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Posts Tagged ‘Home Sellers’

In the real estate business, buyers rely on their agents to provide lots of information to help them with their choices.  When they finally choose a property on which to make an offer, they particularly want two important pieces of information.  One is knowing what their alternatives are.  In other words, what properties are in competition with the target property.  They get that in their initial property search.  The other piece is knowing what other buyers have paid recently for similar properties.  Almost every buyer wants to know this because they don’t want to pay too much, with “too much” being based on those similar sales.  Agents look in the records of recent sales to provide that information to the buyer.  These pieces of info, plus other details about the useability of the property, tax bills, financing options, etc. are what the buyer and agent use to come up with a target price for the property in question.

Sellers sometimes have difficulty grasping these fundamental facts.  Instead, they base their decision on what they want to sell their property for on things like what it would’ve sold for a couple of years ago, what they need to get to pay off their mortgage, what they need to get to buy the next property, or what some relative or neighbor told them their property “ought to be” worth.  The fact is, the buyers in the market don’t care a whit about any of that (see buyers information desires above).  They are just looking for a property that will meet their needs, and one that they can get at a price based on the recent and current market.  If I had a dollar for every time I’ve heard a seller say, “well, I’m not going to give it away!”, I’d have a nice little nest egg.  They just don’t get the fact that the buyers don’t care.

The dilemma I face with sellers like this is that to tell them the truth is often to cause them to look for another Realtor who will tell them what they want to hear just to get the listing.  They do this because they’ve seen plenty of times when a seller will list at too high a price, but will eventually wear down and start dropping their price until it maybe sells after a year or more on the market.  In some cases, because the market is soft, buyers will “low ball” offers just to see what kind of good deal they can find, and tired sellers will sometimes take the deal.  The trouble with that approach is that when prices are continuing to fall, the seller ends up taking less than they would’ve gotten if they’d priced their property realistically with the then-current market, effectively shooting themselves in the foot.

So, is honesty the best policy?  I think so due to what I understand is my fiduciary duty to do what’s in the best interests of my clients.  Do I lose business because of it?  I guess so.  Is that “being honest to a fault?”  Maybe, but I think for me, it’s worth it in the long run.

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The Housing Opportunity Foundation, the charitable arm of the Charlotte Regional Realtors Association, recently held a workshop for Realtors on foreclosure prevention.  Many might think that is an odd thing for Realtors to pursue, but it really isn’t. It’s true that we won’t have a chance to sell a property that avoids foreclosure, but we Realtors have some very good reasons to help people avoid that calamity.

Years ago, when we were working on a market analysis for a prospective seller or buyer, we would occasionally see foreclosures among the other similar properties that had closed.  They were rare enough that we didn’t put much weight on them to influence our recommendations on market price.  Nowadays, foreclosures are such a large part of the real estate market that we, and lenders’ appraisers, can’t avoid considering them as a substantial part of the market.  That part continues to drag down the overall prices of houses currently on the market.  It also does great damage to neighborhoods that otherwise might be thriving.  Sellers of non-foreclosure homes have great difficulty adjusting to the market that is so heavily influenced by these foreclosures.  In order to compete, they must drop their prices far lower than they’d like.  Foreclosures are so much on the minds of buyers that I’ve had several begin their conversations with me with “find me a foreclosure”, asking me to ignore the rest of the available homes.  This is not a good idea since there are some very good deals to be had from non-foreclosure sellers who know they have to compete with these foreclosures and short sales.

Our industry gurus say that we still have at least another year of heavy foreclosures ahead. Realtors are trying to do everything we can to help people avoid them.  At our workshop we heard from many providers of free guidance for people who might be facing foreclosure.  Of particular interest was the presentation by Tami Hinton, Director of Consumer Affairs of the NC Office of the Commissioner of Banks.  She provided two web sites that have tons of info on how to get help and guidance to avoid foreclosure.  The sites are www.fightncforeclosure.org and www.ncforeclosurehelp.org.  If you or someone you know may be facing this problem, these sites can be of immense help.  If the problem is addressed early, very often it can be worked out for the homeowner to stay in the home.

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Perhaps you’ve read all the gloom and doom reports in the news (or on TV, internet, smoke signals, etc.) about how the housing market is still in the tank and heaven only knows when it will come back.  I just wanted to put a little perspective on all these reports showing statistics that indicate that our real estate market has still not turned around.  Those stats do have some bearing as an indicator of the condition of our overall economy, but they shouldn’t be interpreted as being a reason to stay out of the real estate market if you have a good reason to buy or sell.

The fact of the matter is that when someone needs to sell property, there are people out there willing to buy it.  When you see that sales are off 25% from last year, that means that there were still millions of houses being sold during the period.  The buyers are getting great deals and the sellers are giving up more than they’d like, but they do close real estate sales.  What’s more, when the seller goes on to buy another property, they likely will make up for their initial “loses” in the low price they pay for the next property, and they’ll get a remarkably low mortgage rate, too.

What it comes down to is if you’re a buyer or seller in the market, the statistics can inform you about how much competition is out there and what prices will be prevalent, but the stats don’t tell you that you can’t make a deal on real estate.  I’m working with buyers right now who want to move to the Lake Norman area.  They are ready, willing and able, and I can show them the local numbers showing what’s been selling and at what price in order to help them come up with a reasonable offer.  Same for sellers who really want to sell.  We can come up with numbers from our local market reports that prove that at the right price, properties will sell.  Sometimes it takes awhile to find what that price is, but in most areas, there will be willing buyers.

A little patience and a positive attitude go a long way in this business.

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I withdrew one of my Iredell County listings today by mutual agreement with my seller clients.  We had put the house on the market last spring, and priced it according to what little history was available in the community for similar houses.  We agreed that if the house didn’t get some showings, the sellers would agree to lower their list price.  Time passed, and we did get a few showings, but no offers.  It tried to get them to reduce their price to get more traffic through the house, but they felt at that point that they couldn’t do it.  In the meantime, houses in their neighborhood were being sold as foreclosures or short sales for much lower prices than what we would have previously expected.  Those sales have pulled the “comps” down to the point where our listing was getting no attention whatsoever.  The sellers don’t have to move and decided to just pull the house off the market and wait for better times.  I cautioned them that per the economic gurus’ recent statements, those good times will be several years into the future.  One economist said yesterday that the glut of foreclosures will not be absorbed by the market until sometime in 2013.  Of course, things can happen that the economists don’t foresee that could improve the picture sooner than that, and I hope they will.  I’ve seen that happen in the past, but it’s not something you can count on.  Real estate sales prices in our area continue to be soft and continue to drop in some areas.  If you don’t get ahead of that curve with your list price, the market will ignore you.  It’s a tough lesson, but true.

This is a time when sellers who need to sell and are able to sell can find buyers, but at much lower prices than in the past.  If they do that and then become buyers of their next home, they can come out “smelling like a rose” because they’ll buy the next house at a similarly low price and at 50 year low interest rates.  If you don’t need to sell or the numbers don’t work for your sale, then you may as well stand pat.  It serves no value to the seller or the listing agent to try to market a property that is priced above market.  Marketing has its limits, and no amount of marketing will cause a person to pay a too-high price when there are better valued alternatives available.

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I recently spent several sweltering days showing houses to a great young family moving to the Lake Norman area as a result of a job change.  We had started the housing search several weeks ago and hoped to have a selection and negotiate a contract before they left to go back to their out-of-state home.  Fortunately, we did find a house that they really liked.  Unfortunately, it was priced a lot higher than they felt comfortable paying.  Fortunately, at least for my clients, the seller (it was a bank-owned property), after a couple of rounds of negotiating, accepted an offer that was within my clients’ range.  The agreed price was substantially below the list price.

I tell you this to make it clear that sales similar to this are a big part of the current market.  There are many bank-owned properties out there and many short sales opportunities where the original owner has gotten their lender to agree to accept less than a full payoff of their loan as a result of anticipating a relatively low sales price.  These situations help to define the market- the prices that ready, willing and able buyers will pay for similar properties.  This will not change until the inventory of bank-owned and short sale properties is reduced to become a small portion of the real estate market. 

For those wanting to sell their property, this fact has to be considered in setting a competitive list price.  Buyers’ agents see the sale prices and lenders’ appraisers see them too, and base their decisions on them.  There’s no way around it.  Yet, if the seller is going on to buy another property, they will likely benefit from the same depressed price situation for the property they want to buy, so you’ve got to keep some perspective on this process. 

If you’ve got a property on the market now, and it’s not getting showings, the local market prices may have dropped since you set the list price.  You’ll need to seriously consider getting ahead of the curve on falling prices in order to stay competitive.

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There are two kinds of sellers of property.  The first kind, and the kind that I like most, have a reason to move that is important enough that they will price the house competitively in the current market.  They understand that there are buyers out there right now how want to buy a property, have the means to buy a property, but also often have lots of choices about what property to buy.  The sellers know that buyers are looking for the best value in terms of location, condition, and price.  The sellers know that the buyers don’t care what the seller wants to get out of the property or what they’ve spent on the property- not their problem.  The sellers know that if they plan to buy another property, then they can afford to take a little less than they’d like because they’ll likely make up for it when they change roles and become the buyers looking for the best value on their next house.  These are properties that sell well in today’s market, and the sellers get to move on to the next part of their lives.

The second kind of sellers are those who would like to sell only if they can get their desired price which is usually quite a bit higher than the current market will pay.  The current market is defined by what buyers have actually been paying for similar properties over the recent past, not by what sellers want, or what the tax value was two or three years ago.  That was then, this is now.  These sellers are waiting for what has been described as “two suitcase buyers.”  These are buyers with one suitcase full of money and the other suitcase full of stupid!  The irony of this is that if they do find a “two suitcase buyer” who will sign a contract for a high selling price, they better have enough cash in one of those suitcases to pay in full with no mortgage.  This is because if they do have to get a mortgage, it’s likely that the home will not appraise for the sales price, and the mortgage will be denied.  Most overpriced sellers never think of that until it’s too late.

Denied mortgage means no sale which means unhappy buyer, unhappy seller, and unhappy Realtors.  Not good all around.

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Did you know that if you own rental property and wish to sell it,  any current written lease will transfer with the property to the new owner?  This can be used to the owner’s advantage since a property with a current lease and positive cash flow is more attractive to a new rental property owner.  Think of it this way- if a person buys a property with the intention of leasing it, they have to be concerned with the time and cost of getting a good renter in the property.  It may take weeks or months to do this, while during this time, the owner is getting no positive cash flow from the property.  If you sell a property that has current renters who have kept the property in good condition and paid their rent on time, then that is a very valuable asset to the new owner.

We can offer a property for sale and for rent at the same time.  If it sells first, it may go to an owner who intends to live there and will likely be willing to pay a somewhat higher price than an investor.  If it rents first, then it will be more attractive to sell to investors and will likely get a higher price than if it were vacant when sold.

If there are current renters with a written lease, the owner should explain to them that he/she plans to sell the property, but that their lease protects the renters for the term of the lease.  A new owner has to honor the terms of the current lease.

Let me know if you have questions about this.

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I met for dinner last night with a bunch of my old buds from my Duke Power (Energy) days.  I spent the better part of my adult life there working with a bunch of great folks, and we still get together occasionally.  This dinner (euphemism for beer and nachos) was on the occasion of the retirement of Don who I’ve known since around 1974.  We always have a nice time when we get together for some funny talk and some semi-serious talk.  The subject of my post-Duke career in real estate came up, and a comment was made about how they could never consider being in sales.  This is a bunch of engineers, so you can understand.  I told them that while I was working at Duke, I thought about that from time to time since I can’t stand for a “salesman” of any sort to try to get me to buy something.  That just turns me off totally.  My Duke buds just couldn’t believe that I was able to do that successfully.

The answer of course is that this is not what I do when working with real estate buyers and sellers.  I wouldn’t even be in this business if I hadn’t done a stint after Duke with a technical company as a manager who also got involved in helping the company’s clients buy products that worked best for them.  I found that I actually enjoyed listening to and understanding what people want, and helping them reach their goals.  That eventually led to my investigating real estate and finding that, properly done, the job of a Realtor is not to push someone to buy something, but to listen to wants and preferences, help people clarify their priorities, then help them find the right properties to consider and negotiate a transaction that is in their best interest.  The flip side of this is as a listing agent I won’t try to push a person to buy my listing.  The correct and honest thing to do is to present the property in such a positive and complete way that if it is a good match for a buyer, it will be obvious to the buyer.  That includes helping the seller price the property competitively.

I explained all of that to my friends.  I also explained that any Realtor who is interested in referral business, the very best kind of business there is, will do everything he or she can to be sure that the client has no regrets in hindsight.  A happy client will send me future business and be happy that they can recommend me confidently.  So, yes, you could say I’m working this way out of self-interest because I need future business to stay afloat.  But the nice thing is that the style of business that brings referrals for future business is the style of business that makes clients happy, now and in the future. 

That’s a win-win situation.

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If everything (eventually) goes right in a real estate transaction, especially for someone buying or selling a home, the clients end up very pleased and relieved.  They went through a trying process and came out the other side having accomplished their real estate goals.  I have a lot of past clients who are happy with the assistance I gave them.  I ask them if they’d give me a few words that I can put on my web site as a “testimonial.”  Below is the description of one of the real estate adventures on which I assisted.  It was so well-written, I’ve decided to share the whole thing with you (with the permission of the writer/clients).

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When we began looking for our home, we hadn’t come up with our list of parameters. We wanted it all!!! Surprise!
 
We were looking at a few houses that had nothing in common, and weren’t really doing it for us. At that point, we sat down with Stan, and made a list of the things we COULD NOT live without, and what we were willing to compromise on.
 
We also had a small “issue” while looking for our new home….. Fred travels continually for his job… is home for a few days, then will leave for a week or so. I was left to look at these houses and decide whether it was a house that he needed to look at. That being said, if a house was “a contenda”, we had to go back when he was in town to see it again.
 
Stan was EXTREMELY patient with us. Especially considering we looked at approximately 18 – 20 houses. After months of looking, we found a beautiful home in a lovely neighborhood in Mooresville. The house was a short-sale. We put in a bid on the house and discovered that a short-sale takes a long-time. We were edging toward the 1st cut off date for the tax credit. We were concerned that we would not be able to find a house that would truly make us happy. Always remember, EVERYTHING happens for a reason…..
 
Fred was out of town, across the country w/the race team that he works for. Needless to say, it is very difficult to get a hold of him, even in an emergency…. I received a call from Stan, on a Thursday, he said to me “Donna, I have found your new home!” I’m at it right now & would love for you both to come and see it. I let him know that Fred was out of town and he wouldn’t be home until early that Tuesday morning. Stan made an appointment for us to go look at the property Tuesday afternoon. This was the one time, that we had no idea where we were going, OR, what we were going to be looking at.
 
As we were driving down the road that the house was located on, off to my left in a perfect setting, up on a hill was a truly striking house. This house would seem “normal” in a different setting, but, in the setting that it was in…. was just beautiful. I said as we came down the hill Oh my Gosh, that is a beautiful home. Stan said “I’m glad that you like it, because that’s the house we’re going to look at.”
 
WELL…… we walked into the house, and Fred and I always seemed to separate as we looked over prospective properties. That meant, that he had seen the Master Suite 1st, while I looked at the kitchen and guest room and office area. Fred was pretty much done looking when I went into the Master. Fred later told me that as Stan & he were in the dining room/kitchen area, Stan told him to, “Wait for it, wait for it…” at that point I saw The Garden Jacuzzi tub AND the HUGE walk in closet…. I was extremely happy about these amenities.
 
As I came out of the master, I was then told, that I had yet to see the best part of the house. Mmmmm…. really….. thinking to myself… how could it get better? We then walked out the back door where I saw the largest, most private, back deck that I have ever seen! At that moment, I announced that “We ARE buying this house!” After living in an apartment complex for years, I had certainly had my share of problem neighbors and truly wanted my privacy….. I was willing to compromise on that with the house in the neighborhood that we looked at, but, I wasn’t entirely happy about it.
 
I hugged Stan, who told me that the moment he saw the property, he thought of us  and all the amenities that we wanted, and the privacy that I craved. I thank God every day for dropping this house in Stan’s lap. Because, had that not happened, we would have had to compromise on some of the amenities that we weren’t willing to compromise on. As it turned out, we didn’t have to compromise on ANYTHING! We DID get it all!!!!
 
Our home, that sounds so nice to say, is everything we were looking for. We have made it our own, and enjoyed sharing it with our friends this past weekend, as we held our housewarming party, on our party deck!
 
Thanks Stan! You truly are “The Man”
 
Fred & Donna
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I can’t promise that every transaction will come out that nicely, but I can assure you that it’s always my goal to help my buyers and sellers end up happy that they’ve worked with me.  It may take awhile and require some patience, but we usually end up with smiles at the closing table and long after.

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Today is the end of the First Time Home Buyer and Repeat Home Buyer tax incentives.  To take advantage of one of these incentives, you have to be under contract by the end of the day today (I’m available- call me ;-) ).  As we move into the months ahead, we’ll obviously be very interested in whether or not the somewhat improved housing market will continue.  When the incentives were created, the theory was that they would serve as a means to jump-start the economy since so much is dependent on the housing market.  Once that happened, the improved market should be able to survive and flourish without the need for a housing tax incentive. 

Since that time, home sales have improved, including new home sales.  We’re also seen a lot of chatter in the media about better numbers measuring both market metrics and consumer sentiment.  The stock market, long viewed as a leading indicator of the overall economy, continue to rise in anticipation of a healthier economy.  No doubt the unemployment numbers, the continued fall of housing prices and the expectation of continued home foreclosures are keeping the economy from taking off at a rapid pace, but the mood of the country does seem to have improved since last year.

We won’t have a realistic measure of whether housing will be able to sustain its improved performance until we get sales reports from the middle of the year.  I wouldn’t trust April figures to predict a trend because of the effect of the ending on April 30 of the tax incentives, and May will likely not be trustworthy as a bellweather, either.  However, by June or July, I think we’ll be able to take the measure of the improving economy’s effect on the housing market and vice-versa.  People tend to isolate phenomena like the tax incentives and predict the effect on the market from just that one thing.  The problem is that there are always many things going on in the world that have effects on the economy and markets so that to have any hope at all of predicting the future, you have to take into account the combined effects of all those variables working together and assume those that are changing are going to continue to change at a stable rate.  Unless your crystal ball works better than mine, that’s a pretty tall order.

So just settle back, watch what happens ,and don’t pay much attention to the real estate sales numbers for a couple of months.  I’m optimistic that more of us will begin to see better days, and that will be a welcome relief.

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