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By Mike Childs
When you look beyond the doom, gloom and dire economic headlines and all the foreclosure horror stories, you can find a lot of successful sellers moving their properties without giving up all of their equity.
Selling in today's market is accomplished by following these simple steps!
First - Comparables Are Important but They Are Not All That Matters
Over the past few years, buyers, sellers, investors, and agents moved away from making logical decisions and started making decisions based on emotion and sometimes greed. This is the biggest reason we saw the market climb so high in 2005 and 2006 and this is also why we are seeing such declines today. When the market responds on emotion versus logic, there are a lot of high and low swings. It’s like a kid who’s had too much Mountain Dew. He’s full of energy, bouncing all over the walls for a short period of time and the next thing you know he’s fallen asleep on the floor, he’s crashed. This is how the last few years in the local real estate market has been.
We cannot control the market. We can control the way we make financial decisions. Buyers are making more logical purchase decisions these days. They are doing research, looking at many properties, not just 2 or 3, and making offers only on properties that are priced fairly and competitively and offer true “value” for their money.
When a buyer is thinking logically then the seller must do the same. You must look at comparable sales carefully. The keyword is “carefully”. In most cases, it takes a very experienced agent or appraiser who has been in the business during a down market to guide you in the right direction. The comparables will tell you what buyers are willing to pay and what banks are willing to lend on a property similar to yours. They don’t lie; they reflect the current condition and direction of the market, in a broad general sense.
Remember, with today’s technology, consumers (buyers and sellers) have access to MLS market data. The selling prices of homes are no longer the exclusive domain of agents and appraisers. You can be sure a buyer looking at your property knows what similar properties have sold for and are currently listed for.
With that said, what many buyers don’t know is the “true value” of a particular property until they have compared it physically with others. Average sales in a neighborhood may not be the true indicator of the value of your property. If your property is in better condition, has upgraded appliances, flooring, fixtures, etc and is “ above average”, then your property has more “value” and should command a higher price.
An agent should never price your property based on comparables alone. To determine the “value” of your home an agent must physically view your property and other similar properties in order to give you the best pricing advice.
Most buyers want nice, clean, upgraded, move-in ready properties and will still pay a premium for properties that meet their requirements. They will also expect big discounts if they will have to paint or replace flooring or perform deferred maintenance. Most buyers are not looking for “handy-man specials” and will pay more if your home eliminates this type of inconvenience from their lives.
Second - Price Your Property Right!
The value of your home is determined by the market and what a capable buyer is willing to pay. It does not matter how much you owe on the property, or what your paid for it a few years ago or how much you've spent improving it. If a buyer can buy a home just like yours down the street for thousands less than your asking, guess what?
Pricing a property at market value does not mean a low price; it simply means "market value." Today's buyer is afraid of making a mistake so they are looking for properties that are priced correctly. They are not all looking for a steal; they just want to make sure they do not over pay like so many did in the past few years.
In today's market, you are better off pricing the property at the level you are willing to accept and then hold firm. Providing of course, you are willing to accept a competitive price. Price your property correctly in the beginning and you’ll create a lot more demand for your property. It’s better to price aggressively and fairly from the start and turn down 10 offers than be overpriced and not receive any offers at all. Another mistake that agents and sellers make is they price in a cushion when listing their property. As an example, the seller wants $200,000 for their property but since they are worried that the buyer is looking for a deal, they price it at $225,000 in order to have room for negotiations. BIG MISTAKE! Most of the time the cushion pushes the price outside of the logical price range and the buyers never look at your property.
Third – Set Emotions Aside and Treat the Sale as A Business Transaction!
A common problem occurs when an owner or agent gets the first offer from a buyer and it is a lot lower then the list price. They get mad or offended. DO NOT LET A LOW BALL OFFER AFFECT YOU EMOTIONALLY! Simply thank the buyer or their agent, smile and say what Henry Kissinger used to say when negotiating with the Russians, “You’ll have to do better than that”, and leave the ball in their court.
Your goal is to sell the property for as much as the market will bear. If you know the market, the comparables, and the “true value”, you’ll know what to ask for.
Buyers are trying to find quality properties at discount prices. If they made an offer on your property, that means they have chosen yours as being quality and meeting their criteria. It is natural for them to try to get a discount. You will be surprised at how often a buyer will make a low ball offer to later come up and pay market value for the property. If you get emotional about low offers then you are not likely to make a realistic counter-offer therefore chasing a potential buyer away.
Take the following steps when looking at ALL offers.
1. Say thank you for showing interest in the property
2. Review your financial position and the comparables.
3. Make an appropriate counter offer.
Taking these simple steps will increase your chances of selling!
Fourth - Hire A Qualified Agent!
I’m a strong believer of hiring the most qualified professionals available. Do you want the best attorney to represent you in court or the best surgeon to operate on you? Likewise, you should demand the best agent to help you get your home sold. Top agents can help you make more money in a hot market and protect your equity in a down market. Take your time to find an agent who knows how to work in all types of markets. Too many agents got their real estate licenses when the market was hot and now they are having a difficult time.
Work with an agent who has your best interests in mind and who has a marketing plan that produce buyers in today’s market.
Finally There are only FIVE reasons why a house will not sell. - Price
- Condition
- Location
- The Owner
- The Agent
While you can affect the price and condition, you can’t do much about the location. You can control your own emotions and attitudes and you can hire the best agent.
Which of these are preventing you from selling your property?
Be positive, be knowledgeable and be successful.
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