Curb appeal can boost home sale price

curb appeal
Curb appeal (infographic from nar.realtor)

If you want to increase the sale price of your home this spring, you will no doubt focus on the interior.  But how does the home’s exterior look?  You’d be surprised about the amount of necessary cleaning, decluttering and repairing around the exterior of your home.  But don’t skimp on the exterior home preparations before your sale – research conclusively shows that improving your home’s curb appeal can increase the sale price by as much as 8 percent!

An empirical study conducted by Chen, Evans-Cowley, Rutherford, and Stanley (An Empirical Analysis of Effect of Housing Curb Appeal on Sales Price of Newer Houses. International Research Journal of Applied Finance. 2013, Vol. 4 No 11, p1407-1419) was the first to demonstrate the relationship between a home’s sale price and curb appeal.  The authors also discussed how home buyers’ preferences in a home’s exterior influence the home’s sale price.  Besides curb appeal, they suggest that the home’s architectural elements could also be important in the final sale price.  The idea that today’s modern designs are more desirable, and likewise costs more money, is only transitory; such that today’s designs could become trite and tired in twenty years.

The study used a seven-point “attractiveness” scale to determine how respondents viewed the attractiveness of a home’s exterior.  They concluded that there is a relationship between a home’s exterior attractiveness and the home’s sale price.  In fact, they reported that a one-point increase in their scale corresponded to an 8 percent increase in the home’s value!

Home buyers make assumptions about your home’s interior based on the appearance of the exterior.  An unattractive exterior can repel home buyers before they even see the beautiful and updated interior.  Attract home buyers and boost your home sale price by focusing on cleaning, repairing, and “finishing” your home’s exterior.

Basic landscaping can make a huge difference in your home’s attractiveness.  Having too many plants, or letting them grow too much can make the home’s exterior appear crowded and unkempt.  Make sure your lawn is full but manicured throughout your listing.  Properly trimmed trees not only look tidy, but allow home buyers to see your home from the street.  Appropriately placed and trimmed shrubs and flower beds can accent the home’s architectural design.

Check your home’s siding.  Replace and repair any missing or broken siding pieces.  Freshen up siding by power cleaning, or painting.  Even if your home has artificial materials as siding, inspect window frames and fascia boards; these areas are often neglected and may need urgent repair.

How does the deck look?  Unless you maintain the deck regularly, chances are it may seem dull and tired, and may need to be re-treated.  Even if your deck is made of artificial decking, check the railings.  Hire a licensed contractor to repair and secure the deck as necessary.

How about the sidewalks and patio?  The sidewalk and patio can be easily cleaned by power washing.  Cracks in the sidewalk and patio are not only unsightly, but can be a trip hazard.  Cracks are typically caused by rain and water runoff, but can be repaired.  Consider also sealing the sidewalk and patio to prevent further water damage.

Finally, consider finishing the exterior to make your home more appealing and cordial.  Much like staging the home’s interior, you can use similar principles to increase the exterior’s attractiveness; such as placing appropriate chair(s) and potted plant(s) on the porch, deck or patio.

Copyright© Dan Krell
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Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

Listing agent secrets you need to know

Listing agent Secrets

There are a number of topics that your listing agent probably won’t discuss with you, or can’t properly explain.  Here are several listing agent secrets that you need to know:

Your agent won’t sell your home

home for saleYour home will likely sell to a home buyer who is represented by a buyer agent. This notion is supported the 2016 National Association of REALTORS® Profile of Home Buyers and Sellers (nar.realtor), which reported that 88 percent of home buyers used an agent to buy a home.  The remaining 12 percent of home buyers purchased through other means, including with the help of the listing agent, or even a FSBO.  Although your listing agent may claim to have sold the most homes in the neighborhood, the truth may actually be that they are only facilitators.  The buyer agent who actually “sells” the home is labelled the “selling agent” by the industry.

Buyers are not finding homes in print

listing agent secrets
Agent secrets (infographic from nar.realtor)

Print advertising no longer is the means of selling a home. More information from the 2016 National Association of REALTORS® Profile of Home Buyers and Sellers indicate that having a nice spread in a magazine, or posting open houses in the local paper is probably a sales ploy to get your listing.  The Profile reported that home buyers reported how they found their home as follows (nar.realtor):

  • Internet: 51%
  • Real estate agent: 34%
  • Yard sign/open house sign: 8%
  • Friend, relative or neighbor: 4%
  • Home builder or their agent: 2%
  • Directly from sellers/Knew the sellers: 1%
  • Print newspaper advertisement: 1%

Bigger is not better

Another one of your listing agent secrets is that the larger your agent’s brokerage or team, and having a high number of homes actively listed may actually be detrimental to your home sale!  An empirical study by Shiawee X. Yang and Abdullah Yavaş (Bigger is Not Better: Brokerage and Time on the Market; The Journal of Real Estate Research; 1995, Vol. 10, No. 1, pp. 23-33) reported the following results:

  1. The amount of agent’s commission is not indicative of your home’s time on market;
  2. The size of the listing firm does not affect your home’s time on market;
  3. Homes listed and sold by the same firm (i.e., dual agency) does not reduce time on market;
  4. The more active listings your agent has, the longer your home may sit on the market because they do not devote to the time to your sale.

Yang and Yavaş suggest that the larger the listing firm, the more incentive to “cheat” days on market by circulating new listings within the firm before entering it in the MLS, which also increases the chances of a dual agency situation.  “Private placement,” or pocket listings can have similar dual agency results.

Dual agency could cost you

Chances are that your listing agent doesn’t totally understand dual agency, and therefor may not be able to explain how it affects your sale and potentially your sale price.  The Maryland Real Estate Commission’s “Understanding Whom Real Estate Agents Represent” disclosure states:

The possibility of dual agency arises when the buyer’s agent and the seller’s agent both work for the same real estate company…The real estate broker or the broker’s designee, is called the “dual agent.” Dual agents do not act exclusively in the interests of either the seller or buyer, and therefore cannot give undivided loyalty to either party. There may be a conflict of interest because the interests of the seller and buyer may be different or adverse.

One of the listing agent secrets is that dual agency may not be beneficial to you, and can even lower your home sale price.  There are a number of empirical studies that indicate conflicts of interest and other issues that arise out of dual agency.  But a study by Joachim Zietz and Bobby Newsome (Agency Representation and the Sale Price of Houses; Journal of Real Estate Research; 2002, Vol 24, No 2 pp. 165-91) found that a home’s sale price drops about 3.7 percent when the listing and buyer agents are from the same firm.  They stated:

the fact that buyers may obtain a lower price by engaging a buyer’s agent from the same firm as the listing agent raises the issue of whether or not the listing firm is shortchanging the seller. The evidence appears to suggest that the agency relationship between seller and listing agent may be compromised.

Copyright © Dan Krell
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Protect your valuables when selling your home

Preparing your home sale is more than just deep cleaning, decluttering, and minor repairs. Prepare and plan how to protect your valuables during the sale.

protect your valuables
Protect Your Valuables when Selling Your Home (infographic from Elders Real Estate realestatesevenhillsnews.com.au)

I often write about preparing your home for a sale.  Of course, that preparation is to make your home sell quicker and get the best price.  However, preparing your home is more than just deep cleaning, decluttering, and minor repairs.  Preparing and planning how to protect your valuables will not only keep the prying eyes of nosey home buyers focused on your home’s spaces – it can also thwart would-be criminals.

Homes for sale are prime targets for thieves, and your home is not an exemption.  Don’t make it easy for them.  It may sound obvious – use common sense.  However, you’d be surprised how many home sellers don’t lock up their valuables.  In my many years of selling homes, I have seen how home sellers can be careless by leaving credit cards, cash, medications, and financial statements on counters and desks.  There was one instance where the owner left their gun cabinet open!

And theft doesn’t only occur during open houses.  Your possessions can go missing at any time.  Anyone can have “sticky fingers,” even rogue real estate agents (agents have been arrested for stealing from a listed home).  A Washington State agent was caught stealing prescription medications last year.  Another agent faced criminal charges for stealing jewelry.

Additionally, criminals take the opportunity of an open house (and even virtual tours) to stake out your home; only to strike at a later time. So think about laying out your expensive china just to stage your home.

Yes, thieves are looking for anything of value in your home.  Besides jewelry and cash, they will take anything they think they can personally use or sell.  Medications are a commodity to thieves; and anything with personal identification can be used in ID theft.

I am often asked, “Should I install surveillance cameras?”  A few years ago, a home with surveillance cameras was not typical.  Seeing the cameras often turned off home buyers because they felt “creeped out” and didn’t like the idea of being watched.  However, in today’s cyber-world, where surveillance cameras are nearly everywhere, surveillance cameras have become increasingly commonplace.  Before you go out and install cameras in your home, you need to understand the legal implications by consulting with an attorney or privacy legal expert.

Don’t just put away your jewelry and other items of importance, lock them up!  If you’re not one of the millions of home owners who has a safe or strongbox, there are other options such as storing items in other locations (safe deposit boxes; someone else’s home; and even a rented storage unit).

Burglar alarms are a mixed blessing.  Besides deterring crime, real estate agents often set them off; which can be a nuisance and possibly result in a fine for you (more info on false alarms and fines can be obtained from the Montgomery County Police False Alarm Reduction Section).

If you haven’t already deployed crime deterrents in and around your home, consider using interior and exterior lighting.  Exterior lights can help identify night time visitors, as well as possibly deterring would-be thieves.  Consider using timers or motion sensing lights.   Motion sensing lights will activate the light when people approach your home.

Would-be thieves casing your home look for easy entry points.  Lock up your ladders and secure your shed so as not giving criminals the tools to get inside.

And although you may be told that lockboxes are fool proof, only allowing agents in your home – it’s the user that is the weak link.  Careless agents sometimes leave doors unlocked or open, or do not fully close the lockbox, leaving the key free to be used by any passerby.

Your agent can be part of your protection plan.  Consider having your agent accompany all showings.  Additionally, have more than one person during an open house.  This can not only help protect your valuables, but the direct agent contact may be influential in your home sale.

For more information on protecting your valuables, check out Montgomery County Police’s brochure “Home Security, Safety Tips to Keep Your Home and Valuables Safe.”

Copyright © Dan Krell
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Best home sale?

best home sale
Best way to sell a home? (infographic from keepingcurrentmatters.com)

As the housing market strengthens, consumer confidence in real estate increases.  Along with a stronger home sale market comes the increase of for-sale-by-owners (FSBO).  The obvious upside to selling a home on your own is to increase your net.  And a study conducted in 2009 may support your FSBO yearnings. But is FSBO the best home sale?

Research conducted by Hendel, Nevo, and Ortalo-Magné (2009; The Relative Performance of Real Estate Marketing Platforms: MLS versus FSBOMadison.com; American Economic Review; 99:1878-98) found that homes that sold on a FSBO website sold for as much as homes that were listed in the MLS.  However, homes that sold on the MLS did so with significantly fewer days on market.  The authors also found that a significantly higher proportion of home buyers bought homes listed on the MLS.  The research concluded that “FSBO attracts a particular type of seller…” A FSBO seller is very patient to wait for someone to pay for their higher priced home.

The research conclusion about sale price is contrary to annual surveys reported by the National Association of Realtors.  For example, the National Association of Realtor’s 2015 Profile of Home Buyers and Sellers reported that the average home sale price for a FSBO was $185,000, while the average home sale price for an agent assisted home sale was $240,000.  Of course, the 2009 research indicated that homes that did not sell on the FSBO website were promptly sold on the MLS.  Besides being limited to a specific market, excluding “failed” FSBO sales from their data set could have skewed results and could explain 2009 study’s conclusion about sale prices. From NAR’s Field Guide to Quick Real Estate Statistics:

For Sale By Owner (FSBO) Statistics

  • FSBOs accounted for 8% of home sales in 2015. The typical FSBO home sold for $185,000 compared to $240,000 for agent-assisted home sales.
  • Most difficult tasks for FSBO sellers:
    • Getting the right price: 18%
    • Preparing/fixing up home for sale: 13%
    • Understanding and performing paperwork: 12%
    • Selling within the planned length of time: 3%
    • Having enough time to devote to all aspects of the sale: 3%

Going FSBO sounds simple and maybe the best home sale; but going it alone is not for everyone.  Selling a home is much more than putting a sign in the yard – especially if you are demanding top dollar.  Take your efforts up a notch to increase the probability of realizing your sales goal.  Among the many tasks that are essential for a successful home sale, consider a basic marketing plan.  Attract more buyers with professional high quality photos.  Prepare for buyers to visit your home by decluttering and making minor repairs.  You should also have a contract ready in case there is no buyer agent.  Even though you are selling FSBO, you still have to comply with federal, state, and local disclosure laws.  Be prepared for the details of the transaction, which include: negotiating home inspection repairs; providing sale comps to appraiser; dealing with the buyer’s lender and title company.

If going FSBO is intimidating, consider hiring a real estate agent that offers à-la-carte services.  The agent can assist you in many areas of your sale, only charging you for the pieces you need.  You can even pay a flat fee for a MLS placement of your sale.

If you’re like many FSBO’s, you’ll realize the value of a Realtor.  Real estate agents are housing and marketing experts that can assist you in setting a realistic sale price.  Besides freeing up your time, experienced agents can facilitate offers and are expert negotiators.  They know of latest home sale trends and are aware of any new legislation that can affect your sale.

The best home sale

You may find selling FSBO attractive.  But selling a home is in the details that are executed throughout the transaction.  The best home sale may actually be through a Realtor.  The research supports the notion that hiring a Realtor can provide a more successful and satisfying home sale than doing it FSBO.

As I wrote about FSBO’s in 2005:

How much money can you realistically save? …there as been a trend of negotiated commissions, so actual savings for a FSBO have been reduced….Additionally, FSBO’s are contracting and paying commission with more Realtors and their homebuyers in this environment of limited home inventory. In the end, the FSBO’s savings from Realtor commissions may be marginal.

… there are some real negative aspects of selling your home FSBO, such as time, expense, and contractual obligations.

How much is your time worth? Selling a home requires the application of time to tasks. Among the many tasks of selling a home, the top things that a FSBO may do include (and is not limited to) preparing the home for the open house, contacting the paper to advertise, putting up signs, meeting potential homebuyers, and negotiating contracts. The time quickly adds up.

Selling your home FSBO is supposed to save you money right? Well, there is a bit of expense that is necessary. A FSBO must have signs in the yard, as well as directionals (the small arrow signs) to point homebuyers in your direction. Additionally, you might consider paying the local paper for advertising, as well as paying for an internet advertisement (although there are many websites that will allow you to post for free). Another expense may be to have your attorney to prepare and review the contract…. It seems that the expenses also quickly add up.

…even FSBO’s are responsible to adhere to certain federal and local laws pertaining to the sale of real estate (i.e., equal housing, lead paint, Maryland disclaimer-disclosure, etc). This is the one area that FSBO’s get themselves in trouble because of the lack of knowledge and expertise. There is an increased liability potential.

Copyright © Dan Krell
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Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

Greedy home seller tips

Don't be a greedy home seller
Pricing Strategy for a Home Sale (infographic from forsalebyowner.com)

When there is a buzz about home sellers being greedy, you know home sales are doing well.  So, not surprisingly, along with last year’s record home sales came the reports of greedy home sellers.  Are you a greedy home seller?  Or are you adjusting to a market where home prices are increasing?

Greed has developed a bad rap.  Surely there is an evolutionary basis for greed.  Many believe that early hominids promoted personal and group survival by being “greedy” (although disputed by some).  Those who hoarded food, so as to have more than enough, lived through difficult winters and droughts. During times of financial prosperity, greed is looked upon favorably.  However, in the aftermath of a recession, greed is thought of as the basis for fiscal calamity.  Immortalized in Gordon Geckko’s famous “greed is good” speech in the 1987 movie Wall Street, “greed” is a cinematic vehicle to show the fine line between a healthy desire to prosper and a corrupt drive to have more than enough.

Avoid being viewed as a greedy home seller by creating a realistic pricing strategy.  Creating a pricing strategy is an art and a science.  When selling a home, you have to determine the list price.  There are many factors to consider besides recent neighborhood sales, such as condition of your home, sales trends, mortgage interest rates, economic trends, etc.  Like other home sellers, you fall into a conundrum.  If you price your home too high, then it will limit potential home buyers who visit.  However, if you price your home too low to increase home buyer interest, you may not get the price you want.

Contrary to some assertions that a home’s list price doesn’t play a role in the sale, there is evidence to suggest that it really does matter.  Lu Han and William C. Strange determined that a lower list price does increase home buyer visits – but only to a point (What is the Role of the Asking Price for a House? University of Toronto, Rotman School of Management; 2012).  They concluded that there is a point at which the home price is perceived to attract too much buyer competition, which may turn off other home buyers.  Furthermore, their data shows that there is a negative relationship between a list price and the number of home buyers: meaning that the higher the list price relative to the neighborhood, the lower number of home buyer visits, and vice-versa.

If you fear being a greedy home seller by asking for a high price for your home, there is research to suggest that you’ll let go of the greed in order to make a deal.  A 2013 study by Nuno T. Magessi and Luis Antunes looked at how the emotions of fear and greed compete internally (Agent’s fear monitors the spread of greed in a social network; Proceedings of the 11th European Workshop on Multi‐Agent Systems EUMAS, 12-13).  They concluded that greed is mitigated by the fear of loss within the confines of a social network.  When applied to a home sale, the fear of not selling a home competes with the impulse to hold out for the high price.  Deducing further, there is a need to fit within one’s social network by trying to sell a home for the most money, and yet avoid the stigma of a failed home sale.

Don’t be a greedy home seller. RealtorMag described three common home seller mistakes in a 2015 post (3 Mistakes Sellers Often Make; realtormag.realtor.org; April 12, 2015).  Included were “Not being honest with the home’s history,” “Not making a better home presentation,” and “Being unrealistic about the home’s value.”  About unrealistic home value, it was said:

“…Despite tight inventories of homes for-sale in many markets, sellers still need to be careful not to get too greedy with their list price, say real estate professionals…Home owners tend to get a much lower price when they overprice a home at the onset and then drop the price several times. The longer the home lingers on a market, the more likely it will receive a deeper discount…”

If your home doesn’t sell, you must examine your pricing strategy.  Was the price realistic, or were you too greedy?

Copyright © Dan Krell
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Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.