home sale Archives - Page 3 of 17 - Real Estate News and Commentary

March 14, 2019December 13, 2022

Curb appeal science

Curb appeal is one of those “intuitive” topics that only gets media attention in the spring and maybe the fall. If you search the internet, you’ll find millions of websites that talk about curb appeal. Because the concept is based on accepted lore, my guess is that most of those sites regurgitate the same ideas. Everyone has some understanding of curb appeal. And if asked, they will give you their opinion on improving it to get a higher home sale price. Everyone agrees that curb appeal can increase home buyer traffic. And most agree that curb appeal can increase the home’s sale price. But is there a curb appeal science?

I often present empirical studies to help you understand if widely accepted real estate traditions and principles are accurate. Unfortunately, curb appeal science is one of those subjects that doesn’t get much academic attention. Notwithstanding, there are two very compelling studies about curb appeal science.

One of the first studies to empirically confirm the connection between home sale price and curb appeal was published in 2013. 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) examined how a home buyer’s preferences of a home’s exterior influenced the sale price. Not a surprise, they concluded that there is a connection between a home’s exterior and the sale price. They also quantified the relationship, saying that even small improvements to curb appeal can increase the value by as much as eight percent.

It’s not just the yard and exterior home maintenance. Chen’s study also discovered that architectural elements also determine the home’s sale price. They discovered that the demand for higher cost “modern” homes is relative to what’s contemporary. Meaning that today’s highly desirable new homes and floor plans could be less desirable and sell for less in the future.

A more recent study went further and developed a measurement of a building’s curb appeal. Freybote, Simon and Beitelspacher (Understanding the Contribution of Curb Appeal to Retail Real Estate Values; Journal of Property Research. 2016, Vol 33, No 2, p147–161) found that there are three dimensions of curb appeal that can be measured: atmosphere, architectural features and the authenticity of a building.

A home’s atmosphere describes the general landscape maintenance as well as emotional aspects, such as how relaxing, inviting, and vibrant the home feels. Architectural aspects rate the visual aesthetics of the home, highlighting modern design and interesting features. A home’s authenticity relates to its charm and how “genuine” it feels. In other words, can the home buyer picture themselves living there? The study concluded that curb appeal and sale price is not only connected, but can also be accurately measured. The two dimensions that affected sale price the most were atmosphere and architecture. The authors also suggested that the atmosphere dimension has a social component (which may be associated pride of ownership).

Although authenticity was not found to be as influential on sale price, it is notable. A home’s authenticity (as described in this study) is probably one of the least thought of aspects when preparing a home for sale. If the home staging, including landscaping and exterior elements, is over-the-top or does not portray the home accurately, a home buyer may be less interested in making an offer and negatively affect the home sale price.

Original published at https://dankrell.com/blog/2019/03/14/curb-appeal-science/

By Dan Krell
Copyright © 2019.

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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.

February 18, 2019November 23, 2021

Home sale choices

Having a choice is good. For many, have having a choice represents freedom. For others, choice creates angst out of fear of making the wrong selection. Dr. Barry Schwartz wrote about this phenomenon in his book The Paradox of Choice. Dr. Schwartz describes that having too much choice can create negative well-being. This phenomenon also exists in real estate. There are many home sale choices!

Consumers have more home sale choices today than ever before. However, choosing the best option for you can be confusing. Making the wrong selection can result in remorse. How do you choose between a full-service agent, a limited service broker, à la carte broker, private placement broker, or sell by owner? How do you know decide among your home sale choices?

Recently published research further supports the value of hiring a full-service real estate agent. A study conducted by Rutherford, Rutherford, Springer, and Mohr (Limited Service Brokerage: Positive Broker Intermediation?; Journal of Real Estate Research: 2018, Vol. 40, No. 4, pp. 551-595) compared the outcome of using a limited service brokerage to a full service real estate agent. The results indicate that although the limited service brokerage time on market is similar to the full-service agent, your home sale price is likely to be less with a limited service broker.

Although there have been conflicting studies in the past, Rutherford’s recent study confirms that using a limited service brokerage is likely to sell your home for less. The authors concede and discuss other factors that may influence results, such as housing market conditions. Studies that reported positive outcomes of limited service brokerages may have occurred during the go-go market prior to 2007.

How much commission should you pay?

Conventional wisdom says that full service agents are “full-price” (whatever that is) and expensive. However, that’s no longer true. Many full service, high quality agents charge as much (or as little) as discount brokers. A 2015 study by Barwick & Pathak (The costs of free entry: an empirical study of real estate agents in Greater Boston; The RAND Journal of Economics; Vol 46, No. 1, Spring 2015, p.103–145) indicated that increased Realtor competition has forced average commissions to decrease over the last few decades. Of course, they found that the decreased commission structure of the full-service agent good for consumers and the housing market. They also concluded that decreased commissions would increase quality by decreasing entry into the industry for the wrong reasons.

To make better home sale choices, educate yourself.

Understand what services are available and what it costs. You should ask yourself if the services can meet your expectations of helping you through the process of selling your home? And, how will it impact your sale, time on market, and price?

Unfortunately, the National Association of Realtors doesn’t do enough to educate consumers about their choices when buying and selling a home. Including negotiating reduced commissions and buyer rebates. And I wouldn’t expect they will any time soon because of their mission statement (posted on their website nar.realtor): “The core purpose of the National Association of REALTORS® is to help its members become more profitable and successful.”

So how do you choose among your home sale choices? Be a savvy home seller. Don’t stick to “conventional wisdom.” Explore your needs and expectations. Investigate your choices and ask questions. Don’t fall for sales tactics. And don’t be afraid to negotiate commission.

Be a savvy home seller

Don’t stick to conventional wisdom
Explore your options. There is no “one size fits all” home sale plan.
Search for an agent that meets your needs and expectations

What are your plans? How fast of a sale do you expect? In what condition is your home? Interview several agents with different approaches to your home sale.
Ask Questions
Every agent has their own process. Some are hands on and responsive, while others hand off your sale to their “team” and you never see them again. Can you call anytime, or are their limited times? How will the agent meet your expectations?
Don’t fall for sales tactics
Many real estate agents spend lots of time and money learning sales tactics to get the listing. Many have developed polished presentations that are very convincing. Call the agent’s past clients to find out if they over promise and under deliver.
Negotiate listing commission
It’s a very competitive market. Although some agents won’t negotiate their commission, many will. Some will limit their services when they reduce their commission, while others offer full service.

Original published at https://dankrell.com/blog/2019/02/18/home-sale-choices

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January 19, 2019April 22, 2019

Winter home sale prep

winter home prep — Winter home prep (infographic from cdc.gov)

The winter holidays are over, so there shouldn’t be any more disruption to your winter home sale, right? A winter home sale may not have much competition during the winter months, but the weather could potentially put a stopper on buyer visits. And in the aftermath of this week’s snow storm, you might have second thoughts about your winter home sale. But since you’re one of the savvy home sellers, you know that weather is fleeting and winter home buyers are serious. You know to focus on the winter home sale prep.

Selling during the winter is not much different than selling during any other time of year. In other words, home sale prep is required. And just as you would during the summer, you should prepare for home buyers to visit your home during a winter home sale. Instead of the heat and thunderstorms of summer, you should prepare for the cold and snow of winter. Your home should be warm enough to make visitors comfortable to help them envision living in your home. Also, consider having a large mat in the entrance where visitors can wipe their shoes or remove them, so as to help keep your home clean.

Decluttering and maintaining a clutter-free home during a home sale is a challenge. But during the winter, when we tend to retreat inside and “nest,” maintaining a home ready to view can be a test of your will. Give yourself more time for home sale prep before a home buyer comes knocking. Consider a daily quick onceover through the house to help maintain order. Limiting buyer visits to specific times of day can help you feel in control, as well as designate a daily private time when you can relax.

Weather permitting, winter open houses are still appealing for home buyers. And during the winter when there are few homes listed for sale, there are even fewer open houses making your open house a destination. Summer or Winter, an open house is an ideal way to have many home buyers visit your home in a concentrated time period. You should coordinate visiting times and open houses with your agent to eliminate surprises.

Regardless of how well you care for your home, maintenance issues are always a concern during a home sale. More so during the winter. If your HVAC system is not working efficiently, it may not be heating your home evenly and consistently. Aging shingles can cause of ice dams, and allow water penetration into the home. Blocked gutters and downspouts can cause safety issues by causing standing water and ice on walkways. Poorly insulated doors and windows cause drafts and cold spots in the home.

Prepare your home for a winter sale and address maintenance issues before the house goes on the market. Have your HVAC system serviced and cleaned. Have a licensed roofer check your roof for missing or damaged shingles. Consider having a pre-listing home inspection to spot concerns.

Recent inventory shortages and buyer demand has made winter a great time to sell your home. However, some home buyers still believe that they can lowball a winter home sale. And there is a good chance that you will a receive a lowball offer. You prepare for these buyers by strategizing with your agent on negotiating tactics. If you receive a lowball offer, don’t get offended. Instead, take the opportunity to start a dialogue with the buyer. If the home buyer is serious, they will negotiate in good faith.

Original published at https://dankrell.com/blog/2019/01/19/winter-home-sale-prep

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January 12, 2019July 23, 2019

Occam’s razor home selling

Occam's razor and selling a home — Staging is one of the four basics of home selling. (infographic from nar.realtor)

Many home owners are preparing to sell their homes this year. And in doing so, home sellers are looking for new and exciting ways to sell their homes fast and for top dollar. But the reality is that selling a home is not rocket science. There really isn’t a secret trick or approach to selling a home. Rather, it’s more like magic, where properly performed fundamental tasks can set the stage for a satisfying experience. If you don’t know how Occam’s razor (or what it is) can help you get the most from your home sale, pay close attention.

Unfortunately, it’s a human trait seek a complex solution to a simple question. In other words, applying Occam’s razer to your home sale can save you time and allow you to get out of your own way. Occam’s razer is a tool that is often used to figure out solutions and devise scientific theories. It has become popularized as the “keep it simple stupid” method. However, Susan Borowski’s history and explanation of Occam’s razor, written for the American Association for the Advancement of Science, gives it teeth (The Origin and Popular Use of Occam’s Razor; aaas.org; June 12, 2012). Borowski states, “Occam’s razor doesn’t necessarily go with the simplest theory, whether it’s right or wrong; it is not an example of simplicity for simplicity’s sake. It merely tries to cut through the clutter to find the best theory based on the best scientific principles and knowledge at the time.”

In other words, focus on the tried and true fundamentals of selling a home. Anything above and beyond may not necessarily help to sell the home faster or for more money, but could help make the process more enjoyable. That in mind, let’s consider these four basic concepts:

First, consider the condition of your home. Do you have deferred maintenance issues? Does your home need a makeover? Homes that get top dollar are “turnkey.” Many home buyers are willing to compete and pay more for recently upgraded and renovated homes. Selling a home with deferred maintenance or lacking recent updates can not only turn off many home buyers, but can encourage low-ball offers. A pre-listing home inspection can help you identify maintenance issues. Also, consider consulting with a design professional to help you understand which updates (if any) are necessary to help your home sale.

Next, work on the home’s presentation to give it a clean and spacious feel. Decluttering is one of those tasks that can be overwhelming, but it’s importance cannot be overstated. Decluttering will force you to decide which items to keep in the home. Additionally, staging your home can help balance space, furniture and décor. This can help home buyers envision living in the home.

Deciding on a list price is often a conundrum. Although enticing, don’t be seduced by the agent who tells you the highest sales price without understanding their rationale. The housing market can turn on a dime. If your home isn’t priced correctly, it can languish on the market. There are many aspects that go into deciding a price, so work with a respected seasoned agent to go through the market details and scenarios.

Finally, when the home is ready to list, how is it to be marketed? Today’s MLS listing syndication takes advantage of the fact that most home buyers actively search homes on the internet. Don’t rely on gimmicks that promise activity on your listing. A complete marketing plan will take into account the factors we discussed here, and apply strategies to attract motivated home buyers.

Original published at https://dankrell.com/blog/2019/01/12/occams-razor-home-selling/

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December 13, 2018April 23, 2019

Home market value

It’s normal for homeowners to wonder about their home market value. After all, home sales and prices have been making headlines for well over a decade. But you certainly can’t get a home market value from a headline, nor can you assume it from a neighbor’s sale. The reality is that your home market value could vary depending on whom and when you ask.

A timely and important review article by Michael Sanders recently published in the Appraisal Journal asks the question “what does Market Value Mean?” (Market Value: What Does It Really Mean?; Appraisal Journal. Summer2018, 86:3, p206-218). The article correctly points out that determining “market value” can realize different results depending on the scope and purpose of the appraisal. You can see how this might be problematic if you’re trying to determine a home’s value when divorcing or trying to sell an estate property. Some mortgage lenders even have different value criteria depending on the loan product and purpose.

Sanders suggests that “market value” undergoes scrutiny when valuations are difficult and appraisals are questioned (e.g., during a recession). However, having a discussion about the meaning of “market value” now, when there is relative market stability, is probably meaningful for the industry and consumers. Interestingly, the semantics of “market value” have changed through the years, and ultimately depends on the application. He points out at least twelve similar but different legal definitions of “market value.”

Sanders suggests that Richard Radcliff, an appraisal pioneer of the 1960’s, was ahead of his time by advocated for most probable price valuations. An ongoing debate in appraisal circles is whether “market value” is the highest price or probable price. However, it wasn’t until the 1980’s when appraisal articles academically contemplated the association of “probable sale price” and “market value.”

Sanders quotes Richard Ratcliff saying, “appraisal is largely the predicting of human behavior under given market conditions.” Sanders quips about an “ideal world”, where “appraisers would apply market value definitions using a relatively consistent and objective standard, and reflect conditions in the market as they exist, rather than how others might wish them to be.”

Although the accepted dictionary definition of “market value” is the price a buyer is willing to pay for your home, market value and sale price could be different (and often is). And according to Sanders, an appraised “market value” isn’t necessarily the price for which your home may sell.

At this point you may be asking yourself, “how much is my home really worth?” For the answer, you may have to ask a Realtor.

Realtors use market data to prepare comparative market analyses (CMA) that can help buyers and sellers decide on a sale price. Although a CMA is not an appraisal, it is a technical and methodical professional analysis that provides a snapshot of the market. The CMA is typically more refined in scope than an appraisal, such that it is usually limited to a neighborhood and home criteria. Additionally, depending on the location and availability of comparable sales, it can provide a 30, 60, and 90-day probable sale price range based on market trends.

If you’re planning a home sale, a Realtor’s CMA may be your best source of information to decide on a listing price. Even mortgage lenders have relied on Realtor CMA’s, in the form of Broker Price Opinions, to help decide on sale prices for short sales and bank owned homes.

Original published at https://dankrell.com/blog/2018/12/13/home-market-value/(opens in a new tab)

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