How to Market a Home Sale

Some homes seem to sell themselves while others need help.  If your home needs help, understand that effective use of marketing tools can increase your home’s appeal, as well as communicate your home’s value to sell it faster and for more money.  Home sale marketing tools have been used ever since real estate brokerage began.  Although marketing tools come and go, some have stood the test of time.  So you might be wondering how to market a home sale…

How to market a home sale according to a Realtor

how to market a home sale
Housing market supply and demand (infographic from keepingcurrentmatters,com)

If you ask your Realtor how to market a home sale, they may tell you about open houses, print ads, and the internet.

Probably one of the most effective marketing tools an agent has is the open house.  Unfortunately, the open house is under-used, as well as often misused for the agent’s personal gain.  Although the open house routine has changed, brokers have been holding open houses for over one-hundred years.  The open house is the ideal time to communicate directly with home buyers and their agents about your home’s appeal and value.  Try to avoid the use of open house gimmicks (such as cook-outs and carnivals) because they detract from the home sale message.  Furthermore, make sure your agent is focused on selling your home during the open house, instead of focusing on signing-up new clients.

Although not as prevalent today, print advertising was a home marketing staple for over a century.  Today, the majority of home buyers search for homes online, so it’s not likely that a print ad will have a wide audience.  However, agents will uses post cards and door hangers to announce their new listing. Nonetheless, print advertising is still used to market niche homes and agent self-promotion. 

You might be wondering how to market a home sale online? Internet and digital marketing is the most widely used form of advertising today.  Internet marketing is easy because the MLS syndicates your home listing across numerous websites automatically!  Although the syndication is automatic, your agent still needs to check how the listing appears.  If the listing has incorrect information, it needs to be fixed or can hamper results. 

There are a variety of other internet advertising opportunities, including a dedicated webpage, pay-per-click, and video.  However, results, if any, may be limited if not used effectively. 

One of the most important marketing tools to relay your home’s appeal and value is the camera.  Technological advances in MLS feeds and digital photography now allow home buyers to see many pictures of your home and its surroundings in crystal clear clarity.  However, don’t solely rely on new photo technologies for virtual tours, as the viewing ability may be limited.

Virtual reality (VR) is a cutting-edge tech being touted for virtual tours.  Let alone that most home buyers don’t own a VR device, many buyers are likely to search homes when wearing a VR device is not appropriate, such as at work or on the metro.  Even though VR marketing sounds cool, it’s reach is still very limited.

Although VR is yet to be an effective tool, augmented reality such as 3D virtual tours are coming of age.  Although there are still limitations, updated internet browsers, broadband, and new 5G allow home buyers to view your home as a 3D model.

The basics.

Regardless of what real estate agents will tell you, the best marketing tools for your home are the list price, your home’s condition, and its location.  However, a high list price, poor condition and/or location can be helped by your agent’s marketing tools.  Effective marketing tools can also help increase your home’s appeal and communicate the home’s value.  But ultimately, the nitty-gritty of selling your home depends on your agent’s savvy, ability to facilitate an offer, and negotiate a price.

Original article is published at https://dankrell.com/blog/2019/10/15/how-to-market-a-home-sale/

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.

Home market value

home market value
Home Market Value (infographic from keepingcurrentmatters.com)

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)

By Dan Krell. Copyright © 2018.

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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.

Home sale renovations

home sale renovations
Interior Home Sale Renovations (infographic from nar.realtor)

According to the National Association of Realtors (nar.realtor), the average time a homeowner stays in their home is ten years.  This is higher than the seven-year average prior to the great recession (but is less than the thirteen-year average immediately following the recession).  Needless to say, many homeowners are approaching (or have exceeded) their ten-year stint, and are likely selling their home during the spring and will likely be doing home sale renovations.

Any home sale preparation in today’s housing market should include some home sale renovations.  If you haven’t replaced the home’s systems (such as the roof or HVAC) while you lived in your home, there’s a good chance that they are approaching or have exceeded their average life expectancy.

Additionally, the décor and fixtures in your home are likely outdated.  The home sellers who make the mistake of not updating or renovating before they list inevitably face home inspection issues.  They ultimately find that the home takes longer to sell at a reduced price.

Let’s face it, remodeling can be expensive and overwhelming, especially when it’s for home sale renovations.  According to the NAR’s 2017 Remodeling Impact Report, about $340 billion was spent on remodeling projects in 2015.  Although a majority of homeowners would remodel their home themselves, thirty-five percent would prefer to move instead of remodeling their home.

The Report cited functionality and livability as the top reasons for home sale renovations.  It’s a no-brainer that home buyers prefer homes that are functional, comfortable, and sustainable.  Aesthetics is not enough for a home to be appealing to today’s home buyer, it has to fit their life style.  Additionally, home buyers want efficient systems in their new homes that can help save on utility costs.

Home sale renovations should focus on functionality and livability

What projects will get buyers who will pay top dollar into your home?  It should be no surprise that the number one interior project, listed by the 2017 Remodeling Impact Report, is a complete kitchen renovation.  Other essential interior projects include renovating bathrooms, installing new wood flooring, creating a new master suite, replacing the HVAC system, and finishing a basement or attic.

It also shouldn’t be a surprise that the Report listed replacing the roof as the top exterior project. Other exterior projects in high demand include new windows, new garage door, new siding, and installing a new front door.

If you want to add value to your home, even if it’s not for home sale renovations, check the 2018 Cost vs. Value report (costvsvalue.com).  The report can give you insight to which remodeling projects are the most popular, and estimates how much of the cost you can potentially reclaim when you sell your home.

There’s no doubt that renovating your home can be expensive.  Although the costs of home sale renovations can tempt you to cut corners, don’t.  Cutting corners on renovation projects can actually cost you more.  You may have to repair, or even re-do the project if not finished adequately.  Home buyers are savvy, and can spot low quality materials and poor workmanship.

Also, make sure to get permits when required.  If the home buyer doesn’t ask you, the home inspector will likely recommend that the home buyer check for permits.

Although many homeowners don’t mind a DIY project, many hire home improvement professionals.  When hiring home improvement professionals, check with the Maryland Home Improvement Commission (dllr.state.md.us/license/mhic) to ensure they are licensed contractors.  You should also ask for proof of their insurance, including Workman’s Comp insurance, in case there is an accident on your property while completing the project.

If you hire a contractor who will accept payment when the house sells, read your contract carefully and thoroughly. Do your due diligence.  There may be provisions in your contract that you may not be aware of, such as added costs, charging interest, and setting/lowering the sale price.

Original article is published at https://dankrell.com/blog/2018/11/17/home-sale-renovations

By Dan Krell. Copyright © 2018.

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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.

Home pricing psychology

home pricing psychologyPricing your home correctly is the foundation of a successful sale.  I have often talked about the science and art of pricing a home in various market conditions, but did you know home pricing psychology also plays a role?

With vast amounts of public data available on the internet, you may be tempted to price your home on your own.  However, keep in mind that unverified internet data can be inaccurate or outdated.  Moreover, the most recent sales data may not yet be available on your favorite real estate sites.  Asking a Realtor to help you analyze relevant comparables from the MLS can help you decide on a sales price that is in line with home buying trends.

The science of pricing a home is a straight forward method of analyzing the sale prices of similar neighborhood homes.  The analysis will provide you with a potential sales price range.  When selecting comparable homes, make sure that the homes are similar in style (colonial, split level, rambler, etc.).  Select comparable homes that are similar in size (usually within 15 to 20 percent of your home’s living area).  Also, try to find comparable sales that sold within the last six months to be relevant to current market trends.

The “art” of pricing your home is a process of fine tuning the sale price range derived from comparable homes.  Looking at various factors for each home, you can make adjustments on your calculated sale price range.  Interior differences, such as number of bedrooms, bathrooms, or having a finished basement, can change a sale price significantly.  Likewise, exterior features, such as a deck or fence, can also affect the price.

Let’s talk about your home’s condition.  Whether you like it or not, your home’s condition should be a major factor in determining a sale price.  You should be honest and objective when it comes to your home’s condition.  Have others offer their opinions about necessary updates and repairs.  Are there any comparables that are in similar condition?  You may have to make adjustments to correspond to deferred maintenance and lack of updates.

Home Pricing Psychology

To attract home buyers while trying to get top dollar, you may also have to apply home pricing psychology.  Of course, many of these home pricing psychology strategies are not sound or based on facts.  An example of this is the use of a “totem” price.  A totem price is when the second half of the number is a mirror of the first (e.g., 543,345).  This was a strategy that was highly touted during the “go-go” market of 2005-2006.

Until recently, there hasn’t been much research into the psychological effects of real estate pricing strategies.  An empirical study by Eli Beracha and Michael J. Seiler revealed how sellers can ask for a higher price without turning off buyers (The Effect of Pricing Strategy on Home Selection and Transaction Prices: An Investigation of the Left-Most Digit Effect; Journal of Housing Research; 2015; Vol. 24, No. 2, pp.147-161).  Their study revealed that “just-below” pricing can help you sell your home faster and get a higher price.  Just-below pricing is a strategy that lowers the price by reducing the left most digit by “1.”  However, they suggest that when using the just-below strategy in real estate, it should be rounded to the nearest hundred or thousand.  For example, if you decide on a list price of $450,000, then the rounded-just-below price will be $449,900.

Original published at https://dankrell.com/blog/2018/06/05/home-pricing-psychology/

By Dan Krell
Copyright © 2018.

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Protected by Copyscape Web Plagiarism DetectorDisclaimer. 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.

Buyer’s market home selling

buyer's market
Home Buyer’s market (infographic from nar.Realtor)

As winter approaches, many home sellers will be contemplating their next move after their homes have not sold.  It is likely that a volatile housing market awaits home sellers during the first half of 2018.  If you’re planning to list your home, you should have a selling plan that is able to adjust to market conditions quickly.  In other words, know about home selling in a buyer’s market.

The good news for home sellers is that this year’s home sale prices continue to climb, as the September 26th 20-city composite of the S&P Corelogic Case Shiller National Home Price Index (spindices.com) revealed.  The national index during July increased 5.8 percent compared to the same period last year, while the Washington DC area realized a 3.3 percent year over year gain.  However, there is expectation home sale prices may moderate or even slightly decrease in the first quarter of 2018 because of Fed policy and other market forces.

David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices stated in the release:

“While home prices continue to rise, other housing indicators may be leveling off. Sales of both new and existing homes have slipped since last March. The Builders Sentiment Index published by the National Association of Home Builders also leveled off after March. Automobiles are the second largest consumer purchase most people make after houses. Auto sales peaked last November and have been flat to slightly lower since. The housing market will face two contradicting challenges during the rest of 2017 and into 2018. First, rebuilding following hurricanes across Texas, Florida and other parts of the south will lead to further supply pressures. Second, the Fed’s recent move to shrink its balance sheet could push mortgage rates upward.”

Of course, home sale price indices only show sale prices for homes that sell.  And while home sale prices are increasing back to record levels in many areas, the volume of homes sold during 2017 so far is disappointing.  According to a September 20th NAR news release (realtor.nar), August’s existing home sales dropped 1.7 percent.  The Pending Home Sale Index for August dropped 2.6 percent, which made the NAR revise their 2017 home sale forecast to be “slightly below the pace set in 2016.”  Home sale volume in the first quarter of 2018 may also lag due to continued lack of inventory and anticipated increasing mortgage interest rates.  Lawrence Yun, cheif NAR economist, quipped

“The supply and affordability headwinds would have likely held sales growth just a tad above last year, but coupled with the temporary effects from Hurricanes Harvey and Irma, sales in 2017 now appear will fall slightly below last year…The good news is that nearly all of the missed closings for the remainder of the year will likely show up in 2018, with existing sales forecast to rise 6.9 percent.”

Since these are August sales figures from the NAR, it is an unfortunate truth that August sales were not really affected by hurricanes. Mostly because hurricane Harvey hit Texas the very last days of August and Irma hit Florida in September. The main affects of the hurricanes disruption to existing home sales will be seen in September’s statistics. And “missed closings” is a euphemism for phantom closings, because they don’t really exist. So, with regard to sliding home sales, you should take Yun’s “headwinds” of supply and affordability very seriously.

Home selling in 2018, a buyer’s market?

Home sellers positioning themselves solely on this year’s home sale prices may be in for a rude awakening next year.  Sellers may feel as if the market is getting soft, however that may change the latter half of 2018 as home prices moderate.  Sellers will need to be reasonable.  They will need to have awareness of many factors besides home sale prices, including existing home sales volume and neighborhood sale trends.  Including home selling in a buyer’s market.

If you’re planning to sell your home, you will need to play to your audience (home buyers), and listen to their feedback.  Know how to sell in 2018.  Prepare your home before listing it in the MLS by repairing deferred maintenance and possibly making updates.  Home buyers have a track record of paying more for a home that has been totally renovated.  However, if you don’t completely repair and/or update your home, be prepared to lower your sale price.

Be flexible to quickly adjust to a seemingly buyer’s market. Feedback is highly important to get other’s perspectives about your home.  However, take Realtor feedback with a grain of salt.  Instead, have your agent collect buyer feedback at open houses. Home buyers tend to be more honest when giving feedback, and it can be especially helpful in a buyer’s market.  If the consensus is that the price is too high, the price may actually be too high.  If buyers are turned off by the condition and/or curb appeal of the home, consider making repairs or lowering price to reflect the condition.  If they are focused on your décor, consider hiring a professional stager to make the home more appealing.

Rather than a soft market, we are experiencing the struggle for a balanced market due to an inventory shortage and sharply decreasing affordability.  The last year and a half has been all about the home seller.  However, 2018 will be about the home buyer.  Home selling in a volatile or buyer’s market can be challenging. If you’re planning a sale, be realistic about your home’s condition and value. Over pricing your home from the start can make your home languish on the market, which could get you a much lower price if it sells.

By Dan Krell
Copyright© 2017

Original published at https://dankrell.com/blog/2017/10/08/buyers-market-home-selling/

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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.