Archive for the 'Sellers' Category
Here’s My Buyer…Do You Want to Sell Your Home in Milton?
categories: Buyers, Milton Real Estate, Sellers
(To the tune of Gershwin’s “I Got Rhythm”)
I got buyers
They’ve got money
They need to move
Who could ask for anything more?
In a buyer’s market, it is a good thing to have buyers if you are a realtor. I work with both buyers and sellers in my business, but my website and blog have always generated more buyers than sellers, which is understandable given that normally people seek out websites and information more often when they are looking to buy than sell.
Given I have this world-wide buyers magnet, I thought that I’d exploit it if you’ll indulge me. You see, routinely when I’m talking to sellers, particularly those who are considering “for sale by owner” or who aren’t terribly motivated to sell, they say “just bring me a buyer.”
These sellers either don’t understand or don’t appreciate how the home selling process really works (which is outside the scope of this post but worthy of another), or more likely they believe that realtors can just manufacture buyers for all shapes and sizes of homes, no matter what their shortcomings, demerits or hideous floral wallpaper are. Many sellers believe that buyers should be about to look beyond the decor and minor defects and that their home is God’s gift to some lucky buyer. It just doesn’t work that way in a buyer’s market.
Well, through the power of the web, while I can’t actually manufacture buyers, I have had some success in attracting them to North Fulton, Alpharetta and the surrounding cities. In the last 18 months or so, almost 1,300 users have registered on www.LiveInAlpharetta.com. Not all are serious, active buyers, but even if 10% are, that is still a significant number. The fact is: web marketing works and my business has proven it.
Traditionally realtors have marketed homes to buyers. Look at any newspaper, magazine or real estate website and you’ll see pictures of homes for sale. Makes sense. The homes are “the bait” to attract the buyers - and remember, everyone wants the buyer. He or she is the one with the money! Just bring me a buyer. That is all I need. Oh, yeah, and it only takes one. (That is another myth to be debunked in a later post.)
I thought that since I do have a bunch of buyers -and buyers are what everyone obviously wants - that I’d promote one here. Let’s flip the sales equation around and instead of marketing homes to buyers, let me market a buyer to a home (seller). Fells a little bit like the girl calling the boy up for a date, doesn’t it? I always loved Sadie Hawkins.
Without further ado, here is my buyer:
Currently residing in Northern Virginia. Wants to move back to GA to be closer to family. Has a home to sell that is on the market and getting decent activity buy no contract yet. Wants to be in Crabapple Crossing Elementary School district, but will consider other good schools in the area. Wants at least 4 BR, with a basement. Swim/Tennis neighborhood would be nice. Thinks that they would be able to possibly move at the end of the year (between school semesters). Price Range: high $500’s to $600k.
If you are a seller out there and thinking of selling but haven’t because you think the market is soft please consider my buyer for a match and contact me. Even if this buyer isn’t a match and you want to sell, please contact me. I have other buyers, as long as you keep in mind that I can’t actually manufacture one to your exact specifications! .
It does feel a little strange pitching a buyer to the seller, but I’ll get over it. In a buyer’s market you would expect there to be more sellers than buyers and that my buyer would have his pick of houses. Indeed, the MLS data bear this out. As of July 2007, in North Fulton (Alpharetta, Roswell, Johns Creek and Milton) there were 581 more homes on the market than in July 2006.
I just thought that since all the sellers seem to be clamoring for buyers - and because my buyer is not quite ready to buy - that I’d post his credentials and see if anyone wants the buyer bait for a change, instead of the other way around.
Posted by Kevin Warmath | Currently 2 Comments »
$100,000 Price Reduction on Alpharetta Home for Sale - The Price of Ignorance
categories: Sellers
That is not a typo. Yes, a ONE HUNDRED THOUSAND Dollar reduction, and after only 17 days on the market. But I don’t care if the property had been on the market for a year, a $100,000 price reduction on a house worth less than $1M is a miscarriage of the free market. Or maybe it is the free market: free to try to rip off some unsuspecting buyer.
The economic theory of Rational Expectations says that people do not make systematic errors in predicting the future and that any deviations are the result of mistakes and ignorance. I won’t call the seller ignorant, because that would be rude, but he certainly made a big mistake that will cost him in the sale of his house.
The reason is that Real Estate Pricing Theory shows that most of your potential buyers view the property in the first few weeks. That is because most of the qualified buyers in the market have seen everything else and didn’t like it. Now they are waiting on the sidelines for new listings they might like to become available. When they do, the buyers rush out to check them out. After a few weeks, these pent up buyers have all seen your house and now the only people to view it are people new to the market. These people may just be starting their search, may not need to buy as urgently, may not be financially qualified yet or may still need to sell a home.
Back to our seller who overpriced his home by $100,000. Admittedly, this seller represents an extreme case of overpricing, but his mistake first caused him to miss the initial flood of buyers: The people who were most likely to ultimatley buy his home never looked at it when it first hit the market. His proper audience may see it once it was reduced, but they may not, too. A new listing has more impact on the market than a price reduction.
However, the larger damage in my opinion is that this buyer has trashed any good will that potentially could have existed between buyer and seller in negotiating the sale. The seller has shown that he is not trustworthy. Buyers who do look at the property will say out loud: “What was this guy thinking?” And to themselves they will be thinking that the seller may still be trying to rip them off.
The funny thing is that the house is still probably overpriced and will ultimately sell for about $20k less than currently listed…when it does finally sell.
Posted by Kevin Warmath | Currently No Comments »
Changes in 2007 Georgia Real Estate Contracts Help Both Buyers and Sellers
This year’s changes to the Georgia Association of REALTORS (GAR) contracts have some minor edits and some major changes. The two biggest changes are that buyers now must now secure their loans during a Financing Contingency Period and don’t have all the way up to the closing date to be approved for a loan. This helps sellers. The other change helps buyers. It allows them to stipulate that they are offering on multiple properties at a time.
Financing Contingency Period
Buyers cannot string along sellers all the way to closing any more and then fail to close because the loan did not go through. Too many times you’d be a day from closing with the seller packed and moved out only to have the deal fall through. The seller was left incurring many costs and still having a home to sell.
Now, buyers have a negotiated period of time (say 14 days) to apply for the loan and get it approved. If they don’t provide a denial letter from the lender within the contingency period, they are deemed to have the ability to obtain the loan and the contingency is removed.
While this system is new to Georgia, it is used in other states. I believe that California for instance has an 18 day contingency period after which the buyer is considered able to purchase and should they fail to purchase they lose their earnest money. This approach is also similar to how many builders’ contract work.
The impact of this new approach is that lenders will have to be able to take the application, process the loan and commit to their buyer clients that the loan is approved. Buyers may elect to apply to financing and even pre-approval earlier in the purchasing process - and they may also elect to deal with established lenders with proven ability to deliver rather than the “We have the lowest rate today” lenders found on the Internet.
Due Diligence Period
The other big change is that the “Right To Terminate” method of purchasing has been changed to a “Property Sold Subject to Due Diligence Period” option. It used to be that if you chose the Right To Terminate, you had a stipulated number of days to simply back out of the contract for no reason. This approach to purchasing was often used by investors or in situations where one spouse saw a property and wanted to get it under contract while giving the other spouse an opportunity to approve or veto the purchase.
The Due Diligence Period can be used to do any sort of inspection that the buyer wants and then the contract can be amended to address any concerns with the property.
The big change, though, is that the Due Diligence Period section of the contract now has a place to stipulate that the buyer is under contract to buy another property or that the buyer shall have the right to enter into another contract. This strengthens the negotiating position of the buyers. Sellers are less likely to dicker over repairs or price and terms if they are aware that the buyer is ready to buy something else. It allows buyers to play sellers against each other to an extent.
Moral
When entering into a contract, particularly during the early months of the year, look to see which version of the contract you are using. The year is noted in the upper right hand corner of the first page under the GAR logo. I think the 2007 version is better than the 2006 version and I’m using it now; but some agents may be slow to switch over even though February 1st was when we were supposed to start using the new version.
If you are selling your home by owner, make sure you know which version you are using, the differences and how they. Better yet, call me. I’d be glad to help.
Posted by Kevin Warmath | Currently No Comments »
Basement permits
categories: Sellers
A friend told me the other day they were going to finish their basement. He told me the guy doing the work was cheap, did a good job and had done many basements in the neighborhood already. Best of all, he was going to save money because the guy was not going to pull any permits to do the work.
I gently informed my friend that when he goes to sell his home, which he says he wants to do in three or four years, that he will need to complete a Seller’s Disclosure form and on that form is a specific question asking if the required permits were obtained when any alterations were made to the structure.
My friend kind of swallowed hard and thought about it. We discussed the pros and cons of having a disclosure marked that permits were not obtained. A potential buyer can inspect the property, but they can’t open up walls and see the wiring and plumbing, so they must judge condition based on a visual and operational inspection. My friend was also concerned that maybe that he could get fined at some point in the future by revealing that he had not obtained the proper permits. I told him I doubted that was true; that the question is on the disclosure as information to the buyer not to catch past offenders.
The lesson was to be aware that when you make structural modifications to your home be advised that you must make disclosures about this when you sell your home and that could affect the marketability of your home. Permits, while I’m sure they are a hassle, surely can’t be that expensive. Particularly if you are spending a shinny penny on finishing a whole basement. In fact, chosing a contractor who routinely pulls permits might be one of your decision criteria in selecting a contractor.
Posted by Kevin Warmath | Currently No Comments »
Honesty is Hardly Ever Heard
categories: Sellers
Brutal Honesty. Only your friends can be brutally honest with you, so they say. One of my problems, I’ve always been told, is that I’m too honest, that I don’t sugar coat my opinions enough, even it they are “right.”
In real estate it is hard to be honest, particularly with sellers. No one wants to tell you your house is ugly, dirty, stinks, outdated, obsolete, poorly decorated, will never sell in a hundred years to a blind buyer. Yet, some one has to tell you don’t they; or is that the job of the “market?”
I’ve lost a few clients because I’ve probably been a bit more forthcoming in my consultation than perhaps I should or than other realtors. However, my mantra is that I’m going to tell my clients what they need to hear, not what they want to hear. Heck, that is why they are hiring me, right? … for my knowledge of the market and my ability to make their home appeal to the greatest number of buyers? If they don’t want an honest relationship, then the whole sales process with them is going to be stressful - for both of us.
There are agents out there who want your listing - any listing - so badly, particularly in a slow market, that they aren’t going tell you the challenges in selling your house. They just want a sign in your yard because they will get buyer leads from it. They are less interested in selling your house than selling another house to someone who calls off the sign in your yard.
What I’ve always wanted to do is be as honest with my client as the buyers coming through their house are going to be - at least amongst themselves. If you’re a buyer’s agent you know exactly what I mean. Buyers can be as honest as a kindergartner and say exactly what’s on their mind. As an experiment, I’ve always wanted to put listening devices in the houses I’m selling just so that I could let the seller hear exactly what the buyer’s think. Sometimes they’d be horrified.
In my life, I’ve always respected the people who could (and would) give me honest and constructive feedback. These people were true professionals and it is this level of service and sincerity that I believe sellers (and my clients) deserve.
If you search for tenderness
It isn’t hard to find
You can have the love you need to live
But if you look for truthfulness
You might just as well be blind
It always seems to be so hard to give
–Billy Joel, Honesty
Posted by Kevin Warmath | Currently No Comments »
Fish with a net, not a spear.
categories: Sellers
A lot of people think that they are actually funnier than they really are. A lot of people think they are smarter or tougher than they really are. And a lot of people also think their house is worth more than it really is.
Some of this misperception might be wishful thinking, but a lot of it is that homeowners just aren’t out in the market day in and day out. They see a couple of homes in their neighborhood sell for a pretty penny and they think their house must be worth as much too.
As the old saying goes: Your house is worth exactly what someone is willing to pay for it today. And motivation, as well as market conditions, plays a huge part in what someone is willing to pay or what you are willing to accept.
Pricing a home for sale is one, if not the, most important parts of selling the home. There is some art in the process, but a lot of science too. It is possible to analyze the market and determine the “absorption rate,” that is, the number of homes in your price range that the market absorbs, or buys, per month. If the rate is 4 homes a month and you want to sell in a month against 24 other homes in the market, your home must be priced (considering condition) with the 15% of homes that will sell that month. The math is not complicated but the dicipline to apply the logic is sometimes touch. Again, we all think we are funnier, smarter, tougher than we are. The market doesn’t think so.
When pricing the home, my strategy is to fish with a net rather than a spear. You should price your home to appeal to the most number of qualified buyers the minute it comes on the market. That is becuase the most qualified (and perhaps motivated) buyers have seen everything on the market, but haven’t purchased yet; they haven’t found a house they like enough and every time a new home comes on the market, this pool of buyers (and agents) quickly evaluate it. Many rush out to view it. That is why you have more showings when your house first comes on the market.
You want to appeal to as many of these buyers as possible becuase this is your best chance to create a multiple offer situation. If you price your house $10-15k above market and hope that “someone will make an offer and we can negotiate” you are narrowing your pool of qualified buyers you appeal to; the most qualified buyers are necessarily seeing your house. Only after your home has been on the market for 60 days and you have reduced the price do you begin to see these buyers come through, but by then the bloom is off your rose and you are not likely to get competing offeres. Quite the opposite: buyers see that you haven’t sold it - perhaps you haven’t even had an offer - and they lowball you thinking that maybe you will now negotiate. I always counsel my clients to price the house at the market; fish with a net for the most qualified buyers and run the greated probability of staying in the driver’s seat when evaluating offers.
The second old saying goes: “We might not like what it says, but the market never lies.” And often, the market just confirms what we kind of suspected, but didn’t really want to believe. Then it boils down to how strong are your motivations.
Posted by Kevin Warmath | Currently No Comments »
There is a Realtor under every rock
I like to say that there is a Realtor under every rock, by which i mean that there is certainly no shortage of realtors out there and they are easily found.
In Georgia alone, there are something like 30,000 realtors. It seems as if everyone’s sister or mother-in-law is a realtor.
There being so many realtors in the market can make it tough for realtors to market themselves since everyone seems to have a “friend” or relative already in real estate with whom they would elect to work with. I recently connected with a new prospect who was selling two houses and wanted to move into the area I service. We had a nice introductory conversation and he asked me to call him in 30 days, which i did.
When i called him back, guess what? Yep, he had a brother in real estate. But he hadn’t been misleading me in our first conversation. This was a “long lost brother,” literally. Since I’d spoken with him, my prospect had discovered that he had a 62 year-old brother whom he had never met. And the brother lived in Georgia, too, and was a realtor!
Apparently, a sister had come to visit and let the cat out of the bag after all these years. The father was supposedly very upset, but my prospect claimed that it was actually quite nice to meet a new person and litterally get to know him like a brother.
Anyway, it may all seem a little far fetched, but the point is that there ARE a lot of realtors out there competing for the same pool of transactions. Everyone has a brother in real estate - even if they don’t know it yet! To be successful, i believe you must find a way to differentiate yourself from the siblings as well as every other realtor in your market.
I think about this topic of differentiation a lot: I have some ideas…more on that to come…but now i have to run out and differentiate myself with a prospect.
If you and I have worked together and you happen to stumble across this blog post, please be so kind as to comment on how you think I am different from other realtors. This is really the $64,000 question.
Posted by Kevin Warmath | Currently 1 Comment »
Try before you buy your buyer’s agent
A lady called me off one of my signs the other day. She explained that she was interested in the home i was marketing. I talked to her a while and then asked if she was working with an agent to help her find a home. She said that she had talked to one, but he just wanted her to sign a contract and hadn’t shown her a single property.
This is unfortunately too common a story. Now, in the agent’s defense, he was probably just doing what he was trained to do: get his potential client to sign a contract that would legally establish “an agency relationship” between himself (and his broker) and his client.
The problem is that he hadn’t established any value in the relationship yet. Buyer’s are skeptical and rightfully so, particularly when they read the clause in the agreement about how the agent is compensated. More on that in a later post.
Here’s what i say to prospective buyer clients: Treat the first meeting as a job interview. Let’s see how we work together. See if you think i add any value to the buying experience. Then decide if you want to “hire” me to be your agent. Try before you buy.
But understand that I or whoever you select as your buyer’s agent is going to make an investment in you, sometimes to the tune of 40, 80 or even a 100+ hours. Your agent is going to invest the amount of time with you that it takes to achieve your objective. All your agent wants to know is that you recognize that commitment and will honor it through the relationship. Asking you to sign a Buyer’s Broker Agreement (besides being legally required in Georgia in order to act as your “agent” - more on that later too), is just the agents way of getting your commitment.
Posted by Kevin Warmath | Currently No Comments »
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