Taking Apart Another Misconception One Statement At A Time

This following "top ten" list from a local "for sale by owner" website landed in my feed reader this morning. I would provide a link - but it’s not my intention to draw further attention to this particular site.

To each "point" that the author makes, I will provide a "counter-point" for your consideration.

1. You Can “Sell” Your Home Better Than Anyone Else: You know your home best and what is special about the area, as well as other details about the property. A well maintained, fairly priced home virtually sells itself.

You might know all the particulars about your home and area - but you may not know what NOT to say. You could be held legally liable for what you say to buyers!

While a well-maintained, fairly priced home virtually sells itself - you need to make sure your home can be found by the most buyers… and the most important place to get the widest possible audience is the Multiple Listing Service.

2. More Money in your pocket: Calculate 6% or 7% of what you think your property is worth, then ask yourself: is it worth paying this much to have someone else show my property? Chances are the answer is NO.

If Realtors did nothing but add 6-7% to the cost of selling a property while bringing no value to the transaction - there wouldn’t be very many Realtors.. and justifiably so.

In addition to the many services that Realtors bring to the table - they also deliver worldwide marketing exposure which results in the best prices for sellers.

3. You’re in control: You can advertise where and how you want to, schedule showings when it’s convenient, talk directly with prospective buyers, and even take your house off the market when you choose. Remember, listing a home usually requires a minimum of 6 months with a Realtor.

Realtors know where to advertise your property - and if you are serious about selling, you need to allow showings when it is convenient for the buyer… not you.

The reason why most competent Realtors require a six month listing has to do with the current real estate market absorption rate -  because we don’t want to give it away for free.

4. Less Hassle and Frustration: When selling by owner, you don’t have to leave the house because an agent wants to show it, or clean every morning “just in case”. You know exactly when people are coming and can prepare accordingly. When a buyer makes an offer, there is not all the frustrating back and forth phone tag between agents.

In a buyer’s market - like the one we’re in - a seller should be delighted to leave so an agent can show their home. Buyers are not easy to come by, and you only get one chance to make that first impression - so if you’re serious about selling, get that house in ship-shape and smile when an agent wants to show it.

5. Less Uncertainty:  Because you meet the prospective buyers, you have a much better idea how interested people are, what they like about the home, how serious they are about buying and what their time frame and situation is. The direct feedback is easier to live with than wondering how things are going, or worse why no one has made an offer yet.

You don’t get less uncertainty simply because you are dealing directly with the buyers! Do you think that a seasoned Realtor doesn’t know how to interpret a Buyer’s signals and ask the proper questions to determine how motivated the buyers are? Do you really believe the buyers are going to tell you why they don’t like your home - directly to your face?

6. You Can Sell Faster: If you list your home with a real estate agent, everyone knows you’ll probably inflate the asking price to cover the commission fee amount. Three to six months down the road you’ll come to the painful realization that no one is going to buy it at that price, and you will end up reducing your price ( or accepting an offer) equal to the original amount you would have asked if selling by owner. Do it right the first time, and avoid taking the loss. Pass the savings along to yourself and the buyer and sell your home quicker.

If you believe that you can inflate your asking price to cover the brokerage fee - you are mistaken. You would be equally mistaken if you believe you can inflate your asking price because you have kids in college or because you need a big down payment for your next home.

The reason why the vast majority of "for sale by owners" end up listing with a Realtor is because selling your own home is not easy… and most FSBO’s are a failure at doing it, themselves.

7. Show Only To Interested Buyers: You can be sure that buyers are truly interested in your property when they visit because they have personally made the effort to be there. They haven’t been dragged there by an agent using your property for comparison purposes only.

Spoken like someone who knows nothing about showing property. Agents will show your property in the interest of helping you sell it. But if they find that your home is overpriced, then yes - it will help sell another property. It’s called comparison shopping. Every educated consumer does it.

8. You have greater access to out–of-area buyers: Our internet site allows buyers anywhere in the world, easy access to your ad and phone number. Currently it is estimated that 1.3 Billion people have internet access.

My neighbor’s daughter has a MySpace page that anyone in the world can access… but few people can find it. If you want worldwide reach, a Realtor will have your listing on Realtor.com - as well as hundreds of other websites that pull their listings from the listing services.

9. It’s Easy: If you can sell your own car, you can sell your own home…it’s that simple. Once our marketing efforts locate a buyer—lenders, lawyers and title companies take over. Use our marketing resources as your best advertising resource.

Sorry - it’s not that simple. And if you believe that once a buyer is found, then the lenders; lawyers; and title companies will take over - you are sadly mistaken. Don’t get me wrong… I am not saying that you can’t sell your own home - many people do each year. If you decide to take this route, be sure you get educated in the process of selling your home. Just because someone says it’s easy - doesn’t make it so.

10. What is your alternative?  Listing with an agent? The “gravy train” days for agents asking 6% for listings should be dead. Understand that 9.5 out of every 10 listing agents don’t sell their own listings. So why would you even think about listing for a 6% commission. No Listing Commissions-EVER!

The reason why the so-called "gravy train" days of asking 6% aren’t over is because they never were "gravy train" days! Successfully listing and selling a property - especially in a buyer’s market - is not an easy affair.

And the reason why most agents don’t sell their own listings is the same reason why you should list with an agent. Agents are able to attract other agents who are assisting their buyer-clients in their quest for a new home - and this is done through the cooperation of the listing services.

Also, keep in mind that without an experienced agent to help guide you through the transaction - all sorts of bad things could happen. Sometimes, it’s just better to let the professionals handle your affairs!

If you are selling a home in Atlanta - you have a problem… don’t kid yourself otherwise. I don’t care how nice your home is… I don’t care how much you paid for it… I don’t care how well you’ve taken care of it… you are in competition with the real estate market Godzilla - the bank-owned property.

Last week I was on the phone with real estate investment broker Jeff Brown of Brown and Brown Investment Properties. Among the broad and diverse subjects we spoke about, I told Jeff about a local listing agent who is literally tearing up the market. His numbers were simply stunning.

He specializes in bank-owned properties.

We figured that his success was a result of not only obtaining the listing - but more importantly - convincing the bank to drop the price until the property sells. And sell, they are. To the bank, it’s simply a numbers game. Nothing emotional.

One of the properties he has currently listed is a home in a nice neighborhood that sold - new - in the summer of 2005 for $1.25 million. It is a four-sided brick home roughly 6000 square feet in size on a two acre lot in a gated subdivision. It has all the bells and whistles of a million dollar home - including the finished terrace level with home theatre. By all measures - it’s an extremely nice home that is still in very good condition.

This home went back to the bank nearly a year ago, and it went on the market at an aggressive price - with no takers. The price has continued to drop… and is now at $699K. Do you think any of the neighbors has a chance of selling their similar home for a decent price while this Godzilla is wrecking the neighborhood?

There isn’t a snowball’s chance in hell.

This week, a nice couple was referred to me to help them find and negotiate the purchase of a new home. Their intention was to find a distressed builder - but I quickly convinced them that we could find a better value in a bank-owned property that is only a few years old. I assured them that long before a builder will lose money on a property… the builder will go bankrupt and give it back to the bank.

Their thoughts of foreclosures might have been a little more like Greg Swann’s experience last week, but after viewing some of my recommendations online - they agreed to take a look.

So we looked at four foreclosures today, and for the most part - they were pretty decent. No serious damage. One of them was pretty much in perfect condition, actually… new paint and carpet - just like new.

Take a look at this slideshow of one of them. It’s a four-sided brick, 3400 square foot home on a full basement. It has hardwood floors throughout the main level; has a two-story foyer and two-story fireside great room; and five bedrooms with four full baths. It is a nice private gated community in a good school district.

For $375K - how are you going to compete with this?

Created with Admarket’s flickrSLiDR.

As a real estate broker, I frequently talk to people who either have a home they want to sell… or worse yet - have a home that they have been trying to sell for a long time.

They are all looking for the magic home selling  formula.

I wish there was a magic formula… but the truth is - there is none. Many agents will try to convince you otherwise… but the fundamental factors that affect the sale of a piece of real estate are the same as they’ve always been.

They are:

Price

Location

Available Terms

Condition

Exposure

There it is. There is your formula. No magic involved. It applies to every piece of property. It is the universal real estate truth.

Now let’s break it down.

You should note that Price is right there at the top… and that’s because every piece of real estate will sell at the right price - given that a potential willing, ready and able buyer is aware that the property is available for sale.

I’m sure you’ve heard the saying, "Location, location, location!" That’s because the more desirable the location - the more likely a quick sale at a high price can be obtained. Properties in more desirable locations are also more likely to have a higher appreciation rate than similar properties in less desirable locations.

Available Terms refers to the availability and cost of money. Right now, the cost of money is relatively low… but the availability of money is limited. Many people who could qualify for a mortgage two years ago can no longer qualify today - as many easy-to-qualify loan programs are no longer available. Available Terms also refers to your ability (and willingness) to hold a second mortgage or to provide some other incentive such as buying down a buyer’s interest rate.

The condition of a property has an effect on the marketability of a property. The better the condition - the more likely a quick sale can happen at a higher price… while properties in poorer condition are more likely to sit on the market longer and sell for a much lower price.

And finally exposure. No matter what the price might be - no matter where the location might be - no matter what the available terms might me - no matter what the condition might be - if no one knows your property is for sale… it won’t sell.

Now that wasn’t so hard to understand, was it?

Take note that of the five factors, YOU have control over Price and Condition; the Location is fixed; the financial markets have control over the Available Terms, though YOU may be able to make the terms more favorable; and your real estate agent controls Exposure. In other words - YOU have much more control over whether your property sells than your agent does!

If the condition and price are not in alignment with the market - no amount of advertising will sell it. Your agent can buy full page ads in the newspaper and rent billboards up and down the freeway - and in the end, it most likely won’t sell.

Here’s another bit of wisdom to you home sellers:

Of two similar-sized homes priced the same - the one that is in better condition will usually sell first.

Of two similar-conditioned homes price the same - the one that is larger will usually sell first.

Of two similar-sized homes in similar condition - the one that is priced lower will usually sell first.

While no one can deny the anecdotal evidence of some far-reaching real estate marketing efforts, you should not buy into the hype. Sure, a Carribean vacation or some other nice bonus might sway a buyer, but more often than not - it won’t.

The best advice I can give you is to present your property in the best possible fashion. Make it as attractive as possible without spending too much money. If you would like some general tips on this subject, download our Market Preparation Guide to assist you with some ideas that you can put into action today.

Next, talk to a few agents and pick one who suits your personality - and who offers sound advice on how to get your property sold. Remember - the best agent is the one who will tell you the truth… no matter how ugly the truth is. It is very easy to find an agent who will tell you whatever they think will get them the listing.

The current market has far more sellers than buyers, so it is crucial that you price your property properly. An overpriced listing will seldom sell - and since many areas are experiencing declining prices, you don’t want to chase the market down. I have seen many sellers who are still trying to sell their properties - after two years on the market.

Be sure that your property is photographed completely and properly. Poor photography will not serve you well. Buyers want to get all the visual information they can… so be sure they get it.

Be sure to review your listing to ensure there are no errors. Many agents will spell the name of a street or subdivision incorrectly so that other agents will not find it in the MLS. Why? Because they want to have both sides of the transaction. If you catch your agent doing this sort of thing… you might want to seek the assistance of another agent.

And be sure that your property is listed in BOTH the Georgia Multiple Listing Service (GAMLS) - as well as the First Multiple Listing Service (FMLS). This is very important, as not all  agents belong to both services… and you need to be sure that ALL of the agents in the area are aware that your property is for sale.

While this is not a comprehensive list of all the considerations you need to be aware of - these are some of the fundamentals regarding what you need to do in order to sell your property in Atlanta. It’s the same info I give to my fellow agents.

Seriously - it’s really not rocket science. It’s just common sense.