Marketing Your Home
What are some of the methods people use to price their homes?
Four phase pricing: prevalent but ineffective. The consequences of pulling an asking price out of the air are unacceptable for a smart seller. More likely, you may overprice your house, which results in an exhaustingly slow marketing process that ultimately lowers your sale price. Houses marketed by unrealistic sellers usually go through the four distinct pricing phases prior to sale. Learn more about Four phase pricing by clicking on the link below.
Pleasure-pleasure-panic pricing: fast, top-dollar sales. You can sell your house quickly and get the highest possible price by using this method. The secret of success is to establish a very realistic asking price for your house when you first place it on the market. The correct way to establish an asking price is to analyze houses comparable to yours in size, age, condition, and location -- both houses that are currently on the market and those that have sold within the past six months. Learn more about Pleasure-pleasure-panic pricing by clicking on the link below.
Quantum pricing: an effective technique. Buyers use price limits, called quantums, to simplify house hunting. Pricing quantums are initially expressed in nice, round, easy-to-work-with numbers, such as $100,000 and $50,000, and then fine-tuned to $25,000 and $10,000 quantums. Use price quantums to hone your initial asking price to razor sharp, pleasure-pleasure-panic perfection. Learn more about Quantum pricing by clicking on the link below.
What are some deal-making incentives I might consider offering to a buyer?
In a really rotten market, you can sweeten the deal by offering buyers money in the form of special financial concessions. One or more of the following incentives may be the key to putting a deal together:
- Credits: One effective financial inducement is offering to pay a portion of your buyer's nonrecurring closing costs for such expenses as loan origination fees, title insurance, and property inspections. You may also graciously offer to pay for some or all of the repairs found by the property inspections. These payments are usually made as a credit from sellers to buyers.
- Seller financing: On the plus side, financing some or all of the buyer's mortgage may get you a higher sale price, a faster sale, an attractive return on your money, and possibly a deferment on a portion of your capital gains tax. Doing seller financing, however, ties up money you may need for the down payment on your new home. Worse yet, if the buyer defaults on your loan, you must foreclose on the mortgage to protect your money.
What should I do if my house hasn't generated any offers?
Many properties go through a needless series of ineffective price reductions before ultimately arriving at the correct asking price. If your house hasn't generated any offers, even though it shows wonderfully and is aggressively marketed, update your comparable market analysis and consider the following:
- You or your listing agent may have given your house's amenities a much higher value than buyers do. It's tough to precisely establish the value of attributes such as proximity to bus lines, wonderful landscaping, and views.
- You may have put too much emphasis on asking prices or used inaccurate sales data. Perhaps houses that were on the market when you prepared the CMA ultimately sold for much less than their asking price.
- The local real estate market may have gone down the drain. Did mortgage interest rates skyrocket, or did consumer confidence plummet since the CMA was prepared? Find out how many properties similar to yours have sold since your house came on the market. Maybe nothing is selling.
- You may have missed prime time. Every real estate market has peaks and valleys of sales activity.
Whatever the problem, don't compound it with excessive tenacity. If you haven't gotten any offers after approximately six weeks on the market, and other houses similar to yours are selling all around you, the odds are high that your asking price is at least 10 percent over your house's fair market value.
What are some signs that my home might be overpriced?
When you price property correctly, it sells. Conversely, even if your property is in exquisite condition and actively marketed, a lack of offers indicates that it's overpriced. The warning signs of overpricing may include any or all of the following:
- No second showings: Well priced or not, agents and buyers rush to see new listings. Watch out for a precipitous decline in showings after the initial flurry of activity when your house first hits the market. If nobody returns for a second look, you've got a problem.
- Many showings, but no offers: Switch hats -- suppose that you're a buyer. Your agent shows you a three-bedroom, two-bath house for $149,500. Then the agent takes you to a newer four-bedroom, three-bath home just two blocks away -- with the same asking price. The agent doesn't have to say anything; the difference between price and value is starkly obvious. The first house helps sell the second one.
Your listing agent should help other agents route house tours by pointing out overpriced properties the agents can show their buyers before bringing them to your well-priced house. Successful agents show buyers OPTs (overpriced turkeys) in order to sell well-priced houses.
What is the best way to go about doing a price reduction?
Here's how to maximize the impact of your price reduction:
- Bite the bullet and make a full 10 percent cut. Making a series of smaller price reductions only prolongs the agony. Don't turn your house into "That old thing? Something must be terribly wrong with it. It has been on the market forever."
- Use quantum pricing to fine-tune the new price. Suppose that your asking price is $169,500. A 10 percent reduction ($16,950) cuts the price to $152,550, which isn't a smart price. You lose exposure to all the buyers who instruct their agents not to show them anything over $150,000. A smarter price is $149,950.
- If you still haven't gotten an offer after another six weeks or so of active marketing at the new price, make another 10 percent reduction. You may have been 20 percent or more over fair market value when you put your house on the market.
Six weeks isn't carved in stone. In a hot market, four weeks may be more than enough time to give your house maximum buyer exposure. In a slower market you may be wise to wait seven or eight weeks before a price cut. Let local market activity be your guide when you time price reductions.
Is advertising an effective way to help sell my house?
Certain types of advertising are extremely effective. Others, while popular, are big wastes of time and money. The key to selling your house for top dollar -- even in a dismal market -- is simple: Implement a broad-based campaign to generate spirited buyer competition for your property. Advertising is not a cure-all. Glitzy advertising won't sell a house that's in terrible condition, poorly marketed, and overpriced, to boot.
What is a broker's open house and how effective are they?
If you hire a broker to sell your house, one of the first things your listing agent does after you've signed the listing contract is tell the local brokerage community about your property. One extremely effective way to get the word out is to schedule a brokers' open -- a special open house exclusively for local real estate agents.
Agents generally work with at least four or five serious buyers at any given time. A brokers' open is amazingly targeted marketing. No guarantees, of course, but don't be surprised if the first brokers' open leads to a sale. After all, having 50 agents tour your house is the equivalent of showing it to 200 or 250 motivated buyers.
Although your house obviously won't appeal to every one of the agents' buyers, you can bet it'll press hot buttons for a few of them. Well-priced, attractive property almost always generates immediate showing requests. With the advent of cell phones, agents don't even have to wait until they get back to the office to call their clients about your property.
Most areas designate one particular day each week as Brokers' Tour Day during which agents and brokers tour newly listed properties. If many new listings enter the market the week of your first brokers' open, some agents won't see your property due to scheduling conflicts with brokers' opens on other houses. Whatever the reason, the way around scheduling conflicts is to be sure that your listing agent schedules at least two brokers' opens.
Are weekend open houses effective?
We start by noting that folks usually think of public open houses as Sunday open houses. That idea is prevalent because most houses are held open on Sundays. However, no law says that you can't hold a Saturday open house every now and then to scoop up people who can't come to a Sunday open house. Nonetheless, we refer to all public open houses from now on as Sunday open houses for simplicity's sake.
Compared to brokers' opens, you have lower odds of making a sale directly by holding a Sunday open house. But if you're trying to sell your house without an agent, you won't have access to brokers' opens.
After you open your house to the world at large, not everyone who walks through the front door is a legitimate buyer. You get Lookie Lou's trying to pick up some decorating hints and curious neighbors who always wanted to know how your house looks on the inside. Unfortunately, other than an address, open house signs don't contain a wealth of specific information to help qualify prospective buyers.
In a perfect world, nobody steals. Unfortunately, the world isn't perfect. Leaving small, easily portable valuables lying around during open houses is an open invitation to thieves. Figure out a place to put them so they are out of harm's way.
What kind of preshowing preparations can I do?
If you don't know exactly how to generate property curb appeal and subtly stage your house, we cover a few final things you must do to maximize the showing process. For example:
- Make showing your property easy for agents: The easier your house is to show, the more often agents will show it, and, most likely, the more you'll get for it, and the faster it'll sell. Instead of personally doling out your key, either give the listing agent a key if your house is only shown by appointment or have your agent put a house key in a lockbox that agents open by using a special lockbox key or electronically-coded lockbox card. From an agent's perspective, nothing is more embarrassing or frustrating than trying to explain to an antsy buyer the reason they can't unlock the front door. Before you give the listing agent keys to your house, make sure that they actually unlock the door.
- Make yourself scarce during showings: Leave the property while your listing agent shows it. Some buyers are too polite to say so, but having you hovering over them as they tour your house is very inhibiting. Serious buyers want to look into all your closets and cabinets, look under all your sinks and washbowls, and explore every nook and cranny of the house -- but they won't if you're hanging around.
By the same token, as long as you're around, buyers won't make derogatory comments. Sometimes, the most important information you get from a showing is the reason why someone doesn't like the property. Correcting a problem or overcoming an objection starts by finding out about the problem or objection. Your agent should follow up every showing by calling the buyer's agent to find out whether the buyer intends to make an offer and, if not, why.
What is a lockbox and when are they used?
Depending on the location of your property, you may have to use a lockbox. If, for example, your property is 50 miles from the nearest town or located in a scenic but remote area, you may not have a viable alternative to a lockbox.
From the standpoint of making your property easy to show, lockboxes are great. Newer, electronic lockboxes contain a computer chip that maintains a record of which agent's card was used to open the box as well as the date and time the property was shown. Some lockboxes also have a lock-out feature that limits key access to certain hours so you can have some privacy every now and then. Super sophisticated lockboxes can even be programmed with a call-before-showing code that forces agents to call the listing agent to get an additional code to enter the property.
But, the most sophisticated lockbox in the world still has drawbacks. Lockboxes can't straighten up your house before a showing, or tell you which agent let Duke, the wonder cat, out of the house, or point a finger at the agent who forgot to lock your front door after a showing, or, most important of all, help sell your house to buyers.
Is the appraiser's inspection something I should be concerned about?
This final showing to the appraiser is critically important. If the buyer's loan isn't approved because the appraiser thinks that your property isn't worth the amount the buyer is willing to pay for it, your deal falls through, and you're back in the fishbowl again.
What steps can I take to prevent the appraiser from undervaluing my home?
Take these steps to prevent an appraiser from undervaluing your house:
- Shower the appraiser with attention and comps. Your agent may or may not be present during the appraiser's property inspection to "sell" your house one last time. If required, your agent can give the appraiser an updated copy of the comparable market analysis originally used to establish your asking price. The appraiser can use the comparable sales data to justify the sale price.
- Spiff your house up one more time. Appraisers are supposedly above being influenced by a house's appearance. Theoretically, appraisers won't get a bad impression if your property looks lived in. Sure. No matter what appraisers say, they are human. Perfectly staging your house one last time almost certainly makes a favorable impression on the appraiser. And if you're going for a record sale price in your neighborhood, every little bit helps.