Thursday, September 20, 2012

How Things You Read and Hear Can Hurt Your Effort To Sell Your Home


There are many sources of information today that can influence the sale of your home, from online sources like Zillow and Trulia, to getting the opinions of your friends, its important to weigh these in proportion to the advice you’re getting from your broker. While Zillow, Trulia, and other online sources have some great content, its important to remember that it many times is not market specific to what may be happening here at Lake Norman. Your friends can also be sources of opinions, its just important to put those in perspective as just one of a handful of comments you’ll hear while your home is for sale. Here are some of the more common mistakes people can make when evaluating your home.
1. “My friends tell me that they’d rather pick what updates go into a home they buy, so I’m going to wait and let a buyer do their own”. Sure, anyone if given a chance to pick their own tastes, will say they want to do that, particularly if you’re having a conversation with a friend about why you don’t want to update. Friends, unless they are unusually blunt, are many times going to agree with you, many have not actually gone through serious remodel projects themselves, and typically are not thinking from the standpoint of someone moving from out of state, which is currently 50% of our local traffic. What we saw in a recent study of all the homes sold in River Run the past 12 months, was that homes with partial updates garnered roughly a 20-40.00 per square foot premium over homes with no updates, while homes with maximum updates brought up to 60.00 per square foot more. On a 3000 square foot home, that’s anywhere from 60,000 to as much as 180,000 in resale price, more than enough to justify updates. What’s more, the updates alone raised the odds the house would sell to begin with. Many buyers do not want to deal with the unknowns and hassle of doing their own updates, particularly if they are moving from out of town, and given a choice between doing their own and accepting something close, they will many times choose the latter.

2. “I’ve read that people from the Northeast, Asia, and Europe are buying real estate as an investment, why isn’t my home being advertised in those areas?”. Its true that given the unpredictable nature of the stock market and the attractiveness of home prices, that real estate is once again becoming popular with overseas investors. The facts are that many of these people are attracted to high profile areas like California, Florida, Manhattan, and Las Vegas. Not only are these recognizable areas, but they are also those which have sustained some of the largest price devaluations in recent years. Investors are attracted to places with 50 and 60% reductions in value, particularly those which are widely recognized. Our firm periodically advertises in unique channels which tap into these pools, but when we do so, we are typically touting the entire Lake Norman region as opposed to an individual house. The odds of one individual house selling from that type of ad are extremely long, as most shrewd investors, even if they do have interest in the area, will then proceed to shop homes as values within the context of others in that area. Finally, with all of the channels available for people to shop online, even international shoppers and those from other areas of the country have little problem finding properties on sites like Realtor.com, The DuPont Registry, etc. both of which get a fair amount of international traffic.

3. “The Zillow Zestimate Says The House I’m Selling Or Buying Is Worth More or Less”. There are lots of great new tools online to help you understand information about homes. However, as you climb up the food chain with custom features and various types of golf course or lakefront views on Lake Norman, its almost impossible for a computer program to have any idea what the inside of the home looks like, its trims or updates in critical areas like the kitchen or master bath, etc. “Zestimates”, are probably a decent indicator in tract communities where lot size and builder updates were comparable from house to house, but when you start moving up into custom homes and those with a wide variety of expensive features and upgrades, the most accurate indicator of price, far and away, is the value of the closest and most recent sold comparable homes, and at times that can be a very challenging thing to pin down. One of just many reasons you need a realtor who’s been in every home in close proximity to your price range.

4. “Realtor Fees Are High For Just Marketing The Home, I’m Going To Try By Owner Or A Discounter Firm”. One of the great misconceptions about the fees involved in selling your home, is that of associating the cost to “market” your home, with what you are actually paying for, which goes well beyond that part of the process. At our firm, getting the house maximum exposure is just one small part of what comes with our fee. Many of our clients are selling expensive homes, and strategy of pricing, understanding when market momentum is or isn’t in your favor, as well as the negotiating of the deal, can many times impact one of our clients by 50,000 to well over 100,000 dollars in the eventual negotiated price of the home. This winter we had a client who saw an agent down the street in The Peninsula dramatically reduce and sell a home in the 500k range to a list of 510 and sale of 470k. It was January, and our leading indicators told us that due to the lower inventory this spring, an increase in early showing traffic, and improving economic picture, that our clients with a similar home had a chance to do better than the one down the street. We advised that they hold their ground, not reduce to under 500, and in March we sold the home with multiple offers at 520,000, a more than 50,000 dollar premium to the home down the street. Our clients had asked should they reduce, and while it would have been easy for us to say yes, we advised against it and made our clients a huge amount of money. That 50,000 went well beyond a couple percentage points of commission on the broker fees, it represented almost 10 percent of the value of the house. How your broker prices a home, how they negotiate the deal, and how the handle the inspections and appraisal on a luxury home, can impact the ultimate sales price by amounts of money that double or triple the commission fee, something to think about in evaluating selling your home.
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