A Plan of Action to Sell Real Estate in San Diego for Top Dollar
Or, Just What Exactly Do You Do Besides Put Your Home Into the San Diego MLS Listings And Wait?
In this article, I will discuss:
1. The philosophy/marketing approach that we use when marketing your property.
2. The Pricing Strategies that we have found to be effective.
3. The specific methods we use to generate a fast sale at top dollar.
Point # 1
In my experience, buyers buy a home for aesthetic reasons first, and then they will back up their emotional decision with logical reasons.
Here’s a brief “Wish List” of what buyers generally look for in a home.
1. Quiet, peaceful, no-traffic neighborhood.
2. Nice views, especially water views.
3. A modern kitchen with light colored cabinets and granite countertops.
4. Interior of home should be light & bright.
5. Appliances and mechanical/electrical systems should be up-to-date.
6. Roof that will be trouble-free for the foreseeable future.
7. Polished hardwood floors, ceramic tile, or new/newer carpeting.
8. Well-maintained and attractive landscaping.
9. Usable outdoor living spaces such as decks and patio (preferably some private areas).
10. General emotional/intuitive feel of the property and surrounding area/neighborhood.
Obviously, the more of the above features that a property has, the easier it is to market and sell the home. Generally, buyers will not pay the top of the market price or in the upper price range of the properties selling in the area/neighborhood if the property lacks many of the above features or if the property lacks the specific features that they are looking for in a home.
Buyers will discount the offering price of a home in order to bring it up to the aesthetic standard that they want. Buyers have a tendency to “horrible-ize” (you will not find this word in the dictionary) both the features and price it will cost to bring the property up to standard (their standards, of course). Therefore, this leaves you, the seller, two options, if you want to sell your property:
1.Fix the obvious features that are lacking and obtain the best bids before the buyer sees the property and then, sell the property to the buyer. This option generally will net you more money.
2. Adjust the price of the property to reflect the need for upgrading the property to the “Generally Accepted Standards of Most Buyers” (The Wish List). This option generally will net you less money because the buyers have a natural tendency to “horrible-ize” how much it will cost to get the work done and most buyers cannot “mentally” move-in to a house that doesn’t have the features already in place. It is easier for a buyer to keep looking for another property rather than risk underestimating the costs to bring the property up to their standard.
3.Many sellers think that there is a third option, which sounds like this: “According to my own personal standards as the seller, I think the kitchen is just fine with its Formica countertops, and the shag burnt orange carpeting is okay as long as it’s cleaned. If the buyer wants, maybe I’ll credit them some money to clean it.”
The problem with this option is that it takes longer to market the property because the house is a “re-do” in all buyers’ minds. Ultimately, the price the buyers offer (if they make an offer) will reflect what they think needs to be done and how much they think it will cost to do it.
For example a seller might think that it costs $10,000 to remodel a kitchen; a buyer will think it costs $30,000; and the reality may be $20,000. Naturally, a buyer will use their own estimates when deciding whether they will make an offer and how much money will be offered. In this example, the difference in the buyer’s and seller’s estimates would be $10,000 just for the kitchen remodel alone. This assumes that both the buyers and sellers can agree to meet somewhere in the middle.
The reason I am taking the time to explain this entire process is to be sure that you, as the sellers, understand how buyers make their first emotional decision to buy a house.
Essentially, they make a Wish List and compare each home they see to their Wish List. Then, if they like most of what they see, they make price adjustments (discount the asking price based on their price estimates) for the items missing from their Wish List.
You will net more money if you do the upgrades yourself. This is true because whoever gets to do the work to bring the property up to standard is entitled to what I call the “work contingency effort/risk monetary factor”. In short, whoever (the buyer or seller) does the work is entitled to receive the monetary benefits or gains that come with getting lower bids and/or taking on the risk to complete the desired work.
On the other hand, it is possible for you to “over improve” your property. For example, I’ve seen homes where the sellers have put top-of-the-line improvements into a home in a middle-class neighborhood. Unfortunately, the sellers cannot get that money back, because the improvements are out of character with surrounding homes.
In most buyers’ minds, they expect things to be done right and in good working order when they make their initial offer. If some things have been “over improved”, this will provide the logical reasons they need to move forward in buying the property. However, “extras” that you’ve added for your own sense of comfort or security will not generally add much to the market value of the property. It will help the house to sell faster, but the neighborhood sets a “ceiling” price for your house, no matter how much better it is than your neighbors.
Point # 2
Before detailing the various options regarding pricing strategy, it’s important that you understand the following points:
1. There are three types of overall market conditions when selling your home. They are:
· Seller’s Market – This is when the inventory is a specific area is low. Properly priced homes generally sell within 14 days to 21 days maximum. If your property has not received an offer within this time period, it is priced too high. Typically, the overall prices of homes will begin to appreciate when the backlog of homes for sale are sold and the trend after three or four months indicate that the seller’s market will continue for the next few months. Otherwise, it is just a spike in the market. It is important to note that some cities in the San Diego Area can be in a hot seller’s market while others may not.
· Normal Market – This is when there is no real perceived advantage to either the buyers or the sellers. Properly priced homes should sell within 30 to 45 days.
· Buyer’s Market – This is when you have lots of homes on the market for sale in every price range and area. Properly priced homes should sell within 45 to 60 days. In this type of market, sellers must do all the necessary things to make sure their home is staged and presented well to the public and it must be priced at or below the last sale that was comparable to their home. Usually, homes are declining in value in this type of market. Therefore, the sooner you sell, the better it is for you.
2. Within the past few years, the National Association of Realtors researched the history of homes that actually sold in all three types of markets and they discovered two startling pieces of information:
· Ninety-five percent of all homes that closed escrow sold within 60 days after the listing price (seller’s asking price) was set at the appropriate market price.
· Of the homes that sold within 60 days after the seller set the appropriate market price, the homes generally sold within three percent of the seller’s asking price. Therefore, if a property has not received an offer within these reasonable time frames, it is overpriced by at least 5% to 10% and possibly more.
3. The majority of buyer activity on a new listing occurs in the first two to three weeks of the marketing period. This is because real estate agents have active prospects that they are currently working with to find a home in a specific price range. When a home is newly listed, real estate agents will arrange for their prospects to see the home. For this reason, it is important that sellers have their home in the best condition and at the right price at the first exposure to the market.
4. The wrong price attracts the wrong buyers and the right buyers won’t see it. Most buyers represented by real estate agents will not look at properties priced way over its fair market value. Buyers are “picky enough”. Real estate agents don’t want their buyers falling in love with properties that they can’t afford to buy. In essence, if a property is priced at $525,000 when it should be priced at $475,000, the buyers looking for a home with a fair market value of $450,000 to $500,000 will not be shown this home.
5. The obvious value of the Multiple Listing Service is that 80% to 85% of all homes sold in the area are sold through the Multiple Listing Service. However, the real estate agent, not the company they work for, that you hire to sell your home is the critical cause factor to exposing your home to both the other real estate agents and the general public itself in order to get your property sold. It is the individual agent that has to network properly with the other key agents in the other companies in order to get your home sold.
6. A real estate agent has no control over the market, only the marketing plan. Real estate prices go up and down, just like the stock market. You should never select a real estate agent based on the price they tell you. You should first select the real estate agent based on the services provided and competence. Then, you and the real estate agent should select your initial marketing price based on the pricing strategy you select.
7. The value of a home or amenity is determined by the amount that a buyer is willing to pay given a set of circumstances. The value of a home or amenity is not determined by the cost invested in a property, but by the value derived from it.
Pricing Strategies Available to Sellers
1. “As Is” Pricing Strategy With Termite, General Home Inspection plus any other necessary inspection reports – After reviewing the reports, you can properly price the home based on a accurate knowledge of the condition. You can also protect yourself from the potential legal and financial risk due to full disclosure laws. This strategy is most often used when the seller is in financial distress and cannot afford to make any repairs.
2. “Hot Property” Pricing Strategy – This pricing strategy is particularly effective in all types of overall markets. Generally, you get all the pre-sale inspection reports, correct all the items that are affordable, then put the property on the market at fair market value. Usually, you “make yourselves unavailable” to hear offers for 3 to 5 days (to give all potential buyers a chance to see the property) and then, hope you receive a great offer that is acceptable to you. Depending on the price, multiple offers may be possible using this strategy. However, no real estate broker can promise that you will receive multiple offers so you should price the property at or near the lowest price you are willing to accept for the property when using this strategy. This strategy is most often used by executives who are moving to a new higher-paying job and need to be there quickly. The possibility of leaving a few dollars on the table is outweighed by the gain of being in the new location sooner.
3. “Traditional Get It Sold” Pricing Strategy – With this strategy, you should obtain all the pre-sale inspection reports necessary and then, after listening to your real estate agent’s advice, select the initial marketing price of the home. Then, the real estate agent does the marketing activities necessary to expose your property to the real estate community and the general public. Every 21 to 30 days, you and the agent discuss whether the property condition needs to be and/or reduce the price by 5% to 10%. Then, the agent does most of the marketing activities again with the property at the lower price and/or upgraded condition. Then, every 21 to 30 days, you continue this process until the property is sold. By the way, this is the strategy that all major institutions such as lending institutions and relocation companies use to sell their own properties. If you follow this strategy, you should have your home sold within 3 months at the latest (and most probably sooner) as long as the initial marketing price selected is not too high.
Questions You Should Consider Before Selecting Your Pricing Strategy
The three major factors in getting a home sold are the marketing price, motivation of both the buyers and the sellers and the marketing plan of the real estate agent. The things you can control are the initial marketing price and your own personal motivation for selling the property. The real estate agent is responsible for implementing the marketing plan. Take the time to honestly answer and write down a few notes for the following questions:
1. Are the benefits of moving important enough to you to price your property at the fair market value or close to the fair market value?
2. Is your opinion of value based on recent (within the last 3 to 4 months, six months at the latest) neighborhood sold prices?
3. Does it make sense for you to stay in the property any longer than you have to stay?
4. Are your financial needs influencing you to want to price your property higher than the fair market value?
5. Are you willing to seller finance a portion of the financing for a potential buyer, if necessary?
6. Where are you moving to?
7. How soon do you want to be there?
8. Have you heard about any other properties in your immediate vicinity that will be coming on the market relatively soon? How does your property compare to that property?
9. Do you have other properties that need to be sold?
10. What do you really want to be doing in the next 6 months? Next 12 months? Where would be the best location for you to be doing what you want?
In the best case, you can anticipate the following type of scenario to unfold with respect to the listing, sale and escrow process:
Properly priced properties should receive an offer with 30 days of being listed on the Multiple Listing Service. Generally, an escrow will take 30 to 45 days until the sale is complete. So in this scenario, a seller can expect the sale process to take about a minimum of 60 days. If we have 1 or 2 price reductions before we get an accepted offer, the entire process can take about six months to complete. Consequently, sellers should consider listing their property about 3-6 months before they absolutely have to move to the new area.
Some Specific Marketing Strategies To Generate top Dollar
Of course, we do all the “typical” things that other agents do, such as install a sign, a lockbox, and so on. You probably assume that there is a minimum set of activities that all agents do, and you’re right. I’ve seen many a “Plan Of Action” that puffs up these minimums with vague statements like:
“Promote your property to other agents for maximum exposure.”
“Include your home in our innovative marketing and advertising.”
I won’t use flowery language to make the basic exposure of your property sound more impressive. You can assume I do what everyone else does, just as a minimum starting point. Instead, let’s talk about some of the more unusual marketing strategies that we use. We use these methods because we want the same things you do: to get your house sold for the most amount of money possible, within your time frame, and with the least amount of inconvenience to you.
MLS / Internet
Of course, we place your home in the county-wide Sandicor Multiple Listing Service so every agent will know about your home for sale. Another agent might send a member of their staff over to the property to take a picture. They’ll take a picture at whatever time of day they get there, in any lighting condition, with the garage door open, the trash cans and hoses in front, whatever. I will personally take my own pictures, showing your home at its best, and post them on the MLS myself.
|(photo by agent X)||(photo by Dennis Kaiser)|
Keep in mind that our MLS is on the Internet, and this is the picture that the world will see, not just local agents. So making sure there’s a beautiful picture might sound like a small thing, but it really makes a difference.
By the way, no matter who you list with, your house will be on the Internet at www.realtor.com, which contracts with our local MLS. So don’t let someone tell you how he or she will expose your property to “scadzillions of buyers” with their awesome Internet presence – all they do is put it in the MLS and it’s automatically on the Internet.
One of the best ways to use the Internet to promote your property is with a slideshow. A slideshow is a series of pictures, more than the MLS allows, set to music. This gives the person looking at your property a feeling of actually “being there”. When someone who have seen a slideshow calls on your property, they are already pre-disposed to buying it, since they already like what they’ve seen.
Having a slideshow means that your home will be viewed in its best possible condition every single time, without you having to clean it up every time someone wants to “take a quick peek”. Your home can be viewed by real estate agents and buyers 24 hours a day without having to interrupt your life. What a great way to have maximum exposure with minimum inconvenience! If you choose to work with us, we’ll order a slideshow for your property immediately.
You can expect full color fliers to be delivered to your home within days after hiring us. We take multiple pictures or panoramic pictures whenever possible to show off the property’s most desirable features.
The descriptive wording on fliers and ads is very important. We want to be able to hit as many “buyer hot buttons” as possible. We’ve learned that certain words evoke powerful emotions that will cause buyers to want to see, and possibly buy, your house. Words that convey a feeling of SAFETY, SECURITY, and COMFORT. In the upper price ranges, these things are assumed, and the hot buttons then become PRESTIGE and STATUS. The more I can do to stimulate these emotional hot buttons, the more “good feelings” people will have about your house.
Your Home’s Own Website!
The advantage of this is that all kinds of information can be available to any interested buyer at any time. This may include street maps, aerial maps, school information, demographics, fliers, and slideshows. All kinds of information can be presented that cannot be put on the MLS or hung in a brochure box on your sign.
The Auction Effect
Wouldn’t it be great to have multiple offers on your house? Talk about being in the driver’s seat! That situation works so well for sellers that I try to make it happen as often as possible. How this is done varies with each property, and we can go over some of these techniques when we meet. In general, it involves trying to get people to see the house at the same time, or responding to offers in such a way as to encourage a multiple offer situation.
Sound interesting? These techniques aren’t for everyone, and some are a bit unconventional. But I can tell you this — I’ve had some of them used against me when representing buyers, and I didn’t like being on the receiving end. But I had to admit that it sure worked out well for the sellers.
I could go on, but I hope I’ve given you enough to convince you that I’m serious about getting your house sold. I’ve dedicated myself to staying at the forefront of technology so that you have every advantage in the sale of your house. I’ll be happy to sit down with you and discuss just how easy it can be to move on to your new life. Just contact me at any time.