Pricing your home to sell 2013

by Dan Krell
Google+
DanKrell.com
© 2013

It 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 Additionally, public record home descriptions can sometimes contain incorrect or outdated data on home interiors and living area.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.

August 12, 2010October 5, 2019

Truth in advertising: When selling your home, advertise the truth

by Dan Krell © 2010

It is often said that the truth shall set you free, but the truth may also help you sell your home. You might think I’m talking about disclosing material facts (which you should always do), but actually I am referring to how you describe and advertise your home. Accurately describing your home and providing truthful photos may attract actual home buyers who are searching for a home just like yours.

Descriptions of your home in the MLS and other advertisements, as well as photos, are designed to attract home buyers who are searching for the specific features of your home. Home buyers may be attracted by the message you send them, however they will only buy the home that meets their criteria.

You see, searching for homes on the internet is akin to internet dating. Just like internet dating, you want to put your best foot forward. You want the photos to be attractive and your description to be tantalizing. However, distorting photos (or posting photos that are ten or twenty years old) as well as exaggerating your description will most likely make people angry for deceiving them. If you portray your home as something it is not, you are certain to upset home buyers and agents for wasting their time.

Because of its convenience, online virtual tours have become one of the main tools that home buyers use to choose what homes to view in person. As you might imagine, some agents and home sellers are tempted to use digital photo programs to make the homes look better on the internet. Using the “pinch” function to make rooms look larger, they may feel as if they are doing minor photo “touch ups”; but in actuality they may distort what the home looks like. In extreme scenarios, they may cover-up material facts about the home.

Consider telling the truth. For example, if your home is very well maintained but hasn’t been updated since Ronald Reagan was in the White House, then you might consider describing the condition and maintenance of the home rather than saying the home has “updates.” Think about listing the actual number of bedrooms in the home as opposed to listing the number of potential bedrooms if the basement was finished. Additionally, if a queen size bed fits comfortably in the master bedroom; don’t distort the photo to make the bed appear to be a California king size!

If you’re frustrated by having your home on the market for what may seem to be a long time and your home is priced correctly, reconsider how your home is portrayed to home buyers before making a price change (over-pricing your home is a separate issue). Many agents seek price changes as a means to a quick sale; however before lowering the price, have a chat with your agent about how they are describing the home and consider re-taking photos.

Home sellers with whom I have consulted have had positive results once they realized the message they were trying to send to home buyers was not congruent with their home’s characteristics. Remember, a hog in a tuxedo is still a hog; don’t make the home out to be something it is not just to attract home buyers.

This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of August 9, 2010. Using this article without permission is a violation of copyright laws. Copyright © 2010 Dan Krell.

April 6, 2010October 5, 2019

Check your ego and get out of your way

If you’re going to sell your home this spring, “check your ego.” Having a high self esteem is a good thing; however, having an over-inflated worth of your home can cost you money and aggravation.

Listing your home at a realistic price can decrease the home’s “days on market,” and reduce the probability that you would have to significantly lower the list price down the road. Last year, many home owners who were unwavering in their belief that there home was worth more than what the market would bear found that selling their homes took longer and ultimately accepted a price much less than they had hoped. Other home owners who were determined to sell at the higher price eventually exasperatedly withdrew the listing.

Last week’s release of the Standard and Poor’s/ Case-Shiller Home Price Index for January 2010 (standardandpoors.com) revealed that home prices continue to fall; although the silver lining is that the rate of price depreciation is not as steep as it was a year ago. The composite index of 20 metro areas is down 0.4% from December 2009 to January 2010 and down 0.7% from a year ago; nationwide average home prices are at 2003 levels. The Washington DC metro area fared much better than other metro areas; Washington metro area home prices only fell 0.2% from December 2009 to January 2010, however home prices increased 3.5% from the same time last year!

Statistics reported by the Greater Capital Association of Realtors (GCAAR.com) support the findings of the S&P/ Case-Shiller Home Price Index. Average home prices for single family homes in Montgomery County fell between December 2009 ($480,931) and January 2010 ($451,255). Data compiled and reported by the Metropolitan Regional Information Systems, Inc. (MRIS.com) also substantiate these data, such that the median area home prices decreased comparing data from January 2009 to January 2010. However, home prices slightly increased in February 2010.

Many home owners remain confused about the unstable real estate market due to ambivalence caused by the reality of a downward market conflicted with their own value assessment of their home. Needless to say, home owners may find it more difficult to come to terms with the reality that today’s depreciated home prices have fallen to 2003/2004 levels (as indicated by S&P/Case-Shiller Home Price Index), especially if they attempted to sell their home last year. Additionally, home owners are disserved by over-aggressive real estate agents who will say anything to get the listing; including telling the home owner that the home can sell at a much higher price, when the comps clearly suggest otherwise.

Obviously, selling your home is ultimately your decision. Since the decision to sell may hinge on many factors including the sale price, consulting with several different Realtors about neighborhood comparables can give you a good command over the neighborhood data as well as a realistic range of sale prices. If another factor of your sale is the purchase of another home, remember that real estate is relative such that the home you may purchase may be just as good of a buy as your home will be to another home buyer.

Clearly you should not sell your home if you are content living there. But if you are in the position to sell your home and want a successful sale- get out of your way.

This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of April 5, 2010. Using this article without permission is a violation of copyright laws. Copyright © 2010 Dan Krell

January 19, 2010October 5, 2019

What’s more effective, a marketing strategy or a marketing plan?

Successful home sales begin with a marketing strategy and plan.

Does your listing agent have a marketing plan or a marketing strategy? Ok, it was a trick question. Actually, your agent should have both! Long gone are the days of receiving ten offers a day after the sign goes in the ground. In order to get an edge over the competing neighborhood listings these days, successful listing agents need to have an understanding of planning and strategy concepts, as well as their application.

A marketing strategy is the process of positioning your home; in other words your agent researches and compares data from the neighborhood and your home, as well as comparison data from other homes in the neighborhood and extended market area. Comparisons are made between your home’s characteristics and style to the neighborhood to determine similarities and differences. Once the data is compiled and evaluated, trends begin to appear that brings your home to life; your home begins to have a personality of its own.

Your marketing strategy should also include price. Due to recent market fluctuations, price is a major concern for home sellers. Market instability can reveal erroneous data which may cause you to either set your price too high or too low. Nothing can ruin an effective marketing strategy more than over pricing your home, which can severely limit the number of home buyer viewings; while listing too low can result in selling for too little. Listing and sales price data reveal trends that will assist you in setting an initial list price (as well as subsequent price adjustments).

Once your home is on the market, your agent’s marketing strategy (or lack thereof) will determine how home buyers and real estate agents react when thinking of your home. You should be certain that the strategy is appropriate and inclusive because re-positioning your home can be very difficult; the image that is presented to buyers and agents will be impressed forever in their minds. Additionally, word gets around the area fairly quickly, so negative images are surely to be passed along to others who may not yet have seen your home (and ultimately may not because of the shared information).

The marketing plan can be considered a road map in the application of the marketing strategy. It goes without saying that everyone’s listing is on the internet these days, as well as most agents advertising in the local papers. But as any marketing major might tell you it’s not the ad itself, but what the ad says. So, having ads, placements, and flyers generally do not get the attention of home buyers on their own, rather it’s the strategy that is being expressed that grabs home buyers’ attention. Additional consideration should be given to where and when ads about your home will be placed.

The marketing plan should not stop at an internet and print advertisement. The plan should include when open houses should be held (including what to say to visitors), and other means of reaching out to home buyers (such as post cards and broker opens).

Although marketing strategies and plans are vastly different, they are related. The marketing strategy determines the positioning of your home; while the marketing plan is the map that is followed to help home buyers find your home. Without a strategy and plan, your home sale will have to rely on sheer luck.

This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of January 18, 2010. Using this this article without permission is a violation of copyright laws. Copyright © 2010 Dan Krell

November 30, 2009October 5, 2019

Overcoming the new obstacles of selling your home

The 2008 National Association of Realtors Profile of Home Buyers and Sellers reports that 93% of home buyers surveyed indicated they financed their purchase (Realtor.org). Real estate agents have become accustomed to and usually can anticipate most hurdles that came with a typical transaction; agents can usually prepare home sellers for home inspections, FHA appraisals, and shaky buyers.

These days, however, home sellers may feel as if they are trapped in an obstacle course. If finding a home buyer isn’t enough, home sellers are finding that closing the deal is getting more difficult as changes in the mortgage industry creates new obstacles.

Changes in home buyer sentiment and mortgage underwriting guidelines have created a new trend – uncertain closings. A continued disparity between the price home sellers are asking and what home buyers are willing to pay, along with increasingly tightening mortgage guidelines and indeterminate appraisals would make any home seller skittish.

Tightening mortgage guidelines are increasing the pool of unqualified home buyers, while questions of home values have made some closings problematic. Such obstacles have forced some real estate agents to using creative techniques to get their clients to close; some of these techniques have not been used since the 1980’s, when lenders also tightened underwriting guidelines in the wake of the S&L crisis.

One technique is the use of seller financing and land contracts. Home sellers looking to sell to a home buyer who does not qualify for a mortgage and/or get a higher sales price can possibly bypass the mortgage lender by offering seller financing. Once the note is consummated, the seller may decide to sell it to an investor; there are many investors who specialize in purchasing private mortgage notes.

Seller financing is not for everyone. Besides the fact that many home owners need the proceeds of the sale to purchase another home, it requires the seller to assume the risk of the home buyer defaulting. Additionally, sellers looking to cash out their notes may only get a percentage of the sale because investors purchasing these notes usually offer a percentage of face value. If considering seller financing, it is a good idea to consult an attorney to assist you and ensure you comply with local and federal laws.

Another creative technique that is gaining in popularity is “permanent” home swapping. Home swapping has been around for a long time, and has been popularized as a means of ensuring short term accommodations for vacations and sabbaticals. In fact, home swapping has become more chic as evidenced in its use in a recent episode of “Million Dollar Listing” (Bravo Channel; www.bravotv.com/million-dollar-listing) when two parties liked each other’s properties but couldn’t agree on terms. Due to an increasing number of home sellers consider permanent home swapping, more resources are becoming available to identify like minded home sellers. Of course, an experienced attorney should be consulted to facilitate such a transaction.

Although market conditions continue to stabilize, home sellers are encountering new obstacles to selling their homes. Real estate agents and home sellers are increasingly considering alternative and creative means to overcome problems. Before you embark on non-traditional means to sell your home, consult an attorney and other professionals for information that will help you determine if creative home selling is for you.

by Dan Krell Google+ DanKrell.com © 2013

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.

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.

by Dan Krell
Google+
DanKrell.com
© 2013