Both sellers and buyers need to know how to recognize the characteristics
of a real seller. If you are, or planning to become, a seller, you will
need information and concepts to help you end up with a successful sale.
As a buyer, you will want to understand what to look for and what to ask
to ascertain if the house you are interested in is really for sale, or
if you are just spinning your wheels.
True or False: Sellers who put their home on the market have definitely
decided to sell? The answer is "False." Choosing a real estate agent, listing
the property in the Multiple Listing Service (MLS), placing a "For Sale"
sign in front of the home, printing flyers which are displayed on the coffee
table, having open houses and advertising in the newspaper are only parts
of the process. Experienced, professional Realtors know that their existence
does not guarantee you are dealing with a committed seller.
A seller is someone who has made a conscious decision to sell now; has
a strong reason and need to sell; understands the realities of the marketplace;
and will accept a contract with a price within that reality. I see many
listings where the person selling does not seem to meet these criteria.
Recently, 1 did a survey of MLS residential listings in four popular
local zip codes for the past year. Out of a total of 1774 residential properties,
680, or 38%, had not sold or were no longer for sale. Even taking into
consideration that a percentage of these listings are repeats, e.g., a
home which has been listed, expired, then relisted, we are still faced
with an astonishingly large number of expireds and withdrawns — homes which
never sold.
From my experience, a substantial portion of these homeowners were "testing
the waters." They wanted to see if they could get a certain amount for
the property, usually a figure set by what they "need." Buyers, nevertheless,
do not make offers based this.
Other sellers may have determined their asking price by what the property
cost them when they bought. What they may not realize is that there is
no relationship between what they paid and its present market value. In
many cases, the minimum acceptable offer to a seller is the loan amount
plus closing costs. Unfortunately, for a large number of residences purchased
in the past five to six years, the market value of the property is equal
to or less than the loan amount. In some instances, the seller bought years
ago and had abundant equity. During the refi-mania of the early 1990's,
however, he refinanced for more than the property is now worth. This is
a key factor in the softness of the current market. People who want to
sell cannot do so without coming out of pocket to pay their lender the
difference between the net proceeds and the amount of the loan. Few people
can, or choose to, do this.
This is a difficult time to be a seller. Despite periodic headlines
trumpeting that the real estate market has turned around, the hard, statistical
truth is that 1994's sales were poor in most of the Bay Area; 1995 has
been worse. Houses that are selling are those which the market, i.e., buyers
and their agents, perceive to have an asking price within reasonable range
of their market value. A maximum cushion of 3% in the asking price seems
to be most effective.
Pricing is the major factor in whether a house sells or expires. There
are some other secondary, but important, reasons why expireds expire which
effect the saleabilty of a home. Sellers too often do not consider them
adequately in deciding on the list price.
The location is considered
marginal or undesirable by agents and their buyers.
The property is unattractive
outside — what agents call "not a drive-by."
It does not show well inside.
This can include everything from a nonfunctional floor plan, to lack of
charm, to unattractive furnishings, to too much clutter. Sometimes this
is a result of ill-advised renovations, such as replacing some of the wood
sash windows with aluminum in an otherwise traditional home. These changes
may be efficient and cost-effective, but may also be a deterrent to most
buyers.
The property has been customized
in a way that is not appealing or useful to a majority of buyers. For example,
a garage converted to a family room or bedroom is a detriment if there
is no other off street, covered parking.
The area is not a problem,
but homes near the property are unattractive or poorly maintained.
The house is adjacent to
or across from a school or a busy, public park. Both may entail noise and
safety concerns.
The dwelling is situated
on a busy, main street near a freeway or close to a commercial area.
It emanates strong odors
(usually not noticed by the inhabitants) from animals or smoking.
It is a dark house, again
frequently not noticed by the occupants.
There is little or no outside
living, i.e., a nice backyard or deck. Conversely, a front or backyard
which is either dry and barren or overgrown with weeds repels many buyers.
The property is surrounded
by other buildings which impede privacy.
The structure has been poorly
maintained and is a "fixer-upper." These properties can sell quickly, but
only if priced accurately for their condition and location.
A significant error some sellers make is starting with the wrong mind-set.
This is evidenced in questions and statements such as: "Can't we try it
at a higher price?" often followed by, "just for a few weeks? We can always
come down. Bring us an offer and we'll have something to talk about." And,
then there is the all-time classic: "We're not going to give our house
away." These are the words of expired sellers in-the-making.
The number one reason why expireds expire is that the seller does not
have a strong enough motivation to sell. He or she is not committed to
the process. It is apparent in an initial asking price which is too high
and a seller who is slow in adjusting the price to the actualities of the
market. It is not priced competitively with properties in the same category
in terms of location, size, condition, quality, features, schools, and
convenience to shops and transportation. When a property of this type does
not sell, the situation is often seen by a seller as a deficiency on the
part of the agent, when, in fact, the only deficiency was taking the overpriced
listing in the first place.
Preparing a home for sale and going through the marketing process is
generally a stressful, time consuming experience. Much time and aggravation
can be saved if you do nor resist how the market really works. I agree
with the expression "Hoping is the language of the poor." Hope will not
get you a higher price for your home than the market is prepared to give.
Consider yourself a seller only if you accept this as the truth.
