PRICE:

The Initial Interviews: Before listing her house, Mary had wisely interviewed three agents. This is a smart move, even if the first or second agent makes you feel comfortable enough to list your house immediately. Without multiple interviews, you have no way to compare each agent’s marketing plans, including their price recommendations. Each agent had proved Mary a written price opinion, which is called a comparable market analysis (cma). Two agents had recommended a similar price, and the other had suggested a price that was a bit higher. Mary said one of the agents told her she could get $20,000 more than the other two agents had quoted. The agent was so enthusiastic, believable and convincing that Mary really believed this agent. After all what did Mary know about market values? This agent was an expert.

“Buying” a Listing: What probably happened is the agent “bought” the listing by quoting Mary a higher price during her presentation, knowing that Mary’s house would never really sell at the price. More likely than not, the agent intended to wait a few weeks before convincing Mary to lower the price.

This is commonly called “buying a listing”.

Mary’s situation demonstrates a valuable lesson for sellers: if one agent quotes you a significantly higher price than the others, that agent is probably not the right one for you. The market doesn’t lie, so each agent you deal with should arrive at a very close figure. If you list your house higher than market value then drop your price will probably be lower than if you had listed it correctly in the beginning. Let’s say you list your house for $150,000 but it’s really worth $140,000. Buyers in the $140,000 range will never see your house because they’re not looking at $150,000 houses. They can’t afford them. And $150,000 buyers will be comparing your house to others that are truly worth that price, meaning those houses will sell while yours just sits there. In fact, many agents will show an overpriced house for comparison when they’re trying to sell their listings that are more realistically priced.

Why do Some Owners Overprice: Often it’s on their agent’s advice, which we just discussed. Another reason they’ll overprice is based on past value. Assuming a house appraised for $140,000 three years ago, they’ll add an annual appreciation rate of three, four or five percent to come up with $150,000 or more. Makes sense, right? But that’s not valid reasoning. I’ve never found any research to indicate that a home is guaranteed to appreciate. Your house is worth what today,s market says it’s worth, regardless of what the house was worth one, two, five or ten years ago.

Comparing Home Prices to Stocks: Houses are just stock. Hopefully they go up in value. Sometimes they come down. If you paid fifty dollars for one share of IBM stock two years ago and it’s valued at $30 per share now, would you expect to sell your stock at what you paid ($50) plus a profit? Of course not. Well your house is the same. A property’s value is determined by today’s market, not by yesterday’s value plus appreciation. Mary’s price was too high. That’s the number one reason it hadn’t sold after four months.  

Condition:

Condition: After concluding that Mary had her house listed too high, the next step was to ask about the condition of the home. She said it was in pretty good shape, but that it was hard to keep it clean with a family and that it needed painting. She thought she could avoid that expense in such a good market. Mary couldn’t have been more wrong. Buyers are looking for model-home conditions. The paint inside and out should be near perfect. Everything should be kept perfectly straight and orderly. In fact, a buyer should be able to move into her house without doing anything, including cleaning the carpet. Even if Mary received an offer, the condition of the house would cause the buyer to offer less than market value. Mary needed to take the house off the market and paint it inside and out, cleaning everything, including the carpets, windows and light fixtures. Although it may be difficult, a seller really has to walk through the house as if they are a potenital buyer, being very critical and asking whether they would purchase a home in this condition. If you don’t feel you can do that, hire an interior designer to do it for you and to suggest what needs to be done to prepare your house for the most important show time you’ll ever have. Once Mary had completed the recommendations above, the next step would be to invite all three agents back to visit and do another market analysis. She might even invite another agent that had impressed her during the previous listing period. Another common question that many sellers ask and that is what do I do about pets, especially dogs. The results of a recent survey stated that 60 percent of all people are extremely scared or highly allergic to animals. What does this mean to a seller? Its very simple - you need to make other arrangements for your family’s pets. Of course, these pets are family members and you probably don’t want to board your pet. That’s okay, but you may not sell your house in a timely fashion or at its full market value. With dogs, just the liability factor is huge. Your pet is the friendliest around but some little boy may come in pull your dog’s tail, causing your pet to react by biting this boy. Then you have problems. Therefor, its best to board your pet, let a friend keep him, or have some relatives take care of him during this important stage of selling your home. The things that make your house stand out the most is price and condition.

Location: The third reason a house won’t sell in a good market is location. Such things as undesirable schools, a higher crime rate, fithy/messy neighbors, a busy road, or noise pollution (i.e. beside a busy railroad track or under a flight pattern) can make a bad location. Mary’s location was good. There were no real negatives to affect her sale. However, if your house is located poorly, the only thing that can compensate is a lower listing price. In order to sell a house in a bad location, the owner would have to ask for less than what similar homes in more desirable areas have sold for. Favorable terms could also help sell your house, especially if you are in the position to offer owner financing or a lease with options. A good Realtor will be savvy enough to recommend a good strategy and overcome a bad location.