Make The Most Of The Market: Must-Do Guide For Sellers & Buyers
The real estate market is dynamic: it goes up, it goes down and sometimes it is flat. Regardless of its state, Buyers and Sellers can expect the best scenario by being smart – constantly evaluating the current conditions and understanding external variables that may impact the market now and into the coming quarters.
There will be Sellers and Buyers in any market, so how are we going to be the best Seller or best Buyer? I work closely with my clients to bring them the most up-to-date information on the market, preparing them better than the competition and allowing us to be the best negotiator when it’s offer time. Below I highlight and discuss the top missed opportunities to get the most out of the market – for both Sellers and Buyers. These are overlooked points I constantly see and things I make sure don’t happen to my clients.
As a Seller
There is no substitute for proper preparation. Just like doing your homework, you will reap the benefit of your hard work by selling your home for more money, yet this is surprisingly the biggest missed opportunity for Sellers. Proper preparation doesn’t necessarily mean having an updated kitchen, or bathrooms, or new windows and roof. It means showing the home in its best light without all of those honey-do list items that have been building for years. Even when Buyers are open to an older home, a dilapidated one is a huge turn-off.
Over the years I have noticed a consistent trend with my Buyers regarding the property condition. I can show an original condition home that has been maintained (where the Seller has fixed the leaky faucets and repaired the peeling paint) next to an original condition home (one that hasn’t been touched) and what I find is the Buyer can visualize themselves in the well-maintained original condition home and upgrade it later, whereas the one that hasn’t been touched appears overwhelming in its current state. The peeling paint on the fascia board, older flooring and even personal property are all turn-offs to the Buyers. They want to visualize themselves in your home and it is much easier to accomplish this in a neutral home with a clean pallet and no glaring open “fix-me” items.
The good news for you as a Seller, you now know this information and are going to stand out amongst the competing properties. I make sure when we go to market that your home is in its best condition possible, so we can reap the benefit later. While your neighbors are asking themselves why they are not selling, you are closing escrow and moving forward.
As the market continues into the spring and summer months, we will see more inventory and more Buyers. That is almost guaranteed. As Buyers have more selection they will be comparing the positives and negatives about each home, taking into account specific features and attributes about the properties as well as how they feel emotionally. In the end, the emotional connection to a home is very important and no one gets the warm and fuzzy feeling in a home that does not show well.
Smart Listing Price
The first way Buyers search for homes is by price range. Therefore you want to make sure your price fits within your neighborhood range given your home so we maximize the number of people seeing the listing. Once your home is on their radars, we want to make sure the listing price creates interest, motivates them to see your home and ultimately gets the most number of people making offers and competing. This is not a simple task and we will be comparing your home to recent neighborhood sales and the trend of the market in order to create the most sensible listing price. Things like how aggressive Buyers are acting on recent sales and how we anticipate the coming months will be factored in. Sale prices can have an emotional premium, which is created, not a given. This occurs when we get Buyers emotionally attached to the property and through the process, they have to present stronger offers and counter offers in order not to lose the home to competing offers. If you list your property too high, you will not get the competition and instead of negotiating multiple offers for the best terms, you are fighting price drops and Buyers wondering: “why is the house not selling,” “what am I not seeing,” and “what is wrong with the house?” This is exactly what will be going through the Buyer’s mind if we don’t price your home right to maximize the emotional attachment for Buyers.
The first impression a Buyer has on your home are the pictures online. When the new listing pops up on their app and no pictures are available, or they are bad pictures, the Buyer may swipe past your property and never actually visit the home in-person. Pictures taken from the real estate agent’s iPhone with a finger in the shot, an image taken at a bad angle, or one that makes the house look dark will all impact the first impression. It is important to hire a quality professional photographer who knows angles, lighting, and how to make a home look its best. I have used an exclusive real estate photographer for years and she works magic with the camera to bring out the best in a backyard, or kitchen or even a playroom nook. The professional photography and virtual tour are key to getting Buyers excited to visit your home. Having prospective Buyers show up at the open house already wanting to like the house is more beneficial than trying to change their minds if they come with a negative feeling. A simple step, but a very important one. As inventory comes on the market and Buyers do not have time to see all of the homes available, they will start discriminating which homes they see by the pictures and virtual tour online.
Open houses are more important today than ever. Today, many Buyers are searching available homes on an app and attending open houses at their leisure without their real estate agent. They will casually look at the property, ask the host real estate agent questions about the home, and make a determination on whether they will call their Realtor about this particular property. This is an opportunity for the Seller that should not be missed – it is crucial for the host real estate agent to know the house very well and be able to articulate all of the positive aspects of the home and community. It can be the difference in getting the prospective Buyer to come back for a second showing and make a subsequent offer, or them becoming just a casual window shopper as they go to the next available house on their way to an afternoon hike.
I hold my own Open House listings (many other Realtors have their assistants or other Realtors host) because I know how important they are to selling the house with the most number of offers at the highest price. Qualified Buyers are constantly walking through the door and they want a positive experience and good information (and to talk to the expert), not just a random real estate agent that can’t answer specific questions about the home. I think Buyers can become skeptical when specific questions about the house are not able to be answered.
Two of the most common questions I get at Open Houses are: 1) when are you taking offers? and 2) what are the items in the disclosures to know? The scary thing is I get the latter question from both real estate agents and Buyers, which means that neither are necessarily reading the disclosures, so it is imperative to have strong knowledge of the house details and condition.
As a Buyer
I’m not sure where this started, but one of the most common questions I get from Buyers in our first meeting is: “what percentage over asking should we be expected to pay over a listing price?”
Maybe they are focusing on the aggregate data, but there is no correlation between listing price and sale price. Listing prices can be completely arbitrary – it is a price determined solely by the Seller, with guidance from the listing agent. Maybe they took it off an appraisal, a Zillow estimate, maybe that is the price their neighbor sold at, or maybe it is the price they need to retire. Regardless, it is important we understand what the value should be given many specific property variables such as: condition, size, neighborhood, market, property stigmas, natural light, etc. Historical knowledge of the neighborhood in addition to the current market climate are key factors in determining the right price and subsequent offer strategy.
You’ve looked for homes and found the right property. Now what? How will we negotiate the offer in order to get the home at the best price and terms possible? This is not a simple task and takes a quality real estate professional to maneuver through this process. We want to consider variables such as:
- Why are they selling today? Maybe they are relocating, or they are upgrading to a larger home, or getting a divorce. Knowing this information will help understand if they can ride through a market cycle or if they need to sell now.
- What is most important to the Seller? Do they need a flexible closing in order to locate their next property or are they only motivated by price? Is there an emotional attachment to the home? It is surprising how the little things can often make a big difference. Asking the right questions and reading through the lines will make our offer stronger and show that we are mindful to the Seller’s needs.
- The competition. Are we competing with other Buyers on this property? If so, are they qualified Buyers and are they motivated to close escrow? Very often you may get a Buyer somewhat interested, but their offer is not competitive or they are not that interested in the house. It may not be a good comparison to competition for you since they may back out of the deal or never even ratify the deal. Just this week my client was considering a property, so we discussed the home, listing price and how we wanted to strategize our negotiation. The listing agent indicated they had 9 interested parties, which did not sound right given the property and price. We decided to hold back, so not to create unneeded energy around the property. The offer date came and they received one offer on the property, which was contingent on the Buyer selling their current home. That is not what you’d consider a great offer and our strategy enabled us to engage on the property without the initial burden of competition and energy.
Lipstick on a Pig
It is easy to get a warm and fuzzy feeling walking into a beautifully updated home with pleasant smells, soft music, nice decor and good natural light. But is it really a great home or is it just lipstick on a pig where Buyers are bamboozled in order to get the best price? As a Buyer we want to be savvy in recognizing the quick updates to cover old features verses quality upgrades that will last for the foreseeable future, which will make you better than the competition and ensure sound purchasing decisions. Recognizing the difference will also help in identifying potential in other properties that may not look good, but we will have a better sense of the costs, time and effort involved in making a home more suitable for your needs. While your competition is focusing on the homes that show well and are prepared properly, you can get a better home and price and upgrade it to your specific needs.
Anyone can go out and sell or buy a home, but these transactions are not widgets. They are usually the largest transaction a family will make and decisions can cost hundreds of thousands of dollars (I see this all of the time); it is important to think through your situation and make a plan that best fits your needs in order to maximize your goal. There will always be movement in the market regardless of its state, so we want to be the best Seller or Buyer for the market. It takes hard work, tenacity and patience. It takes an understanding of the marketas a whole, since outside variables impact decisions locally. This is what I love. This is what I do. At any point I am available to discuss the market climate, my forecast and how we can best optimize the current conditions to fit your family goals.