Over the coming weeks, we should see the lowest mortgage rates in our lifetime – every house for sale should be selling!
Everybody is smarter about price accuracy after the first couple of weeks of a house being on the market, just based on how many offers have been received. Once a home hits the open market, they will fall into one of three categories:
Everybody Wants To Buy Your House – This is called a market sale. A house in fairly good shape listed with a reasonably attractive price will appeal to many buyers. In fact, every buyer in that price range will probably see the house online within the first 48 hours, and in person by Day Four. Be ready to sell.
Somebody (Special) Wants To Buy Your House – A smaller group will pay a premium if the unique features of the house fit with their specific needs. Expect an occasional offer.
Nobody Wants to Buy Your House – No offers? You have a great house – no one appreciates it like you do! Lower the price until you get offers.
Time is flying by. There are 2-3 weeks left for buyers to find a house and close escrow before school starts!
Even though I’m not a big fan of the practice, I like to try things out at least once a year to see if I can learn anything new.
One of the problems with the Coming Soon listings is that agents don’t have a game plan once the listing hits the internet.
Are they willing to show it prior to MLS input?
Are they willing to sell it prior to MLS input?
Apparently these questions don’t occur to many of the agents employing the Coming Soon strategy, because when I call on them, rarely do they have an answer. They just hope a buyer calls and they can round-trip the deal. The seller deserves better! (we are happy to show while the seller puts the finishing touches on the house)
If you like this one, call Richard Morgan at 619-200-3844.
It is rare in today’s market that you will find a truly motivated seller that will give it away (discount more than 10%). Of the NSDCC sales closed over $1,000,000 in the last 30 days, the average sales price has been within 5% of the average list price.
Does it hurt to try?
Lightweight agents will warn you not to ‘offend’ anybody with a lowball offer. But let’s assume that sellers have a thicker skin. There is a tactical problem that makes it very difficult to come to terms when a buyer presents a low offer.
My rule-of-thumb is that we have two days or two counter-offers, whichever comes first, to make the deal. If the initial offer is 15% or more below the list price, there is too much ground to cover. You’re more likely to run out of time or counters, than to reach an agreement.
The biggest problem is that both sides become attached to their price once they put it on paper, and feel the need to defend it no matter how that price was determined.
Buyer offers 85% of list price.
Seller thinks it is low, and counters 98% of list to send a message to the buyer that this house isn’t going to be stolen.
But the buyer becomes attached to his 85% offer, and he’s not going to be pushed around! The fight is on – and the buyer counters at 88% of list.
Seller thinks we’re going nowhere fast, and drops the negotiations.
Example that has a Better Chance:
The buyer offers 85% with low expectations, knowing the seller won’t be pleased. The seller counters at his 98% number.
The buyer’s response to the seller’s counter needs to be at least 90% of list, for two reasons: A) to impress the seller that a deal could be made here, and B) beat the clock.
Typically, the seller will then counter at 95% of list, and hope the buyer just signs it. But the buyer splits the difference instead at 92.5%, and hopes the difference is small enough that the seller shrugs it off and signs.
The key is the buyer’s counter to the seller’s first counter – it has to be high enough that the seller stays in the fight. If the buyer doesn’t come up much, it’s too easy for the seller to give up.
If you want to buy at 85% of list, then have the agents discuss it on the phone. You have to convince both the seller and the listing agent, so you might as well start with the agent first – if they blow you off, just wait and see if they lower the price later.
Determine a price strategy in advance, and respond promptly. The egos on both sides will run out of gas within two days.
Make a clean, crisp offer – include a solid prequal letter and proof of funds.
Provide convincing data why your price is right, especially if there have been new comps since the listing began.
Don’t justify your price by dogging the house, and all the repairs needed.
Include other sweeteners like free rent after closing.
Keep in mind that you are only fighting for the last 2% or 3%.
Having a strategy is important. Too often a buyer will just throw a price out there, without having a path to follow – and the path is predictable!
The prevailing market theory employed by nearly every realtor is to wait until someone comes along to pay their price. Your negotiations have to go perfectly to disrupt that belief!
My new listing of a classic 1965 fourplex in the heart of the Alta Vista area near Brengle Terrace, and steps to the vibrant downtown Vista scene. The current income is $52,800/yr, and we’re listed for $899,000. After taxes, 10% management fee, and 10% vacancy, it’s a 4 cap.
When it comes to getting the best price for your house, there might be no higher-profile experts than Drew and Jonathan Scott, the personable hosts of several HGTV series including the long-running “Property Brothers.”
“Everybody always thinks that their house is nicer than the one that just sold for more money,” said Drew, a licensed Realtor. (Jonathan is a licensed contractor.) “But the fact of the matter is, most homeowners are blind about the flaws in their home. Which is why you have to value using professionals who will step back and give you an honest opinion.”
Here are the Scotts’ five top tips for getting your home ready to sell:
Pending home sales in Southern California as a whole rose 5.6 percent from May 2015 and 2.4 percent from April, thanks to year-over-year gains of 6.9 percent in Los Angeles County and 6.2 percent in San Diego County. Orange County experienced a 1.8 percent decrease from the previous year.
In a separate study, California REALTORS® responding to C.A.R.’s May Market Pulse Survey reported slower growth in floor calls, listing appointments, and open house traffic, reflecting slowing market activity. Despite the lagging indicators, the percentage of properties selling above asking price reached an all-time high and the number of offers per property rose.
• The share of homes selling above asking price in May increased to 38 percent, the highest level since the survey began, rising from 32 percent in April. Conversely, the share of properties selling below asking price dropped to 34 percent. The remainder (27 percent) sold at asking price.
• For the homes that sold above asking price, the premium paid over asking price declined for the third straight month to an average of 9.4 percent, down from April’s 9.6 percent and up from 8 percent in May 2015.
• The 34 percent of homes that sold below asking price sold for an average of 10 percent below asking price in May, down from 12 percent in April and up from 7 percent a year ago.
• Nearly seven of 10 properties for sale received multiple offers in May, indicating the market remains competitive. Sixty-five percent of properties received multiple offers in May 2015.
• The average number of offers per property increased to 3.1 in May, up from 2.9 in April and 2.8 in May 2015. The increase in the number of offers was driven by a greater share of transactions that received three or more offers. Moreover, homes priced between $200,000- $399,000 and $750,000-$999,000 saw the greatest increases in three or more offers compared to a year ago.
• About one in four (23 percent) properties had price reductions in May, indicating sellers are pricing their homes more realistically. One-fourth of properties had price reductions in May 2015.
The national cheerleaders get excited about every nugget of data, and are happy to jump to conclusions. Yunnie is finally tip-toeing around the downsizing trend that we see everywhere around here, but he can’t assume that those sellers are buying too:
“The May gain over April signals that the real estate market has maintained strong momentum all spring,” says realtor.com chief economist Jonathan Smoke. “We are now in this year’s peak home buying months, and this pace of sales should produce the gains we have been forecasting that will make 2016 the best year of home sales in a decade.
The biggest challenge to prospective buyers right now is tight supply, which we have seen for 45 consecutive months. In these conditions, home values have strong support, but potential buyers will continue to face challenges finding a home for sale that meets their needs. That is why we’re seeing the age of inventory drop dramatically while prices have gone up 5 percent over the last year and are now at record nominal levels.”
Lawrence Yun, NAR chief economist, says existing sales continue to hum along, rising in May for the third consecutive month. “This spring’s sustained period of ultra-low mortgage rates has certainly been a worthy incentive to buy a home, but the primary driver in the increase in sales is more homeowners realizing the equity they’ve accumulated in recent years and finally deciding to trade-up or downsize,” he says. “With first-time buyers still struggling to enter the market, repeat buyers using the proceeds from the sale of their previous home as their down payment are making up the bulk of home purchases right now.”
Adds Yun, “Barring further deceleration in job growth that could ultimately temper demand from these repeat buyers, sales have the potential to mostly maintain their current pace through the summer.”
The local NSDCC sales in May built on the momentum from April, and the 2016 three-month total looks very similar to last year (865 vs. 859):
This was the best of the 40+ house videos on this guy’s YouTube channel – and the only one from San Diego (the others were corny). This condo sold for $2,330,000 in 2014, after selling for $3,000,000 when new in 2007:
Splurging on glossy renderings is so early aughts; now, the hottest sales tool for a luxe NYC crash-pad is a custom-made mini movie. And the Scorsese of selling homes is Curt Hahn, the Tennessee-based owner of Film House. This seasoned film vet turned his movie-producing skills to moving houses four years ago, at the suggestion of a real estate-agent friend.
It’s given Hahn’s four-decade career in movies, commercials and concert films (where he’s worked with Candice Bergen, Garth Brooks, Reba McEntire and Isaac Hayes) a new twist. He now shoots and edits at least one such “home video” somewhere in the country each month; budgets run around $20,000 per shoot, and each is painstakingly scripted and cast.
For a museumlike home more suitable for a family without young kids, Hahn’s mini movie featured a childless gay couple, which helped seal the deal with their real-life counterparts. When tasked with selling an eight-figure ski lodge in Telluride — “the kind that one-tenth of the 1 percent could afford” — Hahn imagined a CEO keen on creating a family hideaway.
So he scripted the story of a father soothing his mirror-image, workaholic daughter with a trip to the grand lodge, during which the entire clan surrendered their cellphones. The lodge quickly sold to a wealthy family, as planned. “It so resonated that we’ve now done several versions of that storyline for other homes,” Hahn notes.
He explains that several factors have driven the domestic-movie boom. Staging, of course, effectively transforms ordinary homes into movie sets. The prevalence of social media has made video an ideal (and shareable) selling tool. And the globalization of high-end buyers has been crucial.
Indeed, one couple spent $1.4 million on an apartment without ever visiting in person. Recalls Hahn: “They told me, ‘We watched that movie at least 25 times, we know where every stick of furniture we own is going to go.’”
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