Why Your Home Will Or Won't Sell In 2007
Before you can develop a plan that will create a successful sale of your home, you must know the current trend within your local housing market. Are you in a seller's market where there are more home buyers than sellers? Are you in a market that is level with steady demand and a normal number of homes for sale within the market? Or are you in a buyers market where the number of homes for sale vastly outnumbers the number of buyers in the market?
Regardless of the type of market you are experiencing, that doesn't make for a good or bad market. Whether you sell or not, will determine how good it will be for you. The following advice comes from 20 years experience, and has helped sellers get sold in all types of markets.
There are three major reasons that will determine if you will sell. Price, condition, and marketing. There are three major reasons that will determine if you don't sell. Price, condition, and marketing. Location is set for home sellers. There are buyers for every location, or you wouldn't have people living there.
Using the Springfield Illinois market as an example we first will determine the type of market. In 2006 4153 homes sold through the member brokers of The Capital Area Association of Realtors MLS (CAAR). The second best year on record and only 30 closings shy of a new record. A decline in the number of sales for the first time in 11 years, a meager drop of seven tenths of a percent.
Does this mean it is a sellers market? No, not enough information to determine. What about the supply of homes for sale? How many listings did not sell in 2006? Are prices rising or falling? You must add these three components to the equation to determine the type of market.
In 2006 a record 3189 CAAR listings expired or withdrew from the market without a sale. The median price fell 1% to $99,000, the first price decline since 1994. A record inventory of homes remain for sale within the market, over a six month supply based upon last years rate of sales. The conclusion is Springfield is in a buyer's market. Although demand continues at near record levels, the number of homes for sale vastly outnumbers buyers, and in 2006 sellers began lowering their asking prices to obtain offers, resulting in the 1% price decline. Is Springfield in a bad market? No, simply put, a highly competitive market. You can still get sold, and at at a good price.
No matter the type of market you are in, you should have a pricing plan in place before you go to the market. Too many people list their home at a price they want or need. What you want or need bears no relationship to what the market will pay. Since 2000, using our pricing plan strategy, 598 home sellers got sold. That's more than any of the other 600+ agents or teams in our market. Proof is in the pudding, having a pricing plan works.
The type of market will determine where you can start your asking price within your plan. You should price the closest to fair market value as possible, based upon verifiable closed sales. There will be a range within which similar homes have sold. In the case of a sellers market you can actually begin slightly above the price range because the market is rising. In a level market begin slightly below the top of the sales price range. In a buyers market, knowing the sale price range of similar homes isn't enough. You must know your competition too. Most likely you will begin at mid or slightly below mid range.
The first three weeks you are on the market are the most active. You will get more showings the first three weeks than in the next ten combined. If you don't get any showings, or if you get showings but no offers the first three weeks, the market has rejected your initial asking price. Adjust the price by 5% or below the next price point. Follow the same procedure the next three weeks, if not sold adjust again by 5% or below the next price point. If you are not sold within the first six weeks, you will be waiting for new buyers to enter the market. Your odds of selling after six weeks go down dramatically, and you could end up as one of thousands of expired listings. Pricing appropriately in the beginning will create a sale at the best price you will ever see. Time is the enemy of the home seller. The longer you are on the market the less valuable your home becomes.
The following is critical to pricing correctly in the beginning. When interviewing real estate agents, never tell them what you want, need, or think your home is worth. This will prejudice their thinking and viola, they recommend that price. Never hire the agent that tells you the highest price, especially if you are in a buyers market. The risk to you is that you will stagnate on the market for the first six weeks without an offer, the agent starts calling and telling you to reduce the price, which you do. Then the agent places a price reduced placard on your yard sign, and in their advertising. The kiss of death. Never allow your agent to advertise price reduced, it implies there is something wrong with your home, you are desperate, and invites low offers. If you are desperate, advertise that fact if you want to get sold at an extremely low price to a bargain hunter.
No matter which agent you hire, no one is right all the time. Your agent and you can have your opinion of price, but it will be the market that ultimately determines the price. Hence the pricing plan. To place your home for sale, and not get sold, sitting month after month on the market is embarrassing, frustrating, and avoidable. In the final analysis it will be price that sells your home, as long as it reflects the condition of your home.
Condition is absolutely within the control of the seller. Think what a car dealer does with your vehicle when you trade it in. You take it to the car wash, and vacuum to look good. You receive a fair trade in price, but never top dollar. What does the dealer do with your old car? They detail it, every nook and cranny, inside, and out. Then they sell your old vehicle for top dollar, all within a matter of days or weeks. Never rush to the market. Don't allow an agent to rush you to the market. Do not place your home for sale until you have the home in the absolute best condition you can get it before the first prospective buyer walks through the door. You only have one opportunity with each buyer to make a first impression.
Marketing. How will you market your home? Sell by owner, or list your home with a professional? The value of a home is not determined by whether a fee for services is being paid by a seller. Do for sale by owners net more money than with a broker? Most do not. Most don't even sell. For sale by owners that sell for more money usually don't even market the home. There are many sales between friends and relatives. These sellers didn't have to face the rigors of the market. They don't count. Real estate is a supply and demand commodity as witnessed in the sellers market with prices skyrocketing, and now in the buyers market where prices are falling. It's simple; the more buyers there are for a home, the more valuable it becomes. Who can produce the most buyers for a home? A for sale by owner or a real estate broker affiliated with hundreds of agents working with buyers? NAR studies show that the changing market has affected the number of by owner sales, down 50% in three years. Doesn't it make sense that for sale by owners would have more success in a seller's market? If you try to sell by owner, and don't have success, and then list the home with a broker, the broker will be starting with a stale product. OK, I'm a real estate broker, but this is the truth, you are better off using a broker than trying to sell yourself. Beyond price, there are a significant number of liabilities a by owner isn't aware of, the least of which is simply getting sold.
Marketing isn't advertising. You don't need a professional to run an ad in the newspaper, to place a yard sign, or hold an open house. Marketing is the manner in which your home is presented, and to whom it is presented. Here's the truth, print advertising generates about 3% of all sales. Prospective buyers that call about a property off all types of ads, buy the home they inquire about one in four hundred times. Buyers want to see all the homes that meet their requirements. More proof in the effectiveness of newspaper advertising, we have not advertised a home in the local paper since 2002 while producing more closed home listings than anyone. Open house results are even more dismal. Only one percent of home buyers purchase a home found at an open house. Makes sense to me, the only qualification to attend an open house is the ability to read two words. Be prepared to say hello to all your curious neighbors at your first open house. A note of caution, open house creates a security risk. Proceed cautiously.
Advertising is advertising. Deep pockets agents will promise to advertise your home in the paper, and hold open house to obtain your listing. They won't tell you the truth about the effectiveness of both. They rely upon your perception that this will sell your home. The truth is you don't need an agent to perform either, and a good agent doesn't need either to get your home sold. Promising newspaper advertising, and open house is a listing tool, more than a sales tool. Do some homes get sold using these tools? Of course, about four percent that sell. When a friend or coworker tells you they got sold using these methods, you'll know how lucky they were.
If you must sell, or want to sell your home in 2007, interview two or three of the top agents in your market. The Illinois Association of Realtors reports that among its member Realtors, 60% have less than three years experience. Many people became enthralled with real estate during the boom years. This means 60% of the agents have not experienced a buyers market. You will be seeing many leave the business in 2007. You will see real estate brokerages merge, or go out of business. My advice; if you want to get sold, and get sold in a reasonable amount of time, at a good price, develop a pricing plan, and hire an experienced agent with an established firm with proven marketing systems.
Regardless of the type of market you are experiencing, that doesn't make for a good or bad market. Whether you sell or not, will determine how good it will be for you. The following advice comes from 20 years experience, and has helped sellers get sold in all types of markets.
There are three major reasons that will determine if you will sell. Price, condition, and marketing. There are three major reasons that will determine if you don't sell. Price, condition, and marketing. Location is set for home sellers. There are buyers for every location, or you wouldn't have people living there.
Using the Springfield Illinois market as an example we first will determine the type of market. In 2006 4153 homes sold through the member brokers of The Capital Area Association of Realtors MLS (CAAR). The second best year on record and only 30 closings shy of a new record. A decline in the number of sales for the first time in 11 years, a meager drop of seven tenths of a percent.
Does this mean it is a sellers market? No, not enough information to determine. What about the supply of homes for sale? How many listings did not sell in 2006? Are prices rising or falling? You must add these three components to the equation to determine the type of market.
In 2006 a record 3189 CAAR listings expired or withdrew from the market without a sale. The median price fell 1% to $99,000, the first price decline since 1994. A record inventory of homes remain for sale within the market, over a six month supply based upon last years rate of sales. The conclusion is Springfield is in a buyer's market. Although demand continues at near record levels, the number of homes for sale vastly outnumbers buyers, and in 2006 sellers began lowering their asking prices to obtain offers, resulting in the 1% price decline. Is Springfield in a bad market? No, simply put, a highly competitive market. You can still get sold, and at at a good price.
No matter the type of market you are in, you should have a pricing plan in place before you go to the market. Too many people list their home at a price they want or need. What you want or need bears no relationship to what the market will pay. Since 2000, using our pricing plan strategy, 598 home sellers got sold. That's more than any of the other 600+ agents or teams in our market. Proof is in the pudding, having a pricing plan works.
The type of market will determine where you can start your asking price within your plan. You should price the closest to fair market value as possible, based upon verifiable closed sales. There will be a range within which similar homes have sold. In the case of a sellers market you can actually begin slightly above the price range because the market is rising. In a level market begin slightly below the top of the sales price range. In a buyers market, knowing the sale price range of similar homes isn't enough. You must know your competition too. Most likely you will begin at mid or slightly below mid range.
The first three weeks you are on the market are the most active. You will get more showings the first three weeks than in the next ten combined. If you don't get any showings, or if you get showings but no offers the first three weeks, the market has rejected your initial asking price. Adjust the price by 5% or below the next price point. Follow the same procedure the next three weeks, if not sold adjust again by 5% or below the next price point. If you are not sold within the first six weeks, you will be waiting for new buyers to enter the market. Your odds of selling after six weeks go down dramatically, and you could end up as one of thousands of expired listings. Pricing appropriately in the beginning will create a sale at the best price you will ever see. Time is the enemy of the home seller. The longer you are on the market the less valuable your home becomes.
The following is critical to pricing correctly in the beginning. When interviewing real estate agents, never tell them what you want, need, or think your home is worth. This will prejudice their thinking and viola, they recommend that price. Never hire the agent that tells you the highest price, especially if you are in a buyers market. The risk to you is that you will stagnate on the market for the first six weeks without an offer, the agent starts calling and telling you to reduce the price, which you do. Then the agent places a price reduced placard on your yard sign, and in their advertising. The kiss of death. Never allow your agent to advertise price reduced, it implies there is something wrong with your home, you are desperate, and invites low offers. If you are desperate, advertise that fact if you want to get sold at an extremely low price to a bargain hunter.
No matter which agent you hire, no one is right all the time. Your agent and you can have your opinion of price, but it will be the market that ultimately determines the price. Hence the pricing plan. To place your home for sale, and not get sold, sitting month after month on the market is embarrassing, frustrating, and avoidable. In the final analysis it will be price that sells your home, as long as it reflects the condition of your home.
Condition is absolutely within the control of the seller. Think what a car dealer does with your vehicle when you trade it in. You take it to the car wash, and vacuum to look good. You receive a fair trade in price, but never top dollar. What does the dealer do with your old car? They detail it, every nook and cranny, inside, and out. Then they sell your old vehicle for top dollar, all within a matter of days or weeks. Never rush to the market. Don't allow an agent to rush you to the market. Do not place your home for sale until you have the home in the absolute best condition you can get it before the first prospective buyer walks through the door. You only have one opportunity with each buyer to make a first impression.
Marketing. How will you market your home? Sell by owner, or list your home with a professional? The value of a home is not determined by whether a fee for services is being paid by a seller. Do for sale by owners net more money than with a broker? Most do not. Most don't even sell. For sale by owners that sell for more money usually don't even market the home. There are many sales between friends and relatives. These sellers didn't have to face the rigors of the market. They don't count. Real estate is a supply and demand commodity as witnessed in the sellers market with prices skyrocketing, and now in the buyers market where prices are falling. It's simple; the more buyers there are for a home, the more valuable it becomes. Who can produce the most buyers for a home? A for sale by owner or a real estate broker affiliated with hundreds of agents working with buyers? NAR studies show that the changing market has affected the number of by owner sales, down 50% in three years. Doesn't it make sense that for sale by owners would have more success in a seller's market? If you try to sell by owner, and don't have success, and then list the home with a broker, the broker will be starting with a stale product. OK, I'm a real estate broker, but this is the truth, you are better off using a broker than trying to sell yourself. Beyond price, there are a significant number of liabilities a by owner isn't aware of, the least of which is simply getting sold.
Marketing isn't advertising. You don't need a professional to run an ad in the newspaper, to place a yard sign, or hold an open house. Marketing is the manner in which your home is presented, and to whom it is presented. Here's the truth, print advertising generates about 3% of all sales. Prospective buyers that call about a property off all types of ads, buy the home they inquire about one in four hundred times. Buyers want to see all the homes that meet their requirements. More proof in the effectiveness of newspaper advertising, we have not advertised a home in the local paper since 2002 while producing more closed home listings than anyone. Open house results are even more dismal. Only one percent of home buyers purchase a home found at an open house. Makes sense to me, the only qualification to attend an open house is the ability to read two words. Be prepared to say hello to all your curious neighbors at your first open house. A note of caution, open house creates a security risk. Proceed cautiously.
Advertising is advertising. Deep pockets agents will promise to advertise your home in the paper, and hold open house to obtain your listing. They won't tell you the truth about the effectiveness of both. They rely upon your perception that this will sell your home. The truth is you don't need an agent to perform either, and a good agent doesn't need either to get your home sold. Promising newspaper advertising, and open house is a listing tool, more than a sales tool. Do some homes get sold using these tools? Of course, about four percent that sell. When a friend or coworker tells you they got sold using these methods, you'll know how lucky they were.
If you must sell, or want to sell your home in 2007, interview two or three of the top agents in your market. The Illinois Association of Realtors reports that among its member Realtors, 60% have less than three years experience. Many people became enthralled with real estate during the boom years. This means 60% of the agents have not experienced a buyers market. You will be seeing many leave the business in 2007. You will see real estate brokerages merge, or go out of business. My advice; if you want to get sold, and get sold in a reasonable amount of time, at a good price, develop a pricing plan, and hire an experienced agent with an established firm with proven marketing systems.
Labels: selling a home
<< Home