5 mistakes sellers make that cost them $$$

Sometimes, the real estate market can play games with our minds. At the top of the market, home buyers imagine that sellers frolic through fields of cash, rubbing their hands together mello-dramatically as they flip through hundreds of offers, concocting a "no brown M&M"-type contract clauses to put the screws to buyers-in-waiting.

At the bottom of the market, the tables turned, and sellers might have visualized buyers sitting on top of truckloads of cash, while deigning to offer them only a paltry few pennies for their Most Precious Asset.

Reality check: neither of these images are anywhere near reality. At the bottom of the market, even the most bargain-hungry buyers are riddled with grave concerns about whether and when to buy, as well as how to get through the maze of tight mortgage and appraisal guidelines. And the opposite is true, too. Even on today’s market - which is much more active than it has been in years - sellers fear making missteps and mistakes that will cause their home to lag or will result in them leaving money on the table, so to speak.
                                              
Here are five of the mistakes I see sellers make when the market heats up and buyers start biting - and some tips for avoiding them.

1.  Overconfidence.  Overconfidence is super serious, because it’s not a single mistake. Rather, it’s a mindset that can spawn a pervasive pattern of errors in judgment. No matter how hot or how cold the market is, as a seller, your task is to get a single home sold: yours. Until you have done that, you should take care not to make assumptions like:
·    any buyer would be grateful to have your house
·    you can now charge a premium for your home
·    if that house got multiple offers, yours will definitely get more, higher offers, or that
·    because relatively few homes are listed for sale in your neighborhood, you can get away with little or no staging or other property preparation.

Okay - so these might be (slight) exaggerations, but they’re not far off from the thoughts that can run through a hot market seller’s head, especially if you’ve been waiting for the market to thaw for a long time.  Keep overconfidence from fouling up your home sale experience by keeping in mind that:
(a)  Market dynamics are intensely local, down to the neighborhood, so even if your cousin across town sold her home in 10 minutes, that doesn’t mean you’ll automatically have the same fate.
(b) Markets change quickly, and the annual summer home buying uptick might be set to slow down a bit as the kids go back to school and the weather cools.
(c ) Most homes that sell fast or for more than asking are carefully prepared to do so, with above-average staging and very strategic pricing. If you want to create the same situation for your home, you’ll need to work with your local agent to put that same level of strategy and work into your listing.
                               

                                                                            

2.  Overpricing.  Do prices go up when buyer demand goes up?  Yes, over time. That does not mean, though, that a few months’ (or even a couple of quarters’) uptick in the market gives you the power to overprice your home without expecting to see the pricing reduce buyer interest in your home, the number of buyers who come to see the place and, ultimately, the number of offers you receive.

Again, the listings that perform well in hot markets are listings that are competitively priced. The homes that appear to present a solid value for the list price are the homes that buyers will be most excited to go see and make offers on.

To boot, what makes for a “hot” market at any given time is different from state to state, city to city - even neighborhood to neighborhood. The hard, cold truth is, in your area, demand might not have increased all that much. Or, increased demand might simply give you a better chance at getting your home sold - period - than you would have had a year ago.  Don’t automatically assume that a recovering national real estate market justifies cranking up the list price on your home.

Overpricing is one of most costly strategic errors sellers make in any market.  Avoid making this mistake by working through the data on what similar homes have been selling for in your area with your agent.

                                                    
3.  Insufficiently reviewing the offer before accepting it. An offer that will never close is a bad offer, no matter what price it has on the front page. And, unfortunately, the occasional ‘bad apple’ buyer is out there making extraordinarily high offers, beyond what the home will ever appraise for, with the intentional plan of demanding a price reduction when the appraisal (predictably) comes in low. There are a number of other offer flaws that are highly likely to get in the way of closing which agents can detect fairly easily, but which hot-market sellers are sometimes tempted to overlook when the offer price is sky high.

Savvy sellers take a pause, no matter how frenzied their offer process is, to work with their agents to vet offers before accepting one, taking care to:
·    assess whether the offer price is within the realm of reality as an appraisal value of their home by reviewing the comps - unless the offer is an all-cash offer or waives the appraisal contingency;
·    review the buyer’s offer to ensure that a reputable lender has checked their credit, income and assets, and approved them for a home loan (again, unless it’s a cash offer); and finally
·    where the buyer’s offer is all-cash or waives the appraisal contingency, reviewing account statements to ensure that the cash truly exists to close the deal (including the cash to make up the difference between the list price and the agreed-upon purchase price, if the buyer is trying to waive the appraisal contingency on a way over-asking offer).

                                          

4.  Prematurely accepting an offer.  Listen - if the first attendee that walks in the door to your Open House throws a stack of cash on the kitchen table on the condition that you take their offer RIGHT THIS SECOND, far be it from me to suggest that you should hold out. But I’ve never seen that happen. What I have seen happen a number of times is for a seller to list a home one day and take an offer the next day, not realizing that a large pool of other buyers who would have offered even more had simply not had a chance to physically get to the home.

In order to get top dollar for your home, you want buyers to compete with each other on price, not on sheer speed.

Sellers, you should definitely have a sense of urgency in responding to offers as they come in - especially if you get one (or more) that passes muster in terms of being highly close-able (see #3, above) and also comes in at or above the price you want. As well, some buyers do have an urgent need to know whether you’re planning to take their offer or not, and will disappear if you stall on their offer too long.

That said, I believe it’s premature to accept an offer before the property has been fully exposed to the market, meaning at any time before the average target buyer who would be qualified and interested in the property has had the opportunity to actually see it. So, if you had 200 people show up to the Open House and got 4 offers the next day, accepting one of the four might not be premature - the exposure to the market is clear from the facts that so many people saw it and that multiple offers were received.

Similarly, if your agent enters a note in the MLS that you would be taking offers at a certain time and date, that puts interested buyers in a position to see it and make an offer before the cutoff.

However, if you have had your home on the market for a very short period of time (less than a couple of days) and you get an offer that you’re inclined to take, best practice is to first ask your agent to ring the other agents who have shown or have expressed an interest in showing the place to let them know that you have an offer in hand and find out if any of them are serious about making an offer. (If so, give them a firm deadline for receiving offers.) If you do this, make sure you respond to the offer you have in hand before its expiration deadline, or get an extension, if you feel you’ll run late.

5. Failing to course-correct before it's too late. It's essential to know what milestones you should be expecting to hit at various points in your listing's timeline, based on how well-priced, well-staged listings move in your current market. And it's just as essential to have a plan of action for what you'll do to course-correct things if they don't move along as planned. Your agent can brief you on such data points as the average number of days a home in your neighborhood stays on the market before it goes pending (days on market, or DOM). From there, you can work together to put a plan in place around what you'll do, as a team, if:

·    no one comes to see the place,
·    tons of buyers come to see the place and no one makes an offer,
·    buyers and agents all unanimously say they like the place, but it's priced too high, or
·    your home otherwise lingers on the market much longer than average with no bites.
Sellers who fail to make an advance plan of action for auditing the agents who have shown it to get their feedback, revisiting the idea of professional staging, lowering the price or otherwise responding to market feedback at a certain point in time tend to course-correct too late - after the place has been on so long that buyers have started to catch a whiff of desperation.

 And yes - this can happen, even on a market like today's.

Kimmie Del'Andrae

Keller Williams Real Estate

801.209.8787

kimmiedelandrae@yahoo.com

How to get mulitple offers

As you might have heard by now, multiple offers are the new black. Well - kind of; if your own home is on the market or soon to be, it can seem like you break your back to prepare your home and it lags and lags on the market while all the cool kids houses and their sellers sit idly by, making champagne toasts while they are inundated with more offers than they can shake a stick at.
Let’s bust one myth: getting multiple offers rarely happens by luck alone. That’s good news for you, as it means that generating multiple offers is more of a science than an art. And that, in turn, means there’s a whole lot you can do to replicate these results with your own home’s listing.

Here are five elements I nearly always see in listings that get multiple offers:

#1. Listed low.  Homes that get multiple offers are often sold in what industry insiders call an auction atmosphere. If you think back to the last auction you saw on TV or participated in online, you’ll remember this basic element of Auctions 101: the starting price is lower - sometimes quite a bit lower - than the final sale price.
In fact, it’s the low list or starting price that gets people excited about the possibility of scoring a great value, whether they’re bidding on an antique Clown figurine on eBay or on your home.  And when it comes to your home, it’s that same, low-price-seeking excitement that will cause many more buyers to show up and view your home than would have come at a higher price point.
In real estate, more showings are an inescapable prerequisite to more offer$.
Now - I’m not at all suggesting you give away the farm, just that you price your home from a retailer or auctioneer’s perspective, rather than the all-too-common backwards reasoning to which home sellers so often fall prey. Work with your agent through the comparable sales data - as recent and as comparable as possible - and then do your best to list your home as a slight discount, not at a slight premium, compared to the recent neighborhood sales.  That will get buyers’ attention.

#2.  Easy to show.  Walk a mile with me, if you will, in the shoes of the average home buyer or their agent. Let’s say there are 50 homes on the market which meet your rough specifications (We’re lucky if we can find 3 in this market)  in terms of bedrooms, bathrooms, square footage, price range and location. You can narrow it down to your 30 top priorities to see. But you only have time to see 8 today. Now, of those 30 top priority properties, about 15 are short sales or foreclosures and you can get into them anytime you want. And the other 15 are split down the middle - half of them are available to be seen with nothing more than a single phone call.  The other half require you to hurdle a ridiculous obstacle course of phone calls, 24 hour notice requirements, strange hours of availability and more phone calls to get an appointment to see the place.
Which would you go see, and which would get ruled out? I think you know the answer!
I am not exaggerating one iota when I tell you that your home could be priced well and marketed well, but if you make it too difficult for buyers to get in to see it, the statistical probability is that they will (a) find and choose another home from those that are more easily accessible to view, and/or (b) assume you are not motivated to sell, get irritated and pass on your home as a result.
Want multiple offers?  Make sure your home is available to be shown on demand, or as close as possible to that. Inconvenient?  Yes.  Frustrating?  Sometimes.  A challenge to keep the place clean at all times? Assuredly.  But, my dear reader, no one ever promised you a rose garden; decide what your priorities are and, if you decide that getting top dollar for your home is at the top of that priority list, then also decide to be willing to deal with the inconvenience involved in churning up multiple offers and getting your home sold. 

#3:  Immaculate look and function. The homes that get multiple offers (outside of the foreclosure arena, anyway), are those with look, feel and function that can be described in one word: covetable (aka “I want that“!). You’re not trying to create a situation in which your home barely edges out the listing down the street in the hearts and minds of your target buyer. If you want multiple offers, what needs to happen is for multiple buyers to fall deeply in love with your home - enough to brave the competition and put their best foot (and top dollar) forward.
Today’s buyers are no dummies. They’ve just lived through the worst real estate recession anyone can remember, and they’re much more frugal that buyers were at the last peak of the market. To boot, mortgage and appraisal guidelines and their own smart sense of frugality prevents them from just hurling dollars at any old place. Accordingly, they are not easily tricked into competing for a home by a slipshod paint job and a few pieces of Pottery Barn furniture. (although I do love Pottery Barn)
To generate multiple offers, prepare your home by ensuring it is:
* Immaculate from the inside out - basements, garages and crawl spaces included
* Decluttered and staged to the nines - including fresh paint, carpet and other things that     need replacing- (see my staging Blog)
* In fine mettle - make sure things like doors, windows and systems buyers test (e.g., stoves, faucets, heating and air conditioning) are not creaky, wonky, ( yes that is a word!) leaky or otherwise dysfunctional - and if you’ve done any major home improvements or replaced any appliances or systems lately, market that fact to show off the move-in readiness of the place

#4: Just enough market exposure.  If you’re home is so lucky as to get an offer the first day or so on the market, count your blessings. But also calculate your opportunity costs: many buyers can’t get out to see homes that quickly - some are unable to house hunt except on the weekends! In my local markets, I’ve seen time and time again that listing agents who are skilled in cultivating multiple offers often plan from the jump to allow the home to be exposed to the market long enough for all qualified and interested buyers to see it and get their offers on the table.
And what’s more, they expressly message the calendar for market exposure, Open Houses and even the offer date and review timeline in the listing, from the very beginning. Here, it’s very common to see a listing come on the market with a calendar of 1-2 Open Houses and an offer date sometime early in the week following the second one. Ask your agent to brief you on the standard practices for market exposure in your local area.
Allowing for ample market exposure - and including the timeline in the listing - lets buyers know that they will be able to get to the property and get their offers considered, and creates some urgency, as well.  Smart buyers interested in properties like this will take care to have their agents contact the listing agent as soon as they think they may want to submit an offer, though; this way, if someone makes a so-called ‘pre-emptive’ offer, you’ll get a call from the listing agent and a chance to compete.
#5:  Sellers who are willing to revise. f you think most of the tips here are not for you because you’ve already blown your chance to sell for more than asking - think again! A number of times, I’ve witnessed what I call the Sweet Spot Phenomenon, where an overpriced home sits on the market for months with no bites, sometimes even through multiple price reductions. Finally, the seller lowers the price to the ‘sweet spot,’ and it generates multiple offers and sells for more than the final list price.
There are definitely homes whose sellers net more than they expected because they were willing to revise the list price downward in response to market feedback (i.e., no showings, no offers or lowball offers).
If your home’s been lagging on the market, talk with your listing agent about what sort of price reduction strategy is likely to maximize your net sale price. Hint: many more buyers are attracted by chunky reductions or reductions below a common online search price point limit than by tiny, incremental reductions. For example, you might draw more flies buyers, and ultimately more money, with the honey of a price reduction from $499,000 to $474,000 than with a series of small reductions from $499,000  to $479,000, because there is a set of buyers who may be cutting their search off at $475,000 - so a price cut below that point will expose your home to a whole new group of prospects.
Happy Selling
Kimmie DelAndrae
Keller Williams
801.209.8787