller accept, just having one enables me to leverage any other offers up as high as any buyer can go.

I recently put on a listing for $360k. We got 6 offers on it. Five had escalation clauses and we ended up selling it for $384k……and that must be the market value since that is what a ready, willing and able buyer agreed to pay. My seller is a good friend who was very happy with the results. If I had put the house on the market for $384k, do you know what would have happened? Since there was only one buyer willing to pay that much, I probably would have only gotten one offer. It would have been full price or less. I wouldn’t have been able to leverage the terms towards the interest of my sellers without the presence of more than one offer any more than an auctioneer could drive up the price with only one bidder in the room.