For several years it’s been a common event in this area for a seller to initiate home inspections (pest inspections too) prior to listing their place on the market. The rationale for that is to avoid any surprises in an escrow, via a buyers home inspection, that could place a seller at a negotiating disadvantage. It’s was also a great way to minimize or even eliminate contingencies in hot markets where there were multiple offers. Having inspections done up front by the seller is still a good idea in my mind, not only for the reasons mentioned above, but for the simple fact that often inspections bring up areas that a seller can easily correct with minimal expense prior to marketing their home. I found a little check list from a home inspection company that I thought could be helpful if you’re contemplating preparing your home for sale sometime in the near future. It’s worth mentioning as well that buyers might also find this useful if they choose to have their own inspections done once in escrow.

• Confirm water, electric and gas service are on, with gas lights burning
• Ensure pets won’t hinder the inspection. Ideally, they should be removed from premises or secured outside.  (I was at a house once where the inspector discovered a nest of skunks as he crawled under the place…we all departed REAL fast!)
• Replace burned out bulbs to avoid a “Light is inoperable” report that may suggest an electrical problem.
• Test smoke and carbon Monoxide detectors, and replace dead batteries
• Clean or replace dirty HVAC air filters.
• Remove stored items, debris and wood from foundation. These may be cited as “conductive conditions” for termites and other critters.
• Remove items blocking access to HVAC equipment, electric service panels, water heaters, attics and crawl spaces
• Unlock areas the inspector must access – attic doors or hatches, electric service panels, closets, fence gates and crawl spaces
• Trim tree limbs to 10′ from the roof and shrubs from the house to allow access
• Attend to broken or missing items like doorknobs, locks and latches, windowpanes, screens and locks, gutters, downspouts and chimney caps.

These are incredibly useful tips…I can’t tell you how many times I’ve needed to return to a property with the inspector later because of an inability to complete an inspection as the result of one of these elements being overlooked. You’ll really save yourselves some time…and potential heartache if you do these things up front.

Last night Lesley and I watched the movie “Date Night” with Steve Carell and Tina Fey. It was OK…not the funniest comedy I ever saw but for the most part enjoyable. Anyway, Tina Fey plays a Realtor and in one scene early on she’s showing a palatial mansion to some buyers and as they’re walking out of the place she tells them the house was originally listed for $1,850,000 but it’s been reduced since the market is slower and it’s now available for $320,000. She asks her clients if they want to write an offer. They respond by saying; “No, we think the market is going to go even lower”.

OMG…did that sound familiar! The question is, when is a deal really a deal? Or maybe another more relevant question could be…when do these rationalizations actually amount to inertia? My good friend and blog reader Michelle Kwok sent me a message the other day on facebook. Seems that she was chatting with a friend who told her she was looking to buy a house. She said: 

 ”I am not in a hurry. I want a good deal, like paying about 60-70% of the value of the house.” I asked her, “Value now, value in 2006?” Turns out, she wants to buy a house and pay 70% of the current value, in Redwood Shores, Palo Alto, Menlo Park.  And then she said, that she is patient, and is willing to wait for short sale/foreclosure.”

It’s funny because I had a guy I worked with, temporarily, about 5 years ago who told me roughly the same goal. Not sure what happened to him. It’s just, knowing what I do about the market around here, it’s hard to take seriously a buyer who states that they want to make an offer of $650,000 on a million dollar listing.  Call me zany…but me-thinks it’s a waste of time. Oh, and that story in “Date Night”? That reduction would amount to over 80%. Folks…that was a joke. It’s a movie…they were joking. You see, it’s a comedy and they joke like that.

It’s not that I’m saying the market doesn’t decline…of course it does. It’s just simply that courageous buyers who take a shot are the ones that make the market decline. One small detail…they’re not getting 40% discounts either. The buyer’s that wait, strategically, and re-enter the market place at exactly the right time (the literal bottom) and scoop all other competitors…simply don’t exist. Unless, of course, they’re characters in a romantic comedy.

I think it’s the buyers that write offers when they have no competition, under asking that get the best deals. It happened after 9/11/2001, it happened in the 4th quarter of 2008 and in most of 2009. Those folks bought when others didn’t. It’s that simple.

It never fails. When someone sells their home they always feel like their place is the absolute best home in town. There really isn’t any competition in their minds. Certainly everyone looking at this place will be overwhelmed by it’s unquestioned greatness and line up to give them offers that will undoubtedly dazzle them. Right?

It happens all the time. These same sellers would be very objective about your house or my house…but not their own. Human nature I guess. Many sellers listen to their agent’s opinions about the state of the current market, read stories in the media, and on blogs like this,  about the state of the current market and even listen to the experiences of friends and family regarding the state of the current market…and conclude that it really doesn’t apply to them.

I know a listing in Foster City that’s, in my opinion, priced $100,000 too high. It’s been on for a couple of months now and has even received a couple of offers. Both offers came in…$100,000 under asking! The sellers said no. The comical thing here is the perception by the seller that they have the leverage to motivate the buyers up to their price. They don’t. In this market with ever renewing inventory, that actually seems to be increasing, a buyer would just as soon wait as pay too much for a house.  The seller’s bravado is actually pretty hallow in the face of that fact.

The truth is that this is a market of diminished seller expectations. What a seller thinks is big and powerful really isn’t so much upon close inspection. It’s humbling actually. For 10 years around here the seller got exactly what they wanted and then some. Their expectations were routinely exceeded and stories about wild overbids were taken as the norm. It’s actually quite fascinating that sellers still cling to that expectation in 2010. It’s also interesting that most sellers, after a couple of months of nothing from a marketing standpoint, finally understand. Seller’s that absolutely, positively won’t take anything less than $1,100,000 for their house when the listing is being signed are the one’s suggesting a price reduction down to $999,000.

I guess experience really is the best teacher.

Things have sure changed in the real estate business. Once upon a time…and it wasn’t that long ago, a seller exposed their home to the market for the first time via the broker tour. In Foster City the tour takes place on Tuesday morning. The home was entered into the market through the MLS and Realtors would visit the place on Tuesdays to determine if it was right for their clients. Tour day, in my experience was maybe the biggest day of the week since a group of us would drive around and see houses. It was important to me for another big reason too…because listing agents would very often entice more traffic by serving lunch in these homes. Nobody can graze quite like a pack of hungry Realtors!

Well things have sure changed. Since the inception of the good ole Internet the entire method of exposing the listing has shifted. The single biggest element is probably the virtual tour. When a listing is entered it’s almost always accompanied by a link to 9 still photos and another to a larger display of 360 degree panoramas along with more still shots. The first exposure of the home is now the Sunday open house where actual buyers, who have already seen the home via the virtual tour, come to check it out first hand. The broker tour still takes place but the dynamic has shifted so that the client see’s the place first on Sunday and the agent merely follows that up with their own inspection on Tuesday morning.

Here’s the truth…not very many agents go on tour anymore. The virtual tour has replaced the old function the brokers tour once provided. If my client hasn’t seen the place I can tell just from looking at the pics if it’s something they might be interested in. That’s particularly the case if the listing is somewhere outside of the local area. Agents used to come to inspect the house from many other communities if they had clients interested in Foster City…but why drive all the way over if they can preview it online? Now a days, even food isn’t much of an enticement. I can’t tell you how much food is sitting on the counter in my office every Tuesday afternoon because it’s gone uneaten at the house on tour! Maybe 20 people come in the three hour time period. It used to be 100.

The broker tour is an after thought now and the biggest benefit of it is the fact that I get to politic with agents that might have a buyer…because they’re the ones who typically show up.

Here’s a little slice of life. I’ve got some buyer clients who are qualified up to $900,000 looking for a house with minimum 3 bedrooms, one level, good area and not a tear down and, of course, a good deal. We were planning to go look at some places one Saturday recently. All of my clients are plugged into an automatic property search that’s part of my website and they receive listings as they come on the market. This on-line organizer allows them to mark homes they’re interested in or delete those they’re not too hip about. ( It’s not uncommon for a client to delete a real gem and mark as interested a real dump…but that’s what I’m here for…to educate them). Typically clients will express an interest in living “somewhere in the Mid-Peninsula”. It’s actually kind of unusual to hear someone insist on living in only one city, so again, it’s my job to cull down the choices to a selection that the client will like based upon the education they’ve been giving me during our relationship. It’s also common for a client to mark 15 to 20 houses as interested but I discovered a long time ago that once people get past the 5th or 6th house their memory of what they’ve seen blurs a bit and they find it hard to keep track of the many details of the houses they’ve seen. Consequently I almost never show more than 6 houses at a time, there’s a natural, human point of diminishing return if we do…for everybody. It’s important to note that if you’re looking in more than one community there’s always going to be something to see in any given price range at any given time. It does happen that one house stands out way over and above all of it’s competition but it’s much more rare than you might think. My point? If you’re a seller chances are your house is not unique…there’s other houses comparable to yours on the market too.

I wrote this post about a year and a half ago and I think it’s as relevant as ever…so here comes a redo:

In yet another example of the wonderful world of technology and it’s applications to real estate, I ran across some websites that can be very helpful when contemplating painting a home. One of the big challenges anymore when painting is choosing from an enormous selection of colors! It’s really kind of unbelieveable as you can choose from shades with names like Dove Wing, Western Accoustic and Swiss Coffee…and these are all shades of White! It’s bizarre! Some clients of mine painted their house colors called Cottage Walk and Echo. Who knew?

Well, there are some really interesting and useful websites right now that can be tremendously helpful when making these choices and I thought it would be useful to pass this info along.  The first is a site called Colorcharts.org and it’s great because it utilizes color selections from several different companies. You can also upload photos of rooms in your own home with your own furniture in it and actually then see how different colors go with your stuff. It also allows for you to match paint across companies and thus you’re not locked into one companie’s pallette. One caveat of this site is that you’ll need to register and there’s a fee of $9.95 for 30 days to use it.

Another great site is Behr Color Smart . Of course you can pick colors from a large pallette and find pre set combinations ideas easily but the best part of this site is that you can put in a color you like and it will automatically find accents that match it. You can also put in the colors of your appliances and the site will match them too. Small tip…you’ll need to click on the little “color smart” tab on the Behr home page to get to the color selection tool.

I went to a listing appointment the other night and I think the sellers had 7 or 8 different colors on variious walls in their home. They all looked good too! It’s a truly different age right now and websites like these…and many others are a very valuable tool. Have fun!

In the last few years maybe the biggest casualty for sellers in this area has been to their expectations of what their home is worth. Many sellers still labor under the illusion that it’s 2005 and if and when they sell their home they’ll get what they want for it. It often seems that, no matter what issues a home presents, many sellers steadfastly regard their homes as better than the competition…past or present.

All of us have blind spots…it’s not all that surprising that folks would lack objectivity when it comes to their own home. That’s why an experienced real estate agent is particularly handy. One of the most important things that experienced real estate agent can do is to set appropriate expectations. It’s sort of important that that happens actually.

Last week I had an interesting experience. I wrote an offer on a small 2 bedroom house that had been on the market for 17 days and had yet to receive an offer. My clients were absolutely crazy about it and when we went to write an offer these folks didn’t want to take any chances of losing it…so we came in at full price, close in 30 days, 20% down, AS IS. All the bells and whistles, basically. Meanwhile, the seller had expectations that they were certainly going to get multiple offers (since their house was obviously the best 2 bedroom house in town!) and, in their minds, the asking price was simply a starting point…bait with which to create a feeding frenzy that would propel them into a higher price range.

Like quite a few sellers, these folks just couldn’t get over the expectation that their home was worth SO much more than their asking price. In response to their disappointment…they countered us $20,000 over their asking price. After I climbed down from the ceiling I reminded the listing agent that 1) this is the 2010 market…not 2005, 2) there isn’t any other offers on the table with which the seller get’s to leverage an overbid against, 3) my clients have a spotless, full price offer (that could potentially become a less than full price offer if someone wasn’t careful) and 4) if they hadn’t gotten multiple offers by this point…it probably wasn’t going to happen and their chances of an overbid had become as unlikely as my chances of becoming the 49ers starting quarterback this season.

At any rate, we politely countered the sellers counter offer with one of our own. One that looked awfully similar to our original offer. This time, we got it. Fortunately.

It’s really not hard to understand how tied to our own unique perspective we get when it comes to our home. It’s clearly important, though, to objectively establish expectations that are realistic, that include an honest examination of what “plan B” looks like just in case the greater Bay Area doesn’t inundate us with multiple offers. It’s also pretty risky right now to create a “bait” asking price! I can’t imagine any buyer in their right mind who would willingly agree to a counter offer that’s over the sellers asking price when there is no other offers on the table. The simple truth of the matter is buyers don’t really care what the seller wants or needs when it come to the price of the house…they care what they want or need in that process.

Here’s an oldie but a goodie…this post is 2 years old but I think it’s still relevant…

OK, this may sound like a bit of a rant. (some of you are saying…”what else is new?”) Open House ads in the newspaper make me crazy. Last Friday morning I called the San Francisco Chronicle and placed an ad in the Sunday open home guide for a new listing of mine. During this process I create the ad itself, stipulate it’s length and pay for it at the time with either a credit or debit card. After we had worked through all of the details they gave me a confirmation number for the ad. Just for your info, a three line open house ad in the Sunday real estate section cost’s $118.00..slightly more if you want bold type. Sunday morning I went and got the paper from the driveway, pulled out the open house guide in the Real Estate section and guess what…no ad.

Of course, I called the Chronicle Monday morning to find out what happened and had to leave a message because nobody could help me…I’m still waiting for them to return my call.  I know from several past experiences just like this that it’ll come down to one of two problems…1) They (or I) transposed a number from my ATM check card and thus it didn’t go through (they never call you back when that happens, and who knows why they just don’t run your card while you’re on the phone with them)..and/or 2) the ad ran in the wrong community or county, oops! I’ve finally come to this conclusion…who cares?

Here’s one of the great secrets of the real estate business folks…Sunday Open House ads are worthless and Realtors buy them knowing that full well. They do it to appease their sellers, who want to be assured that they’re getting their monies worth out of the commissions that they’re paying. Many sellers think an Open House Ad is critical and we resisit illuminating them. We don’t want them to think we’re cutting corners on their marketing so we pay it, sort of like hush money. With each successive year of Internet technology, print ads have  gotten more and more irrelevant. In spite of missing the Chronicle’s ad on Sunday I had at least 100 people at my open house. They came from the directional signs, Craigslist and MLSlistings open house guide. For the last 3 or 4 years I’ve asked people at my open houses how they found the place…90-95% say from one of these 3 options. It’s rare to hear anybody mention a print ad. Yet I see 10 and 12 line ads in the Chronicle every weekend complete with photos of the houses…I’ll bet they cost $500.00 or more. There’s no way they bring one single person more than a 2 line ad will…if they bring anybody at all. Obviously, this is a very technologically sophisticated area where potential buyers see new listings instantly via multiple on-line resources, print Open House ads are an anachronism.

Last year I had a seller who called me at 8:15 one Sunday morning when he noticed the Chronicle didn’t run our ad.(Sound familiar?) He was really panicked that nobody would come to the open house. We ended up with more people that week than we did the week before with the ad! Once upon a time Sunday open house ads actually may have introduced a potential buyer to a listing…can you imagine that being said now?

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.

I think it’s the suits in this pic that really gets me. It’s been so long since I’ve worn one that I forgot what it’s like…the picture seems weird to me! (Sorry if you wear suits all the time!) I think if there’s any hard and fast rules about buying a house it’s that it’s never over until it’s over. Even in multiple offer scenarios there could very well still be room to negotiate should you want to do that. 

There’s an assumption that once a buyer takes a property in As Is condition that’s it. The negotiating ends and the price and terms are locked in. Many many sellers think this way. They get property and pest inspections up front in order to ensure a clean as is sale. The thing is, on many houses there are open questions that the initial inspections open up that create an environment for renegotiation. In one example I can think of recently, a house I’m in escrow on received 6 offers and went $90,000 over asking, As Is.  The house needs work and even though there were inspections done the buyers did further investigation through an engineer that uncovered some significant drainage related issues that clearly effected the home. We went back to the seller and the price got reduced by $35,000. The weight of the new disclosures that the engineer’s report brought to the transaction put the seller in a position where they had to make a decision…if they said no to the buyer’s renegotiation and the buyer walked away from the transaction they would then have to put the property back on the market and any and all future buyers would need to see the new report. They have to ask the question, “what will that report do to the value of the place now?”  Often, the impact on the future marketability of the property by the new report will be put into serious question and it’s certainly much easier and, in the long run, profitable to work the problem out with the buyer you have in hand.

Last year I had this situation with a seller and agent in a house on the coast. The seller chose to ignore that engineers report and rejected my buyers request to pay for some necessary work. The buyers backed out and ultimately found a much better property. The first house sat for another 3 months and finally sold…for less than it would have if the seller had just taken our renegotiated price. I guess the bottom line is just be careful and don’t be afraid to get further inspections and renegotiate if need be.