Tuesday, August 26, 2008

My Agent Won’t List My House At My Price … Why?

Sounds like you have an astute business person for an agent… congratulations. We have often discussed the agents that will list at any price because they are either: a. ignorant and thrilled to finally have a listing to work on, or b. they are going to take the listing and beat you up week after week for a price reduction. The smart agent knows that an overpriced listing won’t sell, and ultimately it will have a detrimental impact on the Market and the property itself.

The matter is actually more involved for the savvy agent, the good business person that understands not just the mechanics of the industry, but the fact that it is, indeed, a business. Despite the perception of the uninformed public that all a listing agent does is put a sign in the ground and put the property in MLS, there is a lot more to it. When a homeowner signs a listing they agree to pay the agent a selling fee when the agent has performed … not just procuring a Buyer, but actually closing the escrow with the Buyer.

When an agent lists a property they are committing to a substantial financial investment. In our particular market area,
Northern Nevada, Just taking a listing actually costs the agent around $2,000 of hard money… without the extra stuff. Then there are ongoing monthly carrying costs in the neighborhood of $400 per listing. That figure will vary according to how many listings the agent carries and what his monthly operating costs are, i.e.- if an agent has ten listings and a monthly base cost of operation of $5,000 his monthly cost per listing is $500. If it takes six months to sell your home, a neutral market (not Buyer or Seller), the carrying cost is $3,000. The agent’s cost is now $5,000 without a guarantee of any return. If you have a $300,000 home and their side of the fee is 3% they will gross $6,000. Now you know that the net is only $1,000 for their personal expenses, i.e.- taxes, house payment, food, utilities, recreation… life.

Some agents might take a listing for the sign placement if you have a highly visible property. That is an old school thought for there are fewer sign calls these days with the proliferation of the Internet in our industry. If your agent is taking the listing too high you might be an unwitting victim … and so is the agent. They are only fooling themselves as to their actual benefits of the listing, and they aren’t serving you well.

Our Advice: Even in a traditional office where agents don’t pay as many direct costs, they still pay as their broker receives a larger portion of the selling fee. Many agents, regardless of their fee-split arrangement, don’t know they are in business. Be careful with such an agent when considering them to list your home. If they can’t manage their own finances properly how careful will they be with yours… your money… when it comes time to negotiate on your behalf and to protect you through the escrow process that is fraught with financial traps?! There is no “let’s just try it”, or “they can always make an offer” since marketing times have gone from a week to nine months on average. The costs and risk are just too high to put your hook in the water on a whim.

An agent must protect your property and investment as well as their time and financial expenditures when they take a listing. The art is to price it right – to get you the most possible in a reasonable period of time.
Experience is Priceless! Lisa Wetzel & Jim Valentine, RE/MAX Realty Affiliates, 775-781-5472, carsonvalleyland@hotmail.com, www.carsonvalleyland.com

Wednesday, August 20, 2008

Buyers Learn A Lot Online.

We have been talking lately about how much Buyers are getting from their online exploits, from their searching the Internet. We had a recent experience that opened our eyes even further on the matter. Jim was showing a listing to some folks when another person drove up to the property on a motorcycle. The man stopped, removed his helmet and took a flyer from the brochure box. Accommodating as he is, Jim opened the door and asked if he wanted to come in.

“I can’t believe you’re here!” exclaimed the man. “You must be Jim”, he continued. Of course, Jim was Jim, and so they talked. The man lives in Roseville, California and was purposely driving by that property after spending time in Reno looking at Hot August Nights cars that day. He has been watching the property online, not just from the property information viewpoint, but he actually went on Google Earth and saw the entire street, as well as the front and sides of the property. He knew things about the vacant property next door that we, unbeknownst to us, didn't ... and a lot about the neighborhood. He was ready for an onsite visit. We are continuing dialogue with the man, providing utility bills, etc., and there is a good likelihood that he will buy the property.

There is a plethora of websites where Buyers can get real estate information including: Oodle, Hotpads, OLX, Frontdoor, Backpage, Googlebase, Trulia, Dothomes, Vast, Zillow, Cyberhomes, Yahoo, Geebo in addition to the well known sites like Realtor.com, remax.com, coldwellbanker.com, c21.com, etc.. Additionally, most agents have their own websites, like ours listed below, that allows people to search the local Multiple Listing Service.

Not only can Buyers search for homes for sale, and pull up comparable sold properties to assist them in establishing value for your property, they can find out what you paid for the property, if you have a loan on the property, if you have tax liens, if there is a Notice of Default, etc. Want to know if there is a permit for the addition? That information is now available on line in Douglas County. Floodplain maps are now readily available online. Well logs and water right information is easily tracked down via the Internet these days. There is plenty more information available to the Buyer willing to search for it.

Not all Buyers have the knowledge, ability or desire to do such extensive search efforts on their own without the help of their agent, but it is important to know that there are Buyers that are doing it, and the extent to which they are working to get information. We have had numerous instances of Buyers calling us with their own list of homes that they want to see. Most of the time they have done such a thorough job of searching that the home they ultimately buy is included in their original “shopping” list.

Our Advice: In addition to a local presence in print media, it is important to Sellers and Buyers that their agent has good technology knowledge and a thorough Internet presence. The latter takes time, knowledge, and experience. Your property must “come up” for Buyers searching our area for property like yours. It isn’t easy, but then … if real estate were easy you wouldn’t need your agent. Remember, not all Buyers use the Internet. We still encounter Buyers that don’t even have an email address. One never knows where the Buyer for your home will come from … it is important that your agent be flexible and ready.

These are fun times being virtuosos in a virtual world, but there is no satellite or website will replace the agent on the ground to help a Buyer find the right house.

Experience is Priceless! Lisa Wetzel & Jim Valentine, RE/MAX Realty Affiliates, 775-781-5472, carsonvalleyland@hotmail.com, www.carsonvalleyland.com

Wednesday, August 6, 2008

Your House Isn’t Nice Enough For A Buyer To Pay Too Much!

You sound like a normal Seller when you say, “We have to get $X.XX”, or “I don’t need to sell.”, or the classic uttered by just about every Seller on the Planet, “We’re not going to give it away.” In every instance, you are right as it is your prerogative as the home owner. Let’s put it in perspective.

If you “don’t need to sell”, and are unwilling to price it right, then it is best if you take your home off the market and wait for the recovery … whenever that may be. If you “have to get $ X.XX ” remember, Market is what Market does. If you can’t/won’t price to sell in this Market, take your property off the market to reduce the inventory glut. It will serve you better in the long run as it will help us recover quicker so you can meet your needs later.

Finally, remember that “giving it away” is relative to the Market. If you are selling at Market value … regardless of the price … you aren’t giving it away. If you are 30% below the Market value you are giving it away and you don’t need us to do it.

Market is set by a willing Buyer and willing Seller. In a “tipped” market like we have today, a “Buyer’s Market”, the advantage goes to the Buyer. A Seller may be willing to sell for $300,000, and the Buyers are only willing to pay $250,000. With no meeting of the minds the property remains unsold. Agents don’t set value. They can price a property with a Seller, rightly or wrongly, but Agents do not set market value, Buyers and Sellers do.

Competition is fierce for Buyers these days and Buyers are smart. The National Association of Realtors tells us that the average Buyer spends eight hours on the Internet …
Northern Nevada MLS … before contacting an agent. Buyers often know the numbers better than the agents showing them property since Buyers are focused on their market segment and agents usually work the full market spectrum. With an abundance of information available on the Internet Buyers are able to do extensive research on available and sold properties.

Don’t try to kid your agent about your value … you are only kidding yourself. If your agent takes your listing too high they are not doing you a good service. Are they taking it because they have no other listings? Are they taking it because they don’t know any better … a newbie or unfocused (has a day job) agent? Or worse, are they taking it to employ one of the oldest tricks in the book … get the contract and start beating you up week after week after week for a price reduction. Regardless, when pricing your home, “to thine own self be true.”

Our Advice: Quit playing games. There are Buyers all over our market … cautious, tentative, knowledgeable, thorough, ready, willing and able Buyers. If you want to sell, your only alternative is to price it right. Consider the amenities you have, assess the market you are moving to, and price accordingly. Good maintenance and upgraded features may get an edge in the market so your home sells instead of another, but it doesn’t yield the additional tens of thousands of dollars it has in the past. Buyers should figure out what they want in a home, find the properties that qualify, and make an offer. With interest rates creeping up, almost one percent in the past three months, they are losing buying power as you wait. Prices are good, values are better … take action.

The last dumb out-of-state Buyer has gone home. They aren’t coming to town and paying too much because they have fallen in love with the area and panicked about not being able to buy a home. The good news is that they are buying homes and cash is flowing. Get in the flow. Experience is Priceless! Lisa Wetzel & Jim Valentine, RE/MAX Realty Affiliates, 775-781-5472,
carsonvalleyland@hotmail.com, www.carsonvalleyland.com