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Category Archive: ‘Why You Should List With Jim’
We can talk, can’t we?
Houses that have been on the market for more than 60 days (which includes 507/1,079 = 47% of NSDCC active listings) missed the hot season.
“If it hasn’t sold by now, something is wrong with the house, or the price.”
Some people use the days-on-market statistic has a primary search feature. Even if the list price has been reduced, just the longer market time can cause buyers and agents to miss the longer-listed properties.
So not only are those listings easier to pass up, the buyer pool in general is shrinking due to the time of year. It’s too easy for them to pack it in.
It’s going to get tougher for the older listings to find a buyer, unless they get aggressive on price. But how many sellers will knock 5% to 10% off their price? Not many.
1. The list price has to be at least 10% wrong if not selling for months.
2. Most unsold listings aren’t that far off. Buyers would be interested in many of the active listings at 10% to 15% under list.
3. Sellers are reluctant to chop that much off their price.
4. Buyers have to take the initiative.
My game plan here:
I am a fan of transparency.
The two best attempts of creating an agent-ranking website got shot down by realtors themselves. But outside entrepreneurs keep plugging away, and one of them could find the right mix and hit the jackpot some day.
One website called homelight.com has agent data. To see what they presented, I looked up my own name. They don’t go into details of where they found this data, or how to interpret this data. No time periods are given either:
Realtors complained about accuracy, but this is what we get instead – outsiders who are running an agent-referral business and using our names and numbers for eyeball bait. They hope you’ll inquire about an agent, submit your contact info, and then they will send you two other agents who are paying them a referral fee of 25% to 30%.
I don’t know where this company gets their data. I’ve sold around 32 homes within the city limits of San Diego, but did they get that straight from the MLS? A title company?
The average days-on-market should only be for listings sold – unless a longer average means the agent’s buyers are waiting out the sellers more effectively. On the MLS, my average days-on-market with sellers is 29 days, and buyer sales average 50 days so I don’t know where they got the 64.
Who knows about the 177. I have more than that on my Zillow count but they may have taken their number from a few years ago? BTW, Zillow finally corrected their sales counts. Each agent has their sales tally on their Zillow page, but Zillow’s 12-month timer must have broke because recently they had displayed my count for the last 17-18 months. I doubt any agents complained! It is back to the 12-month count now.
Two broker-generated listing portals are being developed currently, and they should include agent statistics right off their MLS. They will have the accurate data at their fingertips, so let’s create a depository of identical stats on each agent so the public can educate themselves.
Would it favor the old veterans who have more stats?
It might impress the analytical people who crave data, but consumers should be willing to consider the whole package. If photos and video were included in each agent page, any realtor could create a compelling case on why people should use them.
If agents don’t develop our own website, others like Zillow will keep doing it for us. Or we’ll leave it the way it is now, with agents being able to say whatever they want about themselves because there’s no public way to verify.
Recently an agent mailed out a fancy brochure about being a rural-property specialist. But a simple MLS search of her sales revealed that she had never sold a rural property. She said she had 15 years experience, but she got her license four years ago. I guess she could have been an assistant, or sold in another state, but if you haven’t sold one here yourself in the last four years, then you aren’t a specialist. Yet many agents get away with it because there’s no transparency.
Let’s provide a simple and identical set of data on every agent, and give explanations on how to interpret them.
These are my 16 listings sold over the last 12 months:
Possible interpretations by consumers:
1. He only sold 16 listings in the last 12 months?
The blog drove a lot of buyers my way during the downturn, and I’ve been scrambling to generate organic listings since the REO listings dried up.
2. He sells them too fast.
Sellers who think it should take months to sell a house will think I’m giving them away. But it is more a reflection of pricing accuracy and a hot market.
3. He doesn’t work my price range.
4. He doesn’t work my area.
5. He doesn’t sell my size of house.
6. He’s too busy. (I’ve sold twice this many)
7. He’s not busy enough.
8. He only works with sellers (I closed 17 buyer sales).
If each agent inputted their own explanations, they could add texture to their stats, and make their case why they should be hired. Include a video presentation too (Zillow does).
Consumers would be making educated decisions, and we as agents should not only applaud that, we should insist on it. Agents would have to get better at selling themselves, and those that do would get the business, regardless of experience or sales history.
I am uncomfortable displaying my stats – people are prone to poke holes and find faults. It’s why realtors don’t want data released! But we should all get used to our sales histories being public, because one way or another it is happening – with or without us. Let’s make the best of it!
Get Good Help!
Here’s the best reason to fix and clean your house before selling.
It is irresistible for buyers to add up what they think needs to be fixed, and subtract it from your price. I-R-R-E-S-I-S-T-I-B-L-E.
Some make a sport of it, with both husband and wife scurrying around to see who can find the biggest flaws – and then attach an approximate cost to fix.
But their number is usually double the actual cost, because they aren’t that familiar with the costs, plus they add extra for the hassle factor too.
If a seller is going to get dinged for the damages anyway, they might as well fix them in advance to help the chances of selling for top dollar.
“Can’t we lower the price instead?”
Buyers don’t want to give sellers any credit for pricing in the condition of the home. If it needs work, they want a break on the price. They want to deduct their cost expectations from whatever the list price is, and then double-ding you again once they complete their home inspection.
This didn’t matter as much during the frenzy. But from here on out, we will be experiencing less-than-frenzy conditions.
P.S. I was serious about removing half of the contents. Most houses are full of the sellers’ valued possessions, but they look like junk to everyone else.
My specific tips here: Tips on Preparing Home for Sale
Get Good Help!
Reader 3rd Gen SD sent this in yesterday:
JtR, have your sales and experience led you to a percentage of listing price that should be devoted to making deferred maintenance and aesthetic updates? Perhaps a suggested metric other than percentage of LP?
To wit, I’m sure there are some listing agents who would love for their clients to dump as much cash into the front end as they can. No skin off the agents’ backs, right?
Hypothetical: If a CMA led to a listing price of 800K, would you advise your client to invest 8K, 16K, 24K toward making it truly marketable?
Am assuming paint and flooring, kitchen and master bath updating if needed, but there has to be a point of diminishing returns. I mean, there are “cream puffs” and there are “cream puffs”…
Any general guidelines you’d care to share would be appreciated.
General guideline: Make the house look and smell clean. Add new carpet and paint, do a thorough cleaning, and remove all clutter and half the contents. Include staging to provide emotional appeal and make it memorable.
Let’s go back to his paragraph two.
Not that anyone reads the contracts (principals or agents), but our listing agreement encourages sellers to consider all offers. But once the home is on the market, sellers tend to dig in on price. Their family, friends, and neighbors have seen the price, and sellers feel the need to defend it – at all costs.
It’s not necessarily a conscious thing – it is human nature….in this society.
It is miraculous that buyers are willing to satisfy the sellers’ demands approximately 3,000 times every month in San Diego County (3,568 detached and attached-home sales last month).
Agents hope that trend continues and are willing to list a home for sale at no cost to the seller. Yes, we can score a big bounty at the very end if we can get buyers and sellers to the finish line. But we do so without having a vote on the eventual sales price.
From Paragraph 7 in our listing agreement: “Seller is responsible for determining at what price to list and sell the Property.”
It happens regularly that a listing agent will spend weeks, months, and sometimes years trying to sell a house. They may procure several offers, which would seem to indicate what the market will bear. But the seller has no obligation unless a full-price offer is produced.
To tie it back to 3rd Gen’s question – Because every seller wants to sell for the top of the range of what homes are selling for in the neighborhood, agents are smart to tell them to buff it out before listing.
If sellers were willing – and committed – to sell for what the market will bear, then we could throw a house on the market in any condition and see what it’s worth.
But most sellers won’t sell for any price – they want to sell for their price, regardless of what the market will bear. Thus, fixing them up improves everyone’s chances of a successful sale. You’ve seen me personally get involved in the improvements too – I know it helps our chances!
If we could all understand and agree that a house will sell for what the market will bear, it would change everything. But instead, sellers are motivated to hire the agent that quotes them the highest price, regardless of condition. Some do the fix-ups, and some don’t, and then buyers are left to figure out the rest.
Another reason why realtors should be proponents of auctions!
Almost half of the active listings in NSDCC have been on the market for more than two months. They have missed the ‘selling season’, and the sellers are now left wondering when/if that happy couple with 2.2 kids will come along.
Over the last two years we’ve been in a rapidly-appreciating market, and sellers only had to wait for prices to catch up. But now that prices have been fairly flat, the wait could last forever. It is a real possibility that this is will be the peak for the foreseeable future.
If you are patiently waiting for the ‘right buyer’ to come along, no problem. But for those sellers who want some real guidance about what it will take to get your home sold in the next few weeks, consider my pricing gauge:
Common-Sense Pricing Gauge:
A. If you are getting offers, then your list price is about right.
B. If you are getting lookers, but no offers, then your list price is about 5% to 10% too high.
C. If you don’t have any buyers looking at the home, the price is more than 10% wrong.
Buyers are addicted to the days-on-market statistic, which is out in the open. For every week your house is on the market, buyers are mentally subtracting about 1% from your original list price.
As a result, sellers should lower their price by 5% every 2-4 weeks until they start getting offers.
An exciting price creates urgency and enthusiasm among both buyers and agents. Without it, your listing goes stale quickly, usually after two weeks – and after that, many of the showings are for comparison to help agents sell the better-priced house down the street.
The effective date of the TRID has been determined – October 3rd:
The way some people are acting, you would think it was the end of the world.
The changes in loan disclosures were supposed to take effect sooner, but the mortgage industry pleaded for more time. The lenders’ software needs to be changed and employees need to be re-trained, but once in place it looks pretty simple to me.
There will be two required forms: a Loan Estimate that must be delivered or placed in the mail no later than the third business day after receiving the consumer’s application, and a Closing Disclosure that must be provided to the consumer at least three business days prior to consummation.
Lenders will have to be a little sharper about printing loan documents in a timely fashion. The companies that already have strong, organized clerks who can handle their desk and can print out loan docs will take it all in stride. The lenders who don’t pay enough to get good clerks will struggle with these new timelines. Get Good Help.
People are worried that buyer credits arranged late in the transaction could delay the closing, because the lender will have to re-issue the Closing Disclosure. But credits negotiated during the 17-day inspection period still give the lenders another 13 days to close a regular sale. If your lender is on their game, there shouldn’t be a problem.
But if buyer credits are a problem, what other alternative is there?
Let’s have the sellers supply a written inspection report to every buyer. Have each buyer make an ‘as-is’ offer after reviewing the inspection and termite report, knowing the condition of the house. Buyers might procure their own inspection reports later, but with good inspectors, the findings shouldn’t vary much.
How often does it happen where the buyers make a retail-priced offer thinking the house was in good condition (staged or otherwise), only to find out it needs a lot of work. It happens ALL THE TIME. The sellers won’t do much for them, they are tired of the pursuit, and close the sale any way – and then spend $50,000 to $100,000 over the next 12 months to make it right.
At least if the buyers saw a decent inspection report before offering, they can say that they made a knowledgeable decision.
Handling the repair requests are a major part of a realtor’s job. We would prefer sales to be ‘as-is’, so once we make a deal we can just head for closing.
With ‘as-is’ sales, we’ll only be one step away from auctions.
A video tour of my new listing in Del Sur!
Their agents are telling buyers to wait…but wait for what? Wait how long? Wait for who? It’s irresponsible to make such casual comments.
Not mentioned in this article is that a good agent can overcome all these obstacles, and a bad agent makes them worse:
I have two RSF listings that are outside the Covenant.
One seller asked me what the chances are of selling.
I said 20%, to which he said, ‘Yikes’.
But any RSF listing only has a 30% or 40% chance of selling. There were 436 listings, and 127 sales (29%) last year in the 92067.
Here are the detached-home total listings and sold listings from 2014:
|Area or City|
Listings in the Ranch are the least likely to sell – by far.
What can a listing agent do to help the cause? State your case on value.
It’s always tough to estimate the value of unique or custom homes – but those in the Ranch have so many variables it will make your head spin because every property is so different.
As listing agent, it’s my job to justify the value.
If the purchase is financed, then an appraisal needs to be completed. Even though the sales price will have been given to the appraiser in advance, it’s still the listing agent’s job to make sure they hit the number.
As long as we gathered comps in the beginning to justify our recommended list price, and we have the need to deliver same to appraiser, we might as well include them in the listing to help buyer agents come to the right conclusion.
My case to support the $2,795,000 list price of 7060 Via Del Charro: