Category: home seller

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Get out of your way and negotiate to win

by Dan Krell © 2013
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Self defeating attitudes can  interfere with your negotiating tactics; so get out of the way and negotiate to win.

negotiating tacticsWhat seems like many years ago, I read a book titled “Get Out of Your Own Way: Overcoming Self-Defeating Behavior” by Mark Goulston and Philip Goldberg. If you don’t get the gist of the book by its title, the book describes how people can become obstacles to their own success. And although the book was about personal growth, the premise can apply to self defeating attitudes brought forward during negotiating a real estate transaction.

Obviously, the purpose to entering into a real estate transaction is to either buy or sell a home. However, buyers and/or sellers can sometimes become obstacles in their own path to success; they may lose sight of the bigger picture and can make poor decisions – especially in negotiating price, repairs, and other issues that may pop up throughout the process. For example, a home buyer who seeks a low priced bargain may become frustrated wondering why he is constantly outbid; while the home seller who insists on an unsupported high price might become disappointed when there are no offers.

It is common knowledge that “the first rule” of negotiation is to not be emotional. However, many decisions about buying and selling a home are often based on emotion; additionally, expectation and anticipation often influence home buyers and sellers. If emotions take over, the larger goal is often lost to a narrow focus on seemingly insignificant and petty matters.

Get out of your way by sticking to the facts. Armed with data and facts, there is less conjecture and you are more likely to be persuasive in your arguments. Additionally, concentrating on facts can also help you stay focused on the larger picture of buying or selling your home. For example, when pricing or making offers – use recent neighborhood comps and look for data driven market sales trends (rather than relying on what you hear on the news). Looking at all the facts can also help negotiate other items, such as home inspection repairs; having contractor estimates may assist in resolving an impasse.

Sometimes buyers and sellers go into a transaction with a “win-lose” attitude, where they expect that their position is always correct. Being “aggressive” towards your counterparts may seem the best way to get what you want; however, fighting for an uncompromising position may lead to all parties becoming inflexible and a transaction that does not close. In fact, being forceful and antagonistic about your offer may make others become ill tempered and even possibly hostile to further negotiation.

One of the definitive texts on warfare, “The Art of War” by Sun Tzu, has also been a guiding resource for top negotiators. “The Art of War” doesn’t talk about going to the enemy and forcing them “to eat steel.” Rather, it is a thoughtful treatise on dealing with people. The upshot is that the best way to “win” is to prevent war through positioning, data, and understanding of the counterpart. In other words, negotiating to get your way may require positioning of the facts and being persuasive (rather than approaching the transaction with a take it or leave it attitude).

Negotiating tactics are an often misunderstood part of the real estate process. Hire a savvy real estate agent to assist you in collecting data and persuasively presenting your position. For a successful transaction – get out of your way!

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This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published the week of April 15, 2013. Using this article without permission is a violation of copyright laws. Copyright © 2013 Dan Krell.

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Your real estate agent’s experience is more important than you know

by Dan Krell © 2013
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Why your real estate agent’s experience is more important than you think:

Real Estate AgentsThe National Association of Realtors (realtor.org) publishes an annual profile of home buyers and sellers that includes data and descriptions about how consumers go about choosing a real estate agent.  There are obviously many factors that are involved in the choice, but it is striking that an agent’s experience is not a major reason for their hire; it seems as if most buyers and sellers hire an agent who was referred by someone the consumer knew, and that many buyers and sellers did not talk to more than one agent.

Even though experience is not heavily weighted in agent choice, it may be one intangible that should be considered when you choose your real estate agent.  A recent research study by Bennie Waller and Ali Jubran (“The Impact of Agent Experience on the Real Estate Transaction.” Journal of Housing Research 21, no. 1 (2012): 67-82) highlights the intuitive notion that an experienced agent can yield a better result than an inexperienced agent.

They concluded that hiring a “veteran” agent will have a positive effect on your home sale.  The data indicates that “rookie” agents, those who have had their real estate license two years or less, sell homes for less, take longer to sell homes, and are less efficient during the process.  Data collected from their sample indicated that rookie agents sold homes for about 10% less than experienced agents, which according to their sample data yielded an average net difference of $18,000 (the average list price was $201,297).  Homes listed by “veteran” agents sell about 32% faster than inexperienced agents.  And, experienced agents are more likely to expedite the transaction to completion.

One possible explanation provided by the researchers is that the experienced agents are more likely to list higher quality property that typically sells faster and for more money.  Although they concede that they cannot substantiate this rationalization by this study, they suggest that veteran agents are more successful in obtaining luxury real estate and new home listings.

Real Estate AgentA more likely reason for differences between rookie and veteran agents is the mindset brought forward to the business of real estate.  The investigators discuss how those who consider selling real estate their career are more successful and have better outcomes for their clients than those who do not.  They also suggest that those who consider themselves as “part-time” agents are less likely to achieve as high of a result in their transaction as the full time counterpart; they contend that successful veteran agents are dedicated and devoted to their career.

Other possible reasons for their conclusions (but not discussed in the study) are that veteran real estate agents are more acquainted with the nuances of the housing market and have an increased ability to engage the parties in the transaction.  Full time agents are invested in being aware of listing and sale activity in their respective markets, and network with other agents to compare notes.  Additionally, experienced agents may have developed the ability to easily connect with home buyers and sellers; as well as have greater capacity to understand the specific needs of buyers and sellers – thus facilitating a smoother and successful transaction.

The business of real estate is increasingly complex and difficult.  Rapidly changing demands on home buyers and sellers can be challenging and frustrating for those in the market.  Your agent’s experience, both general and specialized, could make the difference in your success.

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This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published the week of April 8, 2013. Using this article without permission is a violation of copyright laws. Copyright © 2013 Dan Krell.

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When will move-up homebuyers return to the housing market

by Dan Krell
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© 2013

Move-up home buyers missing from housing recovery; when will move-up home buyers return to the housing market?

home for saleI recently came across an interesting article about “move-up” home buyers online titled, “Move-up Buyer Provides The Base For A Recovering Housing Market.” The piece, published by the Chicago Tribune, is not unlike the many articles you might find today about the missing move-up buyer in the housing recovery. However, this article is different – it was published August 17, 1985 (article can be found here: articles.chicagotribune.com/1985-08-17/news/8502240441_1_interest-rates-trade-up-market-home-resale-market).

The striking similarities between the current housing recovery and a real estate market that was recovering from one of the deepest modern recessions up to that time (during the early 1980’s), includes home buyer behavior and economic concerns. And of course, the affected move-up buyer sector and the dearth of inventory appear to be familiar.

Home buyer behavior doesn’t have seemed to have changed much as many would-be home buyers are trying to time their purchase with the market bottom. At that time, like today, interest rate pressures are helped home buyers decide to jump into the market; additionally, then like today a significant number of buyers were first time home buyers. Downward pressure on mortgage interest rates, combined with the fear of rising rates affected home buyers to get off of the fence. However, peek mortgage interest rates averaged about 15% in the early 1980’s.

Another similarity between both periods is the missing move-up market. The typical move-up home buyer is sometimes described as a home owner who decides they need more space, which results in the sale of their smaller home and the purchase of a larger home. Then like today, the move- up home buyer was the missing piece to the housing recovery; the move-up home buyer provides much of the housing inventory that first time home buyers seek. However, it seems as if a “psychological barrier” (as described by the Chicago Tribune piece) holds back many move-up buyers today as it did in 1985. During the current housing recovery, many potential move-up buyers have remained in their homes.

Like other housing recoveries, one of the main issues holding back the move-up buyer is housing appreciation. During an early recovery, home owners may have a difficult time rationalizing buying a larger more expensive home when the new home could depreciate the first year of ownership, let alone the thought of a perceived loss of equity in their current home.

As home prices stabilize it would be reasonable to think that there will be an increased presence of the move-up home buyer. A good example of this was in the housing recovery that took place during 2003-2004. At that time, low mortgage interest rates helped first time home buyers back to the marketplace, and the move-up buyer sector took off relatively quickly when rapid home appreciation was realized. Of course rapid home appreciation was a function of “easy money” that generated real estate speculation that produced the “go-go market” of 2005-2006, the housing bubble, and the subsequent financial/housing crises.

The similarities of a post recession housing recovery might indicate there is currently progress. However, the move-up home buyer sector may be one of the final pieces to the recovery puzzle; and until the move-up home buyer presence is felt in the marketplace, we may yet to endure a few more years of “recovery.”

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This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published the week of April 1, 2013. Using this article without permission is a violation of copyright laws. Copyright © 2013 Dan Krell.

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Buyer and seller expectations can affect real estate sales

by Dan Krell
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© 2013

Home SalesBuyer and seller expectations can affect the housing market

Recent positive housing news has raised expectations for many home sellers, but not for some home buyers who are looking for a great deal. This combination of seller and buyer expectations can make for an interesting spring market.

Expectations, much like beliefs, are influenced by your experiences as well as information to which you’re exposed. A combination of media reports and stories by relatives, friends, and co-workers could create an expectation about the home buying process that could be practical or unrealistic.

Regardless of your expectations, the home selling/buying process is full of pitfalls and surprises. If you’re not prepared, your expectations could set you up for disappointment. Of the many components of the sale/purchase process, the highest expectations are typically placed on pricing and the home inspection.

Home sellers obviously want to sell their home for the highest price. News of low inventory and increasing average home sale prices nationally and regionally would lead you to believe that your home could fetch a higher price. Of course, expectations of a higher price should be reality checked with factual neighborhood data.

Home buyers, on the other hand, want to buy a perfect home and feel as if they bought for a good price. For many buyers, stories of homes purchased at serious discounts are fresh in their memories and may set an unrealistic expectation. Once again, factual data can be a reality check; and depending on the neighborhood, savvy negotiation could be warranted. For example, buyers are encountering fierce competition (not unlike the market just before the financial crisis) in some neighborhoods. And although home buyers are rushing to see homes recently added to the inventory, many are not interested in paying the list price. And although some homes are getting multiple offers, many are not. And of those receiving multiple offers, many of those offers are below list price.

Additionally, appraisals can be an issue too; buyers and sellers alike typically expect that the home appraises for the contract price. If not properly prepared, some home sellers can react to low appraisals by initially finding fault with the appraiser’s comparables and methodology, as well as wanting the buyer to pay the balance; while home buyers may experience increased uncertainty and doubt about their purchase.

High expectations are typically had for the home inspection by all. Home sellers who put forth the effort to prepare their home for a sale, often spending money for updates and upgrades, expect the home inspection to reveal a perfect home. If not prepared, the seller can become headstrong when confronted with an inspection that is other than exemplary. Buyers wanting a perfect home may also be demanding of even inconsequential repairs to be made by the seller.

Buyers and sellers sometimes choose to work with agents who offer promise to meet their sometimes unrealistic expectations, only to be let down by the reality of the sale/purchase process.

Veteran real estate agents often appreciate the novelty of each real estate transaction, due to the ever changing market, circumstances of the transaction, as well as the personalities of the parties involved. Your real estate agent can help you set the tone of your expectations; an experienced and skillful real estate agent can prepare you for the ups and downs of the selling/buying process by reframing your expectations to fit the reality of your neighborhood housing market.

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This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published the week of March 25, 2013. Using this article without permission is a violation of copyright laws. Copyright © 2013 Dan Krell.

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Pricing your home to sell 2013

by Dan Krell
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DanKrell.com
© 2013

home for saleIt has been a while since home sellers have felt optimism about the housing market. Although many would be home sellers continue to wait before jumping into the market; a combination of inventory shortages and reports of appreciating home prices are making some home sellers push the limits of home pricing.

Consideration for an appropriate list price is vital in any market. However, regardless of current market conditions, setting the right list price today could prove challenging. If your home sells quickly, you might feel as if you priced the home too low; while setting the price to high could make your home languish in an otherwise active real estate market.

Since the home seller decides on the list price, you might be tempted to use the most recent neighborhood sale or list price as a guide for your home sale. However, without deeply examining these comparables, this methodology may result in over or under pricing your home.

As public information is widely available on the internet, you might find yourself searching the ‘net for recent neighborhood sales to assist you in making a decision on a list/sale price. However, public records usually post dates of deed transfers as recorded in the courthouse, which are usually after the actual closing (sometimes several months or more).  Additionally, public record home descriptions can sometimes contain incorrect or outdated data on home interiors and living area. Relying solely on data found on the internet could make you miss out on more recent and significant sale comps –again possibly leading you to under/over price your home.

For relevant comparables, ask your real estate agent to prepare a market analysis based on comps found in the local MLS (which contains real-time data). Although the market analysis is not an appraisal, its purpose is to assist home buyers and sellers in deciding on a list/sale price. An experienced agent preparing a market analysis will search for comparables that are most similar to your home by considering home factors such as: location, type, style, size, age, condition, interior amenities, exterior amenities, room count, basement, updates, etc.

Additionally, since the comparables used in the market analysis are as analogous to your home as possible, finding recent comps within your neighborhood are ideal not only because of the proximity to your home, but also because homes within the same subdivisions usually have many similarities (including age, style, lot size, upgrades, additions, as well as functional obsolescence).

Even though many home sellers are optimistic about home prices, you could still encounter appraisal issues. Appraisals are opinions of value by an independent party typically requested by lenders to verify the home’s market value in underwriting a home buyer’s mortgage application. And although appraisers use a standard methodology to derive a market value, some appraisers may exercise caution and seek the conservative value in ensuring the appraisal meets the loan guidelines. Issues can also arise when the assigned appraiser is unfamiliar with your neighborhood and surrounding area.

Pricing a home to sell has been described as a skill by some and an art form by others. Deciding on an appropriate list price not only establishes buyers’ expectations for an offer, it can also set the tone for a smooth sale or a bumpy protracted ride in the marketplace.

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This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published the week of March 11, 2013. Using this article without permission is a violation of copyright laws. Copyright © 2013 Dan Krell.

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