Before You List Your Home Have a Plan!

Another recent incident that cost The Wells Team a good sale. We had listed one of our client's home. They were starting a new home that would be done next spring. They did not have to sell their home in order to complete the new home. Received a good offer on the home in early September with a closing at the end of October. Everything looked good then........ The sellers did not have a plan. They decided they wanted to rent a home close to the site of their future home. However... They wanted an unfurnished home with a specific floor plan available in one month! They wanted a home in an area that is rural and predominantly seasonal mountain homes. Those homes are empty in the winter but are furnished. Two days later they could not find the home they wanted to rent. Contract gone. Home withdrawn two days later. Before you list your home you need a plan! Where are you moving? Have you started looking in this area? Are you willing to rent if needed? Are you willing to put some items in storage while you are renting? Do you have any idea on the cost to move? to store your furniture? If necessary what is your plan regarding schools? Before you list your home, let your agent know your plan. Without a plan you might have to turn down a sale! If you are in the north metro Atlanta area, Lake Lanier, or North Georgia, give us a call! www.randywellsteam.com

Percentages!

After 8 years, and multiple listing presentations, I can throw out a lot of statistics. In a listing presentation the most important statistic is: How much am I going to receive for my home? In my experience, 90-92% seems to be a general average. However I am going to have to reassess that percentage based on the current market, and the price of homes. This year we have sold two homes in the high $600K price range. They both received 96% and 97% of asking price. Why? •Because the sellers had priced the home below their original purchase price. •Because a sales price at 90% of asking price represents a significant amount of money. (approximately 60K) •Because the market is allowing them to hold out for a slightly higher price. This is also the case with homes priced in the $130,000-$170,000 price range. Of course that is a direct effect of the demand for homes in that price range. So how do I answer that question from the beginning of the blog? How much will you receive for your home? I now dispense with the generalizations and provide the potential seller with more specifics on solds in their neighborhood. This is now allowing us to be a little more precise and realistic. Bottom Line: Provide your potential seller with the most precise numbers possible instead of using a generalized statistic.

The Pricer per Square Foot Argument

As I go another listing appointment I know the first question that will be asked: HOW MUCH IS MY HOME WORTH? Of course that is the most important factor our sellers look at when deciding to sell their home and of course which realtor to choose. I lost a listing last month because the seller held me to a price that was said as part of a lengthy discussion on marketing the property. Side-note: This home in question is in my neighborhood where my real estate partner and I have lived for over 12 years. We have had the most resale transactions in the neighborhood for the last 4 years! Back to the story: I gave him a quick number with the comment "If you want to sell it quickly". To this day he took that number, held me to it, and hired another agent two weeks later. However the seller does not seem to remember that our discussion continued. The seller had taken price per square foot of recent sales and arrived at a much higher price. We discussed this and I said he had a very valid argument. At the end of the discussion the seller said he wanted to list it for his amount and I said we could do that and see how the market reacts. Quick history of the home: •Built in 2005 •Approximately 3675 square feet plus unfinished basement •Went into foreclosure in the summer of 2013 •Overall good shape for a foreclosure •Listed, in foreclosure, for $327K, lowered to an auction price of $289K after 6 months of being on the market! •Present seller buys home in foreclosure auction for $284K •Present seller puts approximately $10K to 20K in work on home. •Present seller wants to list it at $399K! •I bring him an offer, before it is listed, at $389K, with $11K in closing cost. Seller turns offer down. Says he wants $10K more Here is my point: We cannot base the price of a home exclusively using a price per square foot model. In this particular case the home did not sell in foreclosure at a much lower price. It had to be sold at auction. Why is it going to miraculously sell now, over $100K higher than auction price, because the seller has cleaned it up? The home is located in a part of the neighborhood that is in lower demand than in other parts. It does not have a golf course or lake view that most buyers want in our neighborhood. When pricing a home you need to know the history of the home, its location in a neighborhood, and other subjective criteria, before pricing it. The price per square foot is a great start but it is not the ultimate determining factor!

MY POCKETS ARE FULL...OF "POCKET LISTINGS"

I know that most of you have never heard this phrase from your friend or neighbor (sarcasm): "If you know somebody who is looking for a home in our neighborhood bring them to my home, I am willing to sell". Yes they are willing to sell: •If the buyer is an all cash buyer so we do not have to have an appraisal •The buyer will pay top dollar for my home including everything I have done to the home •The buyer will close when it is convenient for me •I do want to sell but under my terms My partner and I have pockets full of our neighbor's "pocket listings". We appreciate them giving us the opportunity to sell their home but we are scratching our head on why they will not list with us. Why won't they list their home? •They do not want to pay commission? •They do not want people seeing their home on the internet? •They do not want the neighbors to know they are trying to move? •They do not want to show their home too much? We are trying to wrap our hands around this to give these potential sellers the reasons why they need to list their homes with an agent. •Our neighborhood has no new construction. Buyers have seen the existing inventory and have decided not to come into our neighborhood to look further. They have no idea about these "pocket listings". •We get clients when they find our listings on the internet, or drive into our neighborhood and see our signs. If they do not see a home they like they will not contact us. Therefore we do not get the chance to meet with them and show them our additional "pocket listings". If over 90% of potential buyers start their search on the internet then there is a good chance the "pocket listing" will never be seen. To my fellow real estate agents? What do you think? Meanwhile I remember as a kid when I had army men, bubble gum, pennies, rocks, marbles, and baseball cards shoved in my pants pockets. Ultimately my mom would end washing my pants along with their contents. Unfortunately we do not have a washer big enough to wash my pants with all of these pocket listings. Have a great holiday!

Please do your research before you come see the home!

Lawyers prepare for trial, teachers prepare their lessons, pilot’s flight plan, and real estate agents just???? We are probably the only real estate agents who deal with this particular issue. What is that? The number of agents who make appointments to see our listings, actually see our listings and realize the home did not meet any of their buyer’s criteria. Specifically: “My buyer’s wanted a master on the main floor” “I thought the terrace level was finished” “My buyer’s want a basement” “My buyer’s wanted more square footage” “The price is out of my buyer’s price range”. ARE YOU KIDDING ME! We review all of our listings to make sure the information is correct. That includes attaching a seller’s disclosure. Our information includes square footage, location of master suite, terrace level or no terrace level, etc… Why do my fellow agents not take a little more time to read our information or ask us these questions when they confirm appointments? All I know is that I have very anxious sellers. They are inconvenienced to have their home ready to show. They move around their personal life and then leave the home anticipating a good showing. All I ask is that you, my fellow agent, take a little more time to know your client, research the properties they want to see, and ask the listing agent some good questions. It will save you time, work, and a discussion with an upset seller’s agent!

We Learn From Our Clients: The Art of Negotiations!

A great part of this job is the ability to learn from our clients.
Our last education involved the art of negotiations. The ironic thing is that as much experience as my client had in sales negotiations ultimately the deal fell through.
We received an offer from the buyer’s agent. This buyer had been in the home numerous times but had a very difficult time making a decision on whether to put an offer on the home or another property. After a lot of assistance from her family, agent, and financial planner the buyer placed an offer on the home. We were $50,000 apart 89% of asking price.
We can safely say that 95+% of our negotiations involve a counteroffer from the seller, and one possibly two additional counteroffers from the buyer to settle on the price. Our seller had planned on that strategy.
Before we presented the counteroffer the seller asked me for my opinion. This is where I “choked”. I gave a two minute speech discussing everything except my immediate opinion on the counteroffer. Finally I composed myself. I told the buyer that we represent him and wanted the best offer as possible. However based on the fact that we have the most re sales in this neighborhood, and know the local market, I said I would take the offer. Obviously he did not agree.
The counteroffer was submitted. The buyer declined the offer and would not go above her original asking price. I took the email response from the buyer’s agent and forwarded it to my seller. We were so far apart that I assumed the offer was dead.
This is where I made mistakes.
• I assumed the offer was completely dead. (We were $25,000 apart)
• I emailed the buyer’s agent response and did not follow up immediately with a phone call
• My buyer expressed his disappointment in the fact that the buyer would not negotiate.
• My buyer wanted to meet in person to discuss further options. I did not pursue that.
• I did not know my buyer’s selling ultimate goal. (Actually he had told me his goal but later the immediate goal had changed)
My seller called me. I thought he was going to fire me.
Instead he gave me some feedback, a lot of criticism, and advice on how to handle negotiations in the future. I thanked him. He then told me he had a different goal and to offer a price $10000 over the buyer’s original offer price. That was a solid counteroffer.
We presented the new and improved counteroffer with a great sense of optimism.
The buyer would not budge off of her original offer and the deal died!
Items we told our seller after this event.
• We have buyers who put in an offer and do not want to negotiate. To them it is all business and they will move on to the next property.
• This is a buyer’s market. You gamble when you are priced too high and make a counteroffer that is still too high!
• Based on the appreciation of properties in the South (1.8% according to NAR) was this deal worth losing for $10,000? Actually we had it down to $5000 apart with some concessions. A year from now your net on the home will be about the same (appreciation minus operating cost)
• We have lost offers in the past from buyers who would not continue to negotiate. We lost one sale over $9000 three years ago! This $600,000 home is currently being rented and is worth around $450,000.
• We are in the trenches on a daily basis. We give you our pricing opinion on your home based on lots of research and experience. We know the market!
• We cannot change the market!

In the end we learned how to better respond to our clients. We hope that our clients will listen to us as well. We are the ones in the trenches!