Your home: 3 Common Seller Misconceptions Explored

I love my job. I really do. I have the pleasure of working with sellers all over the city and from all walks of life. Just this week I will be consulting with seller clients in Raymore, Roeland Park, Prairie Village and Waldo. And just this quarter we have listed and sold homes in values ranging from $109,900 to $875,000. Although each home and seller is different, there are some common misconceptions that come up quite often. I thought that I would share a few of them with you this week.

Misconception 1: “We purchased our home for $X and we have put $Y into it, so we need to sell it for $X+Y”

The definition of fair market value for a home is a selling price to which a buyer and seller can agree. Although a seller may have a goal number in mind when it comes to sales price, the buyer must also see that the sales price is in line with the pending and sold comparable homes in the area. Coming out of the down market, buyers are still very concerned with making a smart investment. So even if a seller has put $80,000 into home improvements, most buyers are aware that at best a seller will receive 60 percent of that investment back in the sales price. And what a seller paid for a home is no more relevant to market value than what a stockholder paid for a share of stock three years ago. A share of stock and a home’s value are completely based on today’s market and the effects of supply and demand.

Misconception 2: “It only takes one buyer. We just need the right one.”

Yes, it only takes one buyer. But wouldn’t you like the opportunity to pick which one? When your home is at a price or in a condition that only one buyer has an interest in purchasing it, you have to work with that particular buyer. Conversely, when your home is at a price or in a condition that multiple buyers have an interest in purchasing it, you get to pick the best one. Isn’t that really what you want? Usually, “It only takes one buyer” is the battle cry of a seller who is overpriced or has a home with some condition challenges. Maybe the decor is a bit “personal” or the home is outdated compared to the competition. Waiting for one buyer to come along puts the buyer in the driver’s seat. Pricing a home competitively in line with the current condition will keep the seller in the driver’s seat and attract the largest number of potential buyers.

Misconception 3: “We just want to try to sell our home. If it doesn’t sell, no big deal. What’s the harm?”

What’s the harm? The harm is that how you show a home and how you live in a home are different scenarios altogether. To position a home for sale requires thinning, staging, de-personalizing, and allowing access to the market for showings. It is not easy. However, to the motivated seller it is worth it. It may not be worth it to a “trier.” The real estate market is really intended for those who NEED to sell and those who HAVE to sell. Sellers who need or have to sell will do everything it takes to attract a buyer including a competitive price and presenting their home in great condition. In return, they will attract buyers. I find that motivated sellers attract motivated buyers. The opposite also applies. Unmotivated sellers (triers) attract unmotivated buyers (triers). This is why many of the FSBO’s that eventually hire us to sell their home will share that they encountered a lot of “looky loos” during their time as a FSBO. Because a home listed with a Realtor cannot be shown without either the listing agent or a buyer’s agent allowing access, “looky loos” tend to stick to properties that they themselves can access.

Next week we will touch on common buyer misconceptions. Please remember that if you have a specific topic that you would like to see us cover in our column, please email us. We are here to help!

Your home: Aren’t all Realtors the same?

For Sale Sign

Realtors: Aren’t they all the same?

You probably know my answer, but let’s explore this a little bit. If I were to ask, “Doctors, aren’t they all the same?” you would probably look at me like I had three heads. So let’s try another one. ”Lawyers, aren’t they all the same?” I can’t see you right now but I would predict that I am still getting the three headed look again. Ok, so here is the last one. ”Teachers, aren’t they all the same?” Do you see where I am going with this?

Now let me be the first to say that I have the utmost respect for doctors, lawyers, and teachers. Especially teachers, bless their hearts. But they are not all created equal. Has there ever been a time when you have gone to the doctor and not had a great experience? I would guess at least once, right? Now has there ever been a time that you have been to a different medical professional and received a great experience? I hope so. Both doctors may have had a similar education, but how they deliver their message, relate to their patient, and diagnose a condition could be completely different. The outcome could be completely different as well.

The same applies to real estate professionals. We all have had a similar education when it comes to licensing. Most of us even attended the same licensing schools here in Kansas City. We all use the same forms and contracts every day. And we all utilize the same multiple listing service to promote our listings. However, all Realtors are not created equal. So what should I look for in a Realtor?

Here is a list of questions that you can use when interviewing Realtors.

1. What is the average number of days your listings are on the market before selling?
2. Are you a full time agent?
3. What percentage of the original list price are your homes selling for on average?
4. Do you have a team that allows you to focus on just selling your listings, or do you do everything yourself?
5. How long have you been selling real estate?
6. How often do you have to ask your clients for price adjustments?
7. Can you provide me with the phone numbers of some recent clients for a reference?
According to Keller Williams Realty International, the average agent closed ten sales nationally in 2013. That is not even one a month. Conversely, there are mega real estate teams who close hundreds of sales a year, yet deliver below average service. So you have to be careful. Although when flying most people would prefer a pilot with the highest amount of recorded flight time, most people would also prefer a pilot with a great safety record as well. A Realtor’s safety record consists of his or her average days on market (for listings sold), their original list price to sales price percentage comparison, and their ability to price homes right the first time to avoid chasing the market with several price adjustments.

I chuckled at a recent post from one of my associates. It said something to the effect of, “Oh, I know you are one of the best surgeons in town, and I really need your expertise, but my sister just graduated from medical school so I am going to give her a try.” I have to admit I laughed out loud when I read this. I laughed because I, of course, have heard this before. And it still surprises me to this day. Often we as Realtors, are dealing with hundreds of thousands of dollars when it comes to a homeowners investment in their home. That is certainly not the same as medical surgery, but it is a form of financial surgery and your equity is on the operating table. Who do you want holding the scalpel?

Photo credit: Mark Moz

Your home: Low inventory overcomes functional obsolescence

I use the term functional obsolescence a lot. Especially when it comes to selling older homes. Investopedia says that the definition of functional obsolescence is the reduction in the usefulness or desirability of an object (house) because of an outdated design feature, usually one that cannot be easily changed.

There came a time from 2010-2012 when inventory was at its peak that functional obsolescence reared its ugly head. With a plethora of homes to choose from, home buyers were able to be as picky as their heart desired. Things that were once seen as charming were now being called outdated. That was when the shift occurred. All of a sudden every kitchen without granite counter tops and every home without a more “open” floor plan became unacceptable.

At the same time, smaller homes suffered the most. Because of course all you can do to remedy a small home is to add on to it or possibly finish the basement (if it has one). Neither option really makes sense though because of the cost and the limited return on the investment. Therefore, smaller homes languished on the market while larger homes sold around them and for not a whole lot more in sales price. For example, two bedroom, one bath homes were very hard to sell for several years. Yet now they have a place in the market again.

Most recently I had a client who had attempted to sell a two bedroom, one bath home (less than 900 square feet) for two years in a row with two different real estate professionals. As I was calling through the neighborhood one day, I happened to reach Kelly (the seller). We talked about the low inventory market and the opportunities that it had to offer and she scheduled an appointment to meet me at the house that week. Fast forward a couple of weeks. We listed her charming little Prairie Village home (for a price higher than her most recent list price) on a Friday and by Sunday we had more than one offer on it.

Just this week we sold a home that I myself have had listed twice before during the down market. This particular home is a three bedroom, one full and one half bath. It, too, suffered during the down market because at the time most buyers would purchase a home with two full baths when given the chance. And at the time, they had plenty to choose from and the values had dropped so much that they were not much more expensive than the 1.5 bath home.

Yet this week we listed this same 1.5 bath home on Friday and had it sold by Sunday evening. As a seller you just have to love a low inventory market.

Now please don’t read this and think for a minute that our market is not still a price war and beauty contest. It is both! However, if your home is in great condition (not necessarily updated) and is priced right, it should sell and quickly. Even if it is a small home, or if you still have the pink and grey tile in your hall bath, or if your kitchen is not opened up to your living space- you can still sell.

If your home suffers from functional obsolescence now is the time to sell. Buyers may overlook things today that they will not overlook as inventory continues to increase. What is the saying? Beggars can’t be choosers? Buyers won’t be begging for long as new homes come on the market every day.