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How Flexible Is The Seller?

January 31, 2012 By Leave a Comment

It never fails. Seems like any time I get a new listing, in the first hour of the first open house somebody inevitably asks me this question. ” Is the seller flexible on price?” Honestly, that’s really an astonishingly stupid question…isn’t it? Is there anybody that you know on Earth who puts their home on the market for sale and expects to take a big price reduction…on the first day! I mean, do these folks imagine me sitting with the sellers and having a conversation like this?

Me: “Well, we’re off and running. I just put the house in the MLS and our first open house is tomorrow.”

Seller: ” Great! Remember Jim, I’m real flexible on price. Make sure those potential buyers and those agents know that, OK?”

Me: “Sure, no problem. How much under the asking price do you think you may want to go?”

Seller: “Oh, I don’t know. Maybe $100,000 or so. I just want to make sure those buyers feel like they’re getting a good deal. That’s my goal.”

Folks, if you believe any of this please call me because I have some really great ocean front property to sell you in Vacaville.

Seriously, I’ve never met a seller in my career who had any flexibility on the first day of the listing. If you like the house and want to make an offer on a listing that’s been on the market one day…get ready to pay at minimum somewhere close to the sellers price. Heck, the truth is most sellers entertain the fantasy on day one that they’ll get multiple offers and their house is going over asking. Even if it’s a complete dump! Now if you’re asking that question on day 72…that’s a different story.

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Working The Plan

December 15, 2011 By Leave a Comment

For a long time it’s appeared to me that large expenditures on renovation or remodeling were kind of unnecessary when getting one’s place ready to sell. It came as no surprise to me then when I saw Forbes Magazine run a segment on the 20 best and worst home improvements for the buck and almost all of the “best” in that story were simple, basic things that make nothing but sense.

Of the 10 best suggestions, according to Forbes, here’s my favorites:

1. Clean up the house. 

Give your home a top-to-bottom cleaning or, better yet, hire a pro to do a deep clean. Do it even before you hiring a real estate agent. If you don’t have a regular cleaner, hire one to keep the place tidy until your house is sold.

2. Simple repairs.

It is well worth the modest cost to fix broken outlets, tiles, light switches, door latches, folding doors and ceiling fans. Buyers view such flaws as signs of deeper problems–and may lower their bids accordingly.

3. Eliminate clutter.

A 10-foot-by-10-foot locker at Public Storage or one of its competitors is likely to cost you less than your phone and cable bills. Move out unneeded dishes, linens, personal items and furniture. Try to empty closets. Your house will appear bigger and more valuable.

4. Paint your house.

This can actually be a do it yourself thing to save money. If the paint on the front of your house is peeling, scrape it and repaint. Indoors, cover up any blemishes and repaint any rooms in loud colors that may be off-putting to others.

5. Clean up the yard.

No need to break the bank here. Mow the lawn, weed the flowerbeds and pull any dying bushes. Plant flowers in bare spots.

6. Replace hardware.

It’s a mistake to replace the kitchen cabinets or closet doors. But you can convince buyers to pay a little more by installing new handles, knobs and drawer pulls where needed.

7. Replace old appliances.

A new stainless steel range will not prompt buyers to pay much more for your home. But a seriously bedraggled stove or refrigerator could scare them off. If you’ve got a junky-looking appliance, swap it out for a budget-minded replacement.

All of this makes total sense to me. Interestingly, Forbes is not gung ho about the idea of large remodeling projects or room additions to maximize value prior to a sale. They think, and I agree, that a wise use of your funds can and will bring you the biggest bang for your buck. I would go slightly further and suggest the use of a good professional stager for preparation of the home as well. Intelligent planning and decorating will really assist you in getting top dollar when the time comes

Filed Under: Blog Posts, Seller Info

Reducing The Price

October 12, 2011 By 1 Comment

 

Talk about an awkward pause…it’s that thing that happens when an agent initially broaches the notion of reducing the price on a listing. You see, when a seller puts their place on the market they’re all bravado…they really feel like their place is the greatest thing since sliced bread and certainly buyers out there will share their enthusiasm…won’t they? Often a seller will base their list price on what they feel they need to get out of the place. Those feelings can come from a variety of reasons, could be they need a certain number because they owe so much on the property that they’re stuck if they don’t get an offer at a given price. Could be they’ve done a fair amount of work on the property and their price reflects that expense. It could also be because the price they want will make them feel like it’s worth it for them to sell.

Here’s the problem…buyers don’t really care what the seller needs. Oh, I guess they do if it’s a multiple offer scenario, but then they usually exceed the sellers expectations. If you’re not getting multiple offers you can expect that the buyer isn’t going to be too excited to fulfill your needs if you’re a seller. The buyer is naturally concerned with his/her needs first and negotiating a price is typically high on their list.

As I wrote a week or so ago…if the relationship between the listed price and the perceived value of the house isn’t compatible there’s going to be a problem selling the place. There are several clues to whether or not you’re in need of a price adjustment of you’re a seller. 1) Are you getting showings? 2) Is your agent getting any phone calls inquiring about the property? 3) Is anyone picking up disclosures? 4) Are the open houses well attended? If the answer to these questions is no…it’s most likely time to make a move on that price. Maybe the greatest fallacy that I’ve discovered since I’ve been around is the notion that the right buyer is out there on the horizon and sooner or later they’ll come along and meet your expectations. All you have to do is be patient…eventually the right person will love the place just as you do…and they’ll meet your price. I have two responses to that, 1) Fat chance! and 2) be prepared to wait until the market naturally appreciates enough so that your current price looks like a value, probably over the course of several years! In some cases, if a house is going to sell it may need more than one reduction.

At the end of the day, all the marketing bells and whistles (virtual tours, magazine or newspaper ads, glossy flyers, broker tours…ad nauseum) are never going to sell the home if it’s overpriced to begin with. In my experience at least, buyers really know intuitively when a home doesn’t represent value. The house ultimately is the thing that sells itself…and if it doesn’t offer that value it’ll be very hard to sell.

Filed Under: Blog Posts, Seller Info

Ducks in a Row

August 31, 2011 By Leave a Comment

For a long time it’s appeared to me that large expenditures on renovation or remodeling were kind of unnecessary when getting one’s place ready to sell. It came as no surprise to me then when I saw Forbes Magazine run a segment on the 20 best and worst home improvements for the buck and almost all of the “best” in that story were simple, basic things that make nothing but sense.

Of the 10 best suggestions, according to Forbes, here’s my favorites:

1. Clean up the house. 

Give your home a top-to-bottom cleaning or, better yet, hire a pro to do a deep clean. Do it even before you hiring a real estate agent. If you don’t have a regular cleaner, hire one to keep the place tidy until your house is sold.

2. Simple repairs.

It is well worth the modest cost to fix broken outlets, tiles, light switches, door latches, folding doors and ceiling fans. Buyers view such flaws as signs of deeper problems–and may lower their bids accordingly.

3. Eliminate clutter.

A 10-foot-by-10-foot locker at Public Storage or one of its competitors is likely to cost you less than your phone and cable bills. Move out unneeded dishes, linens, personal items and furniture. Try to empty closets. Your house will appear bigger and more valuable.

4. Paint your house.

This can actually be a do it yourself thing to save money. If the paint on the front of your house is peeling, scrape it and repaint. Indoors, cover up any blemishes and repaint any rooms in loud colors that may be off-putting to others.

5. Clean up the yard.

No need to break the bank here. Mow the lawn, weed the flowerbeds and pull any dying bushes. Plant flowers in bare spots.

6. Replace hardware.

It’s a mistake to replace the kitchen cabinets or closet doors. But you can convince buyers to pay a little more by installing new handles, knobs and drawer pulls where needed.

7. Replace old appliances.

A new stainless steel range will not prompt buyers to pay much more for your home. But a seriously bedraggled stove or refrigerator could scare them off. If you’ve got a junky-looking appliance, swap it out for a budget-minded replacement.

All of this makes total sense to me. Interestingly, Forbes is not gung ho about the idea of large remodeling projects or room additions to maximize value prior to a sale. They think, and I agree, that a wise use of your funds can and will bring you the biggest bang for your buck. I would go slightly further and suggest the use of a good professional stager for preparation of the home as well. Intelligent planning and decorating will really assist you in getting top dollar when the time comes.

Filed Under: Blog Posts, Seller Info

It Get’s Weirder

April 28, 2011 By 5 Comments

Just when I think it couldn’t possibly get any weirder out there…it does. I swear, I thought I’d seen it all last year too! The latest, for me, came last week when my clients decided to write an offer on a house in the area that’s actually pretty nice and was going to get some interest. First of all, the seller decides to go out of the country just when the house goes on the market. The house is occupied by tenants and thus it’s difficult to show. When we do see it we learn that the house has had an addition, done with permits, but the kitchen has been moved into this added space…without a permit. The seller hasn’t gotten any inspections nor has taken the time to fill out the standard disclosure forms before departing the US. When it’s apparent that there’s going to be multiple offers a date is set to look receive them and when that date arrives and the offers are presented…guess what? The seller, still out of the country, is incommunicado and the agent asks for 72 hours to present the offer to that person. (Why don’t we just wait until the seller is ready to look at the offers, you ask? Who knows.)

Three days later I get an e-mail asking us to come back to them with our “highest and best” offer and a tiny little caveat. We need to take the property subject to the current tenants lease and we’ll need to evict them ourselves. Nice! This couldn’t be disclosed up front? Well of course not…then there wouldn’t be multiple offers. Then there wouldn’t be as much pressure to go higher in price!

I kid you not, I’ve had about 5 scenarios like this so far in 2011. This business is amazing!

Filed Under: Buyer info, Real Estate, Seller Info

Is It Permitted?

April 21, 2011 By 1 Comment

So much has changed from the old days…meaning the 1998-2007. Everything was OK back then. No matter what problem existed buyer’s pretty much overlooked it. They just wanted a house. It’s a whole different animal in 2011. Case in point: I’ve got 2 new listings coming up that have issues around permits.

In one case, the garage was converted into a family room by a prior owner. Garage conversions are typically frowned upon by local governments who require parking at residences. Also, they’re not too happy about washer/dryers and hot water heaters existing in living areas. This kind of thing happened pretty regularly in years past  and nobody really cared much. Now, FHA won’t allow a conversion like this on loans they’re underwriting. That means anybody who doesn’t have 20% down isn’t going to be able to get a place like that…or the garage is going to have to be brought back to it’s original purpose.

The second case is even more difficult. This one involves a 2500 sq ft 4 bedroom, 2 bathroom house with a family room. The problem here is that the public record shows that the house is a 1000 sq ft, 2 bedroom 1 bath house. When asked, the seller told me that her husband and some of his friends, who were contractors, did these additions in the 70′s. “He didn’t believe in permits” she said. Hmm. If FHA is skittish about a garage conversion, what do you suppose they’re going to think about 1500 sq ft of unpermitted living space? I’m thinking they’ll take a dim view of it. Not to mention the fact that, from a marketing standpoint, the house will need to be marketed as a 2 bedroom house with bonus space since these additions were done with out permits. Doing otherwise could easily lead to a lawsuit. What happens if the person who buys this place decides to remodel a bathroom down the road and tries to get a permit for it? What does a city building inspector say about all this additional square footage?

In this case, I’m thinking the best bet is going to be to try and get the additions permitted. I have no doubt that this will be the topic of a few future blog posts. It’s going to be really interesting.

Filed Under: Buyer info, Real Estate, Seller Info

Sort Of Confusing

April 19, 2011 By 6 Comments

So, I’ve posted about this before but it just seems to be such a recurrent theme that I thought I’d give it another whirl. I’ve been doing this for 21 years now and it never ceases to amaze me how so many sellers, who all want top dollar by the way, put so many hurdles in front of actually getting it! Case in point, I go out to show property the other day and in preparation for doing so I call the sellers on 5 different houses to make appointments. The first house just came up on Friday, so I made the assumption I could preview it at it’s initial open house on Sunday. It wasn’t open, there was no lockbox and the seller wasn’t home. So I call again and speak to the seller, asking if I can show the house at 3:00PM.

“No” she says. “I’ve got piano lessons all afternoon. Can you come at 5:00PM?”

Since I’m meeting my clients at 2:00, extending the showing until 5:00 probably isn’t going to work. Next is a tenant occupied house. The tenants are uncooperative, won’t allow a lockbox and only will allow showings at designated open houses. That one’s not going to get shown either. At the third one, the seller informs me he’ll be getting ready to go to work at that time and it would be great if we could come some other time. Like maybe 5:00 after he’s gone out. (I should have met these clients at 5:00, huh?…the problem is, they can’t make it at 5:00!)

Maybe I should show vacant houses only? A couple of weeks ago I had an appointment to show a house in Millbrae and when I got there another agent and his clients were at the front door trying to get in. No lockbox again. They had rung the doorbell several times to no avail. I was still waiting for my client to meet me there so I hung around after they had left. When my client arrived we went up to the front door and looked in the window, rang the doorbell again a couple of times and, of course, still no response. Just as we were getting ready to leave a young couple rools up and goes into the house, we follow them in. There’s about 10 people in there. If we don’t coincidentally meet this incoming couple we don’t see the house. I don’t get it? Do folks want to sell their houses or not?

Maybe I’m just weird, but isn’t it kind of important to actually show your house when it’s on the market? Doesn’t everybody kind of have the same goal here? Buyers want to buy, sellers want to sell, agents want to sell to buyers? Maybe I’m just out of touch with the new reality here?

Filed Under: Real Estate, Seller Info

Earth to Seller…

January 25, 2011 By 1 Comment

OK, it’s 2011. Things are improving a little too…I’m certain of that. In spite of that, we’ve just come out of a few pretty lean years to say the least and because of that it would see to me that folks putting their homes on the market would sort of grasp the fact that things just are not what they were. What do I know! Truthfully, most sellers do understand that things are a bit different…but there always seems to be one in every crowd who doesn’t have a clue.

I wrote an presented an offer last week on a house in Belmont that had some competition. Competition actually isn’t what it was a few years ago. All offers came in right around the asking price on this place. The seller, apparently thinking that this place was the only house for sale in San Mateo County, countered us $50,000 over asking. Seems that the seller felt that this was their one and only shot to really maximize their asset and decided to plunge into the negotiations. Last year, with no competition at all, I had another seller counter $50,000 over asking too. In that case the seller just thought she deserved it since a neighboring house had sold for the higher price a couple of years ago. She was entitled to it, after all.

Here’s a funny rule about real estate that’s proven to be true to me time after time. A buyer really doesn’t care what a seller thinks, feels or wants. They’re concerned with what they think, feel and want. Strange, huh? In both cases described above, the seller’s came back down to earth.  Why not, you ask? It’s sort of a dangerous game if you ask me. It ‘s not that difficult for me to see a buyer getting annoyed or frustrated with a seller’s lack of awareness of reality and just walking away from the negotiation. I’ve heard a ton of stories of sellers shooting themselves in the foot by being unrealistic and ultimately taking alot less for their house after a month has gone by because they lost a good buyer by being too greedy early in the transaction.

Here’s the thing, the market is different than it was a few years ago. If you’re thinking of selling…that applies to you. It’s funny how many sellers believe that when it applies to everybody else…certainly their house is special though, right? Umm…no! The odds are great that you won’t get $100,000 over asking like we did in 2004ish. Negotiate good and hard, but be realistic. Please.

Filed Under: Real Estate, Seller Info

The Blind Leading The Blind

November 16, 2010 By 10 Comments

So I walk into an open house the other day and after I browse around a little while the agent asks me what I think about the price.

“I think it’s high” I say. (Honestly…I think it’s about $200,000 too high!)

“Ya, me too” she replies. She then proceeds to tell me the story. Seems the seller hates Realtors, thinks they can’t be trusted and told her that over dinner a few months ago (They’re friendly acquaintances…YIKES!) Naturally, the seller ultimately calls and informs her that she’s going to get the listing…but the seller wants no advice of any kind on any topic! No opinions are to be expressed about staging or decoration, marketing, timing or advice about inspections…etc. Naturally, the seller doesn’t want any opinion expressed about the price of the house either! All the seller wants is an agent to put a sign in the yard and do open houses. (Why this person just doesn’t do a For Sale By Owner or use Help U Sell or Redfin is beyond me!)

Ultimately, the agent here is going to spend a whole lot of time resenting the seller and feeling like she’s wasting alot of time with this listing. You know what? She is!

Imagine doing this in any other area of life. You go to your Dentist and tell him/her that you don’t want any opinion expressed at all about anything…you just want your root canal done under your specific instruction following something you might have read after doing a Google search. Or how about this…you go to a restaurant and inform the waiter that you hate restaurant people and insist on going back to the kitchen yourself to supervise how your meal is prepared and then served. You name the business, imagine taking control of it cause you don’t trust the folks working there. How much experience do you suppose this seller really has with selling a house? 95% of the really experienced sellers I’ve known in the 20 years I’ve been a Realtor have bought or sold 4 or 5 houses in their lives. I sold 4 or 5 houses in June.

Clearly, there’s idiot realtors out there. In my experience though, the vast majority of folks I know in this business are really honest, hard working and committed people. Not wanting advice from one as in the story above is simply amazing to me. Of course, it sort of goes without saying here…if an agent agrees to take a listing this way it really will amount to the blind leading the blind. I guess they deserve each other!

Filed Under: Seller Info

Avoiding the Trap

November 11, 2010 By Leave a Comment

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In the almost 20 years since I’ve been a realtor, there’s one phenomenon that I seem to see happen over and over again. It goes something like this…The  Jones’s decide they want a bigger, nicer, better, smaller…whatever home. They then start looking, both online as well as at weekend Open Houses. It’s at that point that something strange happens…they kind of like a place! What follows typically is the inevitable phone call to either me, or to a lender I know who then refers them to me.

For some reason there’s this funny sort of common thread among these buyers who feel that they would like to make an offer on a new place before selling their existing place, usually via an offer contingent upon the sale of said place.  Why not? It’s logical and it sure seems less painful than the perceived alternatives…but what are those alternatives? Here’s a few:

1) The seller has plenty of cash on hand and doesn’t have to worry about selling their original place. There are certainly people like that out there…there just aren’t many of them.

2) The seller has a ton of equity in their original home which they can pull out and use for the new down payment and then sell the house later if they want to. This is occasionally possible but for folks moving up it’s difficult…particularly in this current lending environment. 70% loan to value is the rule now and often it’s hard to pay two mortgages as well.

3) You sell your house first. This idea seems to feel a tad intimidating to people because there’s always a fear that if and when they get an offer on their home they won’t be able to find what they want before it closes…and they’ll be rendered homeless.

Thus…the contingency offer. What this means is the buyer asks the seller to accept an offer that allows them to sell their original house before consummating the deal and closing escrow. The buyers feel safe because they feel like they’ve gotten the home they want. Herein lies the trap. The simple truth is that sellers don’t like contingencies…even the sellers who’re making the contingency offers don’t want a contingency offer on their place! There are just too many questions about the saleability of the buyers property! A seller who is willing to consider a contingency offer is certainly going to be far less flexible on price and terms than they would be with a non contingent offer. A buyer making this type of offer loses an awful lot of leverage by making this choice.

In my experience, selling your place first is the best, and most stress free choice. You’re not going to feel like a gun is at your head to have to sell in order to get the “dream house”. One of the biggest lessons most of us learned during the boom years was the fact that the “perfect house” comes up again…and again! In addition, once you receive the right offer you can always rent back after close of escrow, giving yourselves more time to shop for the new place. 90 days is not unheard of for an escrow and rentback combination and during that amount of time I’ve never seen a buyer be unable to find the right new place. Avoid the trap…be patient and sell first.

Filed Under: Buyer info, Seller Info
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