Same Property, two different tools.
Matterport Virtual Tour
- Tour at your own pace
- Floor Plan and Doll House views
- longer interaction time
- Creates emotion
- Tell a story
- More website locations to market
Same Property, two different tools.
We understand the importance of netting a seller the most amount of money. We also know we only get paid if a property sells. Ultimately, it’s not the seller or the agent that determines what a property is worth, but instead the buyers and the market. We know where the market has been, where it is, and where it’s headed in the near future. If a seller isn’t willing to be realistic, then it might not be worth our time and marketing dollars.
There is a difference between needing to sell and wanting to sell. If a seller doesn’t need to sell and isn’t motivated, it could be a waste of an agent’s time and money. If a seller isn’t motivated, but is realistic on pricing, that’s okay. We know motivation levels vary. Keep in mind, we are often told by sellers, “we don’t need to sell.” Only to find out weeks later they are suddenly more motivated. Generally, you wouldn’t be contacting us, if you didn’t want to sell your home, see FSBO’s.
We will want to know what your past experiences have been. If you home has been listed with 3 other agents over a short span, it can be a “red flag” to an agent that your expectations may not align.
If you were going through a divorce, would you hire the same attorney as your spouse?
Similar logic to a FSBO, many buyers (even though a Buyer’s agent cost nothing) think they will obtain a better price by going through the listing agent. The reason being, they think the listing agent will cut their commission, and thus net the sellers the same amount at a lower price to the buyers.
Generally speaking, the only parties that benefit from this scenario are the listing agent and the Sellers, and here is why:
Reasons a Listing agent may not drop their commission when operating as a transaction agent to both sides.
Going through the listing agent may help in unique instances, but to get a better deal is not one of them.
[testimonial name=”Noreena Hertz”]All of us show bias when it comes to what information we take in. We typically focus on anything that agrees with the outcome we want.[/testimonial]
Thanks to the internet, one of the biggest changes in the Real Estate the last 15 years has been in the access to information for Buyers and Sellers. While, easy access to information has solved some problems, such as, not having to rely on Agents searching for you, making searching faster, easier, and in the convenience of your own home. It has created a whole other set of problems that REALTORS have to combat, such as mis-information, information overload, and misinterpretation of information. A major part of why the FSBO’s percentage is at all time historic lows and part of the reason why agents are needed more than ever to decipher and guide Buyers and Sellers through what they need to know and what they need to remove from their cranium.
Here are some common mistakes I see buyers and sellers make when it comes to gathering information on their own:
Whether you are a Buyer or Seller, a knowledgeable REALTOR will tell you what you need to know, and not what you want to hear.
[testimonial name=”Daniel J. Boorstin”]Education is learning what you didn’t even know you didn’t know.
These are the comparable properties that matter when it comes to appraisals.
These properties indicate where pricing is potentially trending in the market. After all, closings that were negotiated and closed months ago, could have done so in a different market environment. And no, the listing agent will not tell us what the contract price is for, if they did, they would be doing a huge disservice to their client as the deal could fall through. Then potential buyers could know what the Seller is willing to accept creating an advantageous negotiating position for them and a REALTOR failing to follow their duty of confidentiality.
This is the Seller’s competition and what potential buyers will be comparing your property and price to (as well as previous closed sales). Getting showings, but no offers? You might be losing out to the competition.
These Sellers tried to sell their home and missed the mark either on price, marketing, or hiring the right professional…sometimes the one mistake leads to the other two.
The short answer is that it depends on your situation and why you want to move. If you ask a REALTOR it’s never a bad time to sell, and to some degree that is true, especially when affordability is at historic lows, but everyone’s situation is different.
Below are some benefits of selling your home in the Fall and Winter months when typically there is more inventory and less demand. The market tends to shift from a hot, Sellers market, to a neutral or possibly even a Buyers market.
As you can see, Selling in the Fall and Winter months can have it’s advantages. It is all about opportunity costs. If you are serious about selling you home, it’s even more important to price your home correctly. Otherwise, you could “chase” the market down, and miss your opportunity.
In a “Sellers Market,” inventory is low. Listings are important for any REALTOR’s business as it is relatively free advertising and there is a potential for buyer leads to come from the listing which increases business for that agent or possibly help support their buyer’s agent if it’s a team. Unfortunately, when inventory drops, agents don’t have as many listings, and thus, they don’t have as many leads coming in to support themselves or possibly their team that relies on the listing agent. In order to secure the listing, they can potentially, end up potentially doing the Seller a disservice by creating unrealistic expectations of a sales price in order to secure the listing. The agent, hopes to eventually price reduce the listing later on in order to sell the property. Unfortunately, statistics have shown this is not the best way to attract the best possible price, because most of the demand for a listing is in the beginning of the listing sales cycle. Sometimes, in a Sellers Market, the listing agent can get bailed out as market prices may rise fast enough to eventually meet the listing price, but that doesn’t always happen.
See above…but sometimes it’s not 100% the agents fault. The Seller reads newspaper articles, or talks to a neighbor and hears how “hot” the market is now and figures “hey, let’s take a shot and see if we can get a buyer to pay above what the market is dictating.” The problem results in most likely having to do a price drop if they are serious sellers. Depending on market timing, there is a good chance at some point inventory will start to increase, then the Seller ends up “chasing the market” downward.
As mentioned previously, Price reducing usually isn’t the ideal strategy for two reasons. Most of the demand from serious buyers that are ready and willing to act is when the home first comes on the market.
Depending on shifting markets, the Seller may wind up chasing the market, and end up selling for considerably less and have it one the market for a longer period of time. This is why a good REALTOR who understands trends and shifting markets is key when listing your home.
AKA…the “hopeful” Seller. You know the type, “we are going to list it for this much and not sell for a penny less because the inventory is low and there is not another property on the market like ours.” We call them “hopeful Sellers”, because they may not need to sell their home, but if they get a certain price, they will. They may get this impression from what they see on TV shows or feel that no negotiating is the best negotiating. While those shows are entertaining, they are not how things generally operate in real-life situations.
This depends on how the property is priced. If it’s slightly below market value and you have multiple offers in a few days, then yes, you don’t have to negotiate. But if you are like many Sellers in a seller’s market, then you are going to be ambitious with the price and you should seriously consider negotiating with the first offer that comes in, as they statistically, first offers are usually the best offers.
Some Sellers think that because of the lack of inventory they do not have to prepare their home for showings. The home ends up smelling like their pet, isn’t clean, seller requests limited showing times for their convenience, yard work isn’t kept up, etc. Buying a home is an emotional experience. The potential buyers want to at least feel like the home has been taken care of, and they want to know the sellers are serious sellers. Any of the above has the potential to make them question if this is the right home for them. The agent should be able to educate Sellers on what they may need to do before showings, and not rely on buyers agents feedback to tell them later on.
Unless you can wait a very long time, when inventory is low, prices tend to increase (Supply vs. Demand curve). The longer you wait, the more you may pay later. Buyers often time think this is a line used by agents to get them to act fast, but in a Sellers Market with rising prices, it really can costs Buyers who wait. When it comes to “timing the market,” it’s usually more luck and happenstance than skill.
There are so many factors that play a role in the Housing Market. It’s a long sales cycle for one, and often the data we are looking at and interpreting is months old and the current Supply and Demand could be different from the numbers we are analyzing. Which is why it’s usually 3-6 months after a peak or valley before even the experts know, and any future predictions, is often speculation. Other factors such as increasing interest rates could really effect a buyers purchasing power the longer they wait.
See Buyers Purchasing Power Explained
Every deal is different and has different circumstances, but the main reason I advise against this tactic in a “Sellers Market” is due to time (see previous). The longer it takes to come together on price, the more opportunity there is for another Buyer to submit an offer and create a bidding war or a “highest and best” scenario. Sellers often don’t take low offers seriously, or they get offended. There is little incentive for them to counter very much if at all. Sometimes, both buyers and sellers have the impression that “we will just meet in the middle” which often is not the right approach to take. Professional REALTORS can help Sellers and Buyers get past the emotions of initial shock of low offers and counter offers, and advise on negotiation strategies depending on the current Market, but sometimes there is only so much we can do.
No house is going to be absolutely perfect, unless you build it yourself, and even then new construction homes can have issues as well. Of course, a Buyer can always ask for major repairs to be completed before closing (roof, a/c, pluming and electrical are the most common), and most of the time and depending on what the purchase agreement states, the Seller will accommodate (sometimes depending on offer price) because they will have to disclose any issues they are aware of materially effecting the value of the home to any future Buyers. Depending on the contract, asking for repairs could give an out to a Seller and enable them to pursue possible back up offers or place the home back on the market. Also, an experienced agent will know repairs are rarely done to the other persons liking. A solution could be asking for a Seller credit or purchase price reduction, and have the Buyer do the work to their standards and liking.
Time is of the essence, especially In a Sellers Market. You have to be ready to act fast. If you don’t have a pre-qualification letter ready for an offer, then that could cost you time when you do find a home you want to make an offer on, and could potentially lose out to another Buyer that was ready. Sellers usually want a quick contract-to-close period (30-45 days is pretty typical now for a financed buyer), the further along you are with your lender, the easier and shorter that time period can be possibly giving you the edge over another Buyer when negotiating.
When inventory is low, and demand is high, there is a very good chance of multiple offers on properties…especially highly desirable properties. Just because there is another offer, doesn’t mean that it is a good offer. Afraid of over paying because of a bidding war? Protect yourself with an appraisal clause or financing contingency. While you might be out $400 for an appraisal if the deal falls through, you have saved yourself thousands in overpaying.
Numbers Don’t lie…the perception is that with the advent of the Internet that it’s getting easier and easier to FSBO your home in order try to net more money. The truth is that in the early 1990’s FSBO’s accounted for about 20% of the real estate sales. Today FSBO’s account for only about 8-10%. What gives…with all the new internet website, tools, and transparency why has the FSBO rate gone down?
Along with the normal factors that make for sale by owner challenging, the simple answer is that the internet has actually hurt FSBO’s, because Buyers now have more information at their fingertips than ever before. As professionals, we can debate over the accuracy of the information, but the sales numbers don’t lie.
Owners, ask yourself these 3 questions:
Some food for thought:
The last few years there have been many REO (Bank Owned Sales). Banks are in the business of making money, right? If they thought they could net more money without the use of an REALTOR®, do you think they would?
Did you know, the owner of fsbo.com sold his NY condo? After trying to do it alone at 2mil for six months, he decided to solicit the help of a REALTOR®. The realtor listed it for more money (150k more) got full price, charged the full 6%, and netted the owner 30k more than had the owner sold it at his full price of 2mil.
How people search for real estate has changed a lot in the last 15 years. Close to 90% of home buyers find their home online, and close to 50% of buyers are willing to buy a home “site unseen.”
For the same reason Florida is popular destination among US citizens (weather, beaches, boating, entertainment), make it a popular second home for foreign buyers as well. Out-of-town buyers do not have the luxury of seeing properties first hand, so they make a lot of decisions based on what they see online. Which is why Sotheby’s International Realty® has created such an inviting online experience.
Thanks in-part to their global brand, marketing partnerships (google, Wall Street Journal, NY Times…), and rich professional photos and videography, sothebysrealty.com had over 1 billion views last year.
A home’s first “showing” is online. Wouldn’t you want to show it to as many people as possible? Which website would you want your luxury home showcased on?
Price per Square foot, often isn’t a bad place to start when comparing home prices, but all too often I see Buyers and Sellers put too much emphasis on it.
Here are some typical factors that can change the value of a home based on comparable homes with the same sq/ft.: