HOME SELLERS: Motivate your buyers by motivating their Realtors

Like many of my posts, I'm pretty certain that this will annoy a few agents.  No disrespect or judgement intended, but it is what it is; the truth as I see it. I write what I practice, and I practice what allows me to sleep peacefully, knowing that I've given my clients the very best representation possible. To say that sales commission doesn't motivate sales agents is naive.  Sales commissions were designed to motivate sales people.  It's that simple.

OK, so who truly decides which home a prospective home buyer is going to buy?  This seems like a pretty cut and dry question, but the answer might surprise you.

You may think it's the bread winner.  "I make the bucks! I make the call!" You may say "It's the Mrs., of course.  Happy wife...happy life!"  Perhaps a unique circumstance dictates which home a buyer is going to purchase.  You'd be surprised just how often those answer are just not the case.  More often than not, your buyers' real estate agent is the most influential person involved in the home buying process.  They are, after all, the resident expert with the experience and expertise to confidently guide home buyers toward the right home and away from the probable money-pit.


Here's a bit of background on sales commissions as they apply to real estate transactions.  In the areas I have served over the past 9 years, which include most are of the state of California, 6% is the standard sales commission paid buy the sellers at the close of escrow.  This commission is typically split equally between the cooperating brokers, with 3% going to each side of the transaction.  Listing Agents and Buyer's Agents both have their fair share of responsibilities, tasks, hurdles, and headaches that they encounter throughout the days, weeks, and months.  Some transactions are simple.  Some are complex.  It's my belief that, at the end of the day, it all comes out in the wash.  "But I worked so hard to get this one to close!  I deserve more!"  Yea?   No!  Maybe you made bad choices when screening your client.  Maybe the property you wrote on was a money pit.  Maybe you had a cash buyer with low expectations who's buying everything in site and all those transactions are simple!  It all evens out in the end.

So looking at the question posed at the beginning of this blog, what does it matter who the biggest influence is in the home buying process?  Because, and here comes the part that can make folks uncomfortable, it's very easy to see how (with a Realtor's personal income as a direct function of the sales price of the house and percentage commission to be received at closed) agents might encourage their buyers to write on one home over another, based solely on the commission being paid by the seller.

For example: Of the 57 homes sold in Redlands, California in November of 2015, 22 had the buyer's agents' commission at 3%.  The rest were 2.5% or lower, with a few as low as 1%.

As someone looking to sell your home, don't you want the market (meaning willing and able buyers and their agents) to be highly motivated to see your house as often as possible, with as much enthusiasm as possible?

Here's a guiding question.  If an agent is looking at what we call "Like" or similar properties; one is paying her 2% and another paying her 3%, which one is she likely to encourage her buyer to write an offer on?  The houses are truly similar and the only real difference is the commission she'll earn.  The truth is that the property that's offering only 2% might not be shown at all be this agent. As a home seller, if the commission you pay is more heavily weighted toward your listing agent, your home might not be seen by the entire market.  It's true.  "But aren't agents supposed to have their clients best interest in mind?" Absolutely! This agent might not feel that she is behaving unethically.  To her this home might be redundant. Now many agents will show both "like" properties. Some, however, won't.  After all, although sometimes agents are not treated as such, they are actually human beings.  After all, if you could perform identical tasks (a purchase transaction) and one task pays 50% more...which one would you pick?  On a $250,000 transaction, this would be the difference between $5,000 and $7,500 in gross commission earned.

There are exceptions to this rule, as there are to most.  But it's a safe bet that a relevant percentage of homes closing with a cooperating broker commission split that is out of balance (higher on the listing agent's side) likely closed at a price lower than they might have if the buyer's agents had been sufficiently (or equally) motivated. That was a mouthful. In short.  Lower commission for the buyer's agent means fewer showings...means less demand... means lower sales price...mean you, the home seller, net less proceeds; cash.

If you're meeting with a Realtor to discuss a possible listing, please discuss this topic. Don't be shy.  Don't let a real estate agent try to convince you that he or she needs $X to successfully market your property.  Unless you're selling true luxury real estate, that's just not the case.  If you are selling luxury real estate, the hefty commission you're paying will surely cover your agent's marketing efforts anyway.  So ask the question, "What percentage of the sales commission that we are paying your firm goes toward the incentive for our buyers' Realtor?" If your Realtor addresses this topic in a manner that leaves you with a comfortable understanding...game on! You've got a winner. If they hem and haw around the issue, keep pressing on until you have an answer that satisfies you.  If they give you a load of crap about advertising budgets...fire them before their hired.

#RESN

Should I buy a new home or a previously owned home?

Q: Should I Buy a New Home, or a Previously Owned Home?

A: This question's an easy one to answer:  It depends!  See!  Pretty easy!  

Ok, all kidding aside, my wife and I have owned 3 homes over the past 12 years. Two of those were new construction. That shows my personal taste. However, there's always two sides to the story, right?  I mean, you can't buy a new, 1907 Victorian home in Redlands, and you'd be hard pressed to find a brand new home in a with 90 year old oak trees. So what are the benefits of new construction, beyond that obvious ‘new home smell!’ 

Here is a list of reasons that might compel you to buy a brand new home as opposed to one that is pre-owned. 

• Choices - With little to no change in sales price, new home builders often offer choices as to colors, styles, and features of your home. No, these aren't “upgrades”, but they're still choices. Carpet color, tile, vinyl, counters, cabinets, etc.  You'll often have 3 or 4 standard choices in each category to choose from at no extra cost.   I don’t know many home owners who’d give you that flexibility.
• Negotiating Tools - Builders often use their own lenders. This gives you several opportunities to negotiate the price of the home, the terms of the loan, closing cost credits, and/or design center credits.
• Newly Finished Interiors - In my family, we had little-ones crawling and rolling around on the floors. It brought us peace of mind knowing that not just the carpet was new (and in a color we loved)...but the carpet pads and sub-flooring was new as well.  No smokers, no pets, no allergies, and no spills that are going to resurface 4 months down the road.
• Less Competition - Typically you're not going to compete with several other buyers for the same house like you might with a previously owned home. You'll likely have the choice of many new homes and models, or even the same floor plan on different lots.
• New Infrastructure - When you buy a 35 year old home, you've got 35 year old...everything else...attached.  Infrastructure: In new home communities, you've typically get new sewers, streets, lights, and more.
• No Home Inspections - Everything is new!  What's to inspect?  With pre-owned homes, you've got those anxious days between the time you write an offer and the time you receive your pest and home inspections.  New home construction likely allows you to skip this step altogether.
• No Appraisal Concerns - Yes, your new home must appraise in order for a lender to fund, even on new construction.  That said, it behooves the builder to price their homes accordingly.  Have I seen new homes NOT appraise?  In those cases the builder simply reduced the purchase price to the appraised value.
• FHA and VA eligibility - Virtually all home builders will sell to FHA and VA buyers!  These buyers are typically well qualified and committed to the process.
• No Additional Home Warranty Needed – Why not? It comes with one!  Wait...it comes with several: Foundation, Roof, Finish, Appliances...everything.
• Builders reputation – When you buy new construction, you've got a builder's reputation at stake, and they'll stand behind their product.  With pre-owned homes...the sellers’ have likely moved on, and you'll never see or hear from them again.

I could easily create a list that's just as long and just as compelling advocating the purchase of pre-owned homes.  In fact, I'm sure I will.  However, at this point in my personal life, and with a young family in tow, I feel very peaceful living in a newly constructed home and I'm always at peace when I help a client negotiate a deal with a home builder.

How To Get Your Listing Ready To Sell

11 Points All Home Sellers Should Know

For many of us, when we think about selling our home, our goal is to walk away with the highest "Net Proceeds" (most money) possible!  This post is designed to help you get to that point as simply, safely, intelligently, and inexpensively as possible.  Do you have to do them all? Absolutely not. You don’t have to do any of them.  Each of them, however, contribute to an optimal outcome.  Don’t do any?  You may end up disappointed in the end.  Do ‘em all…you’ll hit a home run.  

You may have motivating factors other than getting top dollar for your home. Perhaps you need to sell to accommodate a job transfer, or there’s a change in your family makeup, or maybe you want to close escrow quickly so you can purchase another home that you've submitted a contingent offer on.  But in each of those cases wouldn't you prefer the best financial outcome?  My job as a listing agent and a real estate consultant is to guide and advise my clients on exactly how to safely, effectively, and efficiently get to that finish line...and to do it with a smile.

If we’re going to truly be effective, we need to shift our mindset from that of a home seller to that of a home buyer.  We need to think like a buyer; even think like our buyers' Realtor.  Taking this point of view from the very earliest possible moment will not only open the door for the very best offers to land on our desk, but it will also build the foundation for a smooth and seamless close of escrow.
Below, I've outlined a number of key steps that, when addressed intelligently and thoroughly, will result in the best possible outcome at closing time!  Some of the items are outlined in greater detail, but please know this: Any one of these elements might be the one that catches your buyer's eye. We won't know which one it is until we're in contract...so let’s do 'em all!
 
1) Save your money.  Don't remodel for your buyer!
"Honey!  Don't you think that if we redo the kitchen we'll get a much higher sales price?"  This is such a common misconception.  The simple answer to this question is, Yes.  However, the practical, bottom line answer is almost always a resounding NO!  You may put a stunning new, $40,000 kitchen into your home and find out that your sales price did, indeed go up up...by $25,000. NO bueno!  In addition to the drama and pitfalls we often encounter throughout the remolding process, you've now netted a $15,000 loss and pushed back the sale of your home by 4 weeks.

I've been a paid consultant on nearly 75 flips.  If I could yell at the top of my lungs something I've learned throughout that process it is the fact that we will NEVER know what our buyer really wants!!  "Why not?"  Because we don't even know who our buyer is…yet!

This guidance doesn't come from real estate class, or a case studies.  I've seen firsthand, countless times, when a property was purchase, then updated and upgraded, only to hear at the very first open house, "Wow!  This is great!  I love it! If we just refinish the cabinets in white then put in that hardwood that we both love so much, this place would be perfect!"  Yes, they're already talking about ripping out the upgrades that you just installed.  It happens all…the…time.
"So what do we do to spruce up our kitchen?  It looks pretty sad." We spend a couple hundred bucks making it look twice as good as it does now.  Simply installing some new hardware or a refinish/re-staining goes a long way.  Then we let your buyer choose their new kitchen.  They're welcome to make those choices when it’s their house.

“But what about the sales price? If we don't update the kitchen then it's not going to sell for as much as the one across the street!"  That right!  It's not.  The one across the street has a $40,000 kitchen upgrade. So...it sold for more than yours will. There!  Isn't it nice to be told the truth? Price your home appropriately and you'll leave room for your buyers to remodel at their convenience...after close of escrow.

Don't make more work for yourself. Unless you are a licensed contractor, you're never going to make your money back on your upgrades!  "But what about that couple on TV?  Flip or Flop!  They ALWAYS make money!"  You're absolutely right. They do, 95% of the time anyway.  However, Tarek and Christina El Moussa will tell you the same thing I I'll tell you: The first rule of flipping is that you make your money when you buy...not when you remodel.

2) Get a home inspection and a pest inspection:
When you list your home for sale, you're actually listing your home...in its current condition...for sale.  Honestly though, do you actually know the current condition of your home, or do you just think you know?  Do you know if the floor under the tile in the kids’ bathroom is in still in good condition? Do you know why that upstairs shower doesn't seem to drain as well as the others?  Think about it. The truth is that we aren't selling what we think you own.  We are selling what you actually own.  Now, aren’t you curious to know what you actually own?  Then get your inspections done.

"Wait, what?  Me?  I don't want to pay for a home inspection!  Isn't it the buyer's duty to inspect anyway?  And heck...I have to disclose anything that turns up in the inspection, don't I?  If I don't do inspections...I can't disclose what I don't know...right?"  Yes.  Both of those statements are true, and I know that for some readers this comes off as counter intuitive, but bear with me while we dig more deeply. This is (among others) where many Realtors and I just don't see eye to eye.  I've seen too many tears and too much aggravation to sit idly by waiting for the inevitable obstacle to derail my clients' transaction.  Inspections will help us discover the true condition of the home. The findings will either be clean...or important.  Both of those findings are good to know.

Knowing the condition of your home in the beginning all but guarantees that you won't be disappointed in the end.  You'll know what you're working with.  You'll know the truth.  You won't be sweating it out during that anxious "home inspection time-frame.  You'll also have a much better idea of what proceeds you can expect from the sale because you'll know what you're actually selling. If there was a couple of quick fixes that would help not just secure the best offer, but facilitate the smoothest close of escrow...wouldn't you want to know what those are?

In the image above, Is that water damage? Is there a leak behind the wall?  Is this a huge problem? Nope!  This is where kids dropped their wet towels each day.  Needs a tough of paint, or a short piece of baseboard at the most, but it could catch your buyers eye and turn them away.

What do we need to do in order to show the home in its best light? Keep this in mind too:  Virtually all home buyers pay to have a home inspection and pest inspection done before their inspection time-frame expires. So, your buyers are going to discover the true condition of the house and all of its flaws. Then we inevitably wind up back to the negotiating table!  Wouldn't you rather know what's coming in advance, so you're best prepared to address it?

"What if there is something catastrophic that is discovered through a home inspection or pest inspection? What if we can't even afford to make the repairs? Then we're stuck!"  Think it about this way: If you can't afford to make the repairs, does that mean that the problem no longer exists?  Of course not!  The problem is real and we have real ways to address it.
"Oh man!  The roof has a leak and it's caused mold in the living room. You can see it right at the ceiling! We can't afford to fix the roof!"  I’m here to tell you that there are solutions. How many can you think of?  Here are just a few:

1. You could tell the buyers that you’re not going to fix it.
2. You can put the property back on the market with the disclosure of the roof condition.
3. You could issue a credit to the buyer.  
4. You could drop the price of the house.  
5. You could find a roofer that will allow you to pay him at the close of escrow so you don't have to come out of pocket.  
6. You can even call your home owner's insurance. "What. What?  Call my homeowner's insurance for a leaking roof?"  Yep!  Did you know that in many cases damage caused from a leaking roof or faulty plumbing can be claimed on your homeowner's insurance?  

The point is that it's best to find the problem areas so we can address them in advance. Again, keep in mind that these 'discoveries' are either going to come from you...or from the buyer a few weeks down the road. Now that you know in advance about a couple of repairs that might need your attention, you can remedy whatever the circumstance is proactively...without the pressure of a contract hanging over your head.

3) Maximize Curb Appeal:
Insert cliché here!  "You don't get a second chance for a first impression."  I want you to remove the following thought from your mind..... "Gosh, that doesn't look that bad!"
"It's not that bad" isn't the level we want to hold ourselves to.  Remember, we won't know which element of the home will be the one that 'closes the deal' with your new buyers, so we need to make sure that each element shows at its best. This starts with the first thing a buyer sees when they drive up to the property; the condition of the front yard and the front of the home, or what Realtors call "Curb Appeal."

Typically we know well in advance that we're going to be selling our home.  This is the time when we want to jump on the yard.  A little bit of fertilizer, some seed, some water, and some attention will take a yard from drab to dramatic.  Keep your lawn long and lush.  Keep your trees and shrubs neatly trimmed.  Keep bushes away from the siding of the house, and keep tree branches well clear from the roof.  Prune your shrubs so that they don't obstruct windows.  This accentuates the architecture from the outside, and brightens the rooms by letting the natural light in.
Although it's not actually considered "Curb Appeal," use the same idea for the backyard and side yards as well.  Keep it simple, bright, clean, and green. Just don't neglect them.

4) Start Packing:
Packing?  Yep!  Get on it!  We want your home to show clean, roomy, and inviting. If you're a typical American family, you've probably filled your home with...um...???...stuff!  We all have. Well, you're moving anyway...right?  You have to pack when you move, so why not start packing in advance?  Pack up everything (within reason) that's not necessary for day to day living over the next 75 days. Put it all in storage...or if your budget is tight, just neatly pack boxes into your garage and/or storage sheds. I've found "PODS" to be quite helpful.  This way you don't have to move your things twice.  Pack your things into Pods, then when you close escrow on your new home you have your Pods dropped into your new driveway.

Beyond decluttering your home, (is decluttering actually a word?) packing up your odds and ends makes each of your rooms feel bigger and more inviting.  Important too, is the fact that buyers typically don't care to see how your family lives in the house.  Yes, that means taking down that painting of Aunt Mable over the fireplace.  She'll forgive you.  She wants what's best for you too!  Depersonalizing the home will help prospective buyers visualize how they might add their own personal touches to their new home.

Bedroom Closets, Bathroom Cabinets, Linen Closets, Pantries, etc. should ALL be decluttered.  Your closets should be no more than 60% full. Uncluttered closets and storage areas tell your buyer that a family is living here now, and they've got plenty of room.

5) Clean, and I mean clean; DEEP CLEAN:
I recently asked a client to have his home professionally deep cleaned before we actively marketed his property.  He wasn't sure what I meant. What I mean by deep clean is that virtually every inch of every surface of every room is cleaned, dusted, and/or polished. Yep!  Under that little spinning plate thingy in the microwave, baseboards scrubbed, ceiling fans dusted, furniture polished, windows cleaned inside and out...and screens too.  Think of it like selling your car.  If you want top dollar, you get it professionally detailed!  “So how much does it cost to get your house 'professionally detailed'?  In this case, an army of experts deep cleaned his 3,300 sq. ft. home for $350.   Too rich for your blood?  Then grab some rubber gloves and get to work.  Heck, a couple of phone calls, pizza, and some Diet Coke might motivate some extra elbow grease too.  If not, at least you won't be hungry while you work. Make it clean, simple, and spacious.

6) Staging:

Keep it simple.
Keep it clean.

"But I'm not a professional stager!"  Right; but you don't have to be!  Have you ever been to a retail store?  The Gap?  Macy's?  Pottery Barn?  There; that's a good start.  Use those stores as models to help you "Stage" your home for sale.  Pay attention to details.  Make each area look like you're trying to sell whatever is on display. Towels in your linen closet? Folded neatly; with like colors together.  Pictures on the bedside table? Make them few; sparse...or gone.  You ought to have a lamp, a clock, and a book; done!  What about the closets in the bedrooms? Make 'em just like the racks at your favorite clothing store.  No...Not Ross or K-Mart.  I'm talking Nordstrom.  If you "Stage" the items at your house as if you were selling them and you needed to get absolute top dollar...  Hey, wait!  You DO want to get top dollar, but not for your candles and blankets.  You want top dollar for your home, so pay attention to the smallest details and you'll put yourself in a position to reap the highest reward.  Oh yea.  One more thing.  Remember that old argument?  Toilet seat up or toilet seat down?  The answer is easy: Neither.  Close the toilet…always.

7) Paint:

Crisp, clean, neutral, and inviting

Do you want top dollar?  Then you're going to have to get dirty...or you're going to have to pay someone to do that for you. The "Frozen" themed room is great for your 8 year old daughter, but might look like a daunting task to a prospective buyer.  Worse than that is that they might see that room as "A girl’s room."  Taking away the idea that it could be a guest room, a boy’s room, even an office or den.  Let your buyers decorate when they move in.  Let's give them a warm and inviting position to start from. Something clean, warm, and neutral has proven to yield the highest returns. Odds are, if you're home's been lived in, the walls are in worse condition than you might think.  Don't believe me?  Pull that bed; the one without the headboard, away from the wall.  Now go paint.
"What about the outside?"  Here's where things can get into a gray area.  Painting the outside of your home can be quite costly.  However, with fresh paint on the outside of the home, home inspectors and potential buyers may see fresh paint as responsible ongoing maintenance. "If the eaves are maintained this thoroughly, I bet the rest of the home is too!"   So the topic of outside paint should be looked at on a case by case basis.

8) Fix it:
What do I mean?  If it doesn't work the way it's supposed to work, fix it.  Example: The rear sliding door.  The never seem to work properly.  It's just another trigger, negatively affecting the buyers' point of view. A stubborn rear slider might leave buyers thinking, "If the whole house was maintained the way the rear slider was...we should run!"  That middle bathroom is still missing the handle for the drain.  5 out of 9 lights in the chandelier are burned out. That drawer in the kitchen has come off the rails.  Closet doors don't open and close smoothly?  I could go on...and I don't even live there!

None of these items are going to be expensive.  Not fixing them, however, could be. Remember point #2 of this post?  Get a home inspection?  The inspection report will leave you with an itemized list of items that you can tend to while you're preparing your home for sale.  Again, this is on your time, not your buyer's time.
9) Downsize your furniture:
Just 'cuz you own it doesn't mean you have to display it! Keep it simple.
If you have large furniture items, you may want to move them out, especially if your home is limited on square footage.  A large, ten person sectional couch is fantastic in a large Great-Room, but in a 1,240 square foot home, it probably consumes more square footage than a buyer is going to want to concede. If you have the means to remove bulky items from smaller rooms, your home will show at its best. Beyond that, keep in mind that in terms of staging, less is more.

In the room above, start by centering the room around the fireplace. Remove the love seat, remove the cards from the mantel, take out the TV and the TV tray, and the painting above the TV.  Arrange the two chairs and coffee table on one side of the room, with the lounge chaise on the other side. Ultimately, getting the most utility or usability out of the room with the least amount of furniture is what we're looking to accomplish.

10) Bring the outside in:
Add a plant or two to the family room and maybe a couple of live herbs in the kitchen and you're all set.  You don't need to have a green thumb, but if you can keep two or three potted plants alive for three or four weeks, you're in good shape.  If you absolutely love the atrium that you've turned your living area into over the past 7 years, great.  You can re-open it at your new home, but for now more than a few potted plants can make a home damp and musty on the inside.  We simply want two or three pops of color and freshness to brighten up the kitchen and family room.

11) Give each room a title:
"Here's the master bedroom, here's the den, and here's the game room" sounds better than "Here's the room where we keep all of our crap!"  If you've got that "extra" room full of "extra" stuff, you can guess where it should go.  That's right...pack it up!  Better yet, pack up 90% of it, and keep 10%.  The sewing machine and two dressers is now "our Craft Room". Look behind the clothes hanging in that room.  You might find a treadmill or and exercise bike.  Throw down a cheap Yoga mat and you've got an "Exercise Room". You get the point.  Each room gets a title.

As I mentioned at the top of the post, we'll never know which of these points are the most important until it's too late. So take the time, proactively, to show you house at its very best.

Good luck.  Don’t hesitate to ask for help.

#RESN

7 mistakes new (and veteran) investors make when looking to secure income properties.

Are you looking at buying rental properties this year?

Here are 7 mistakes many investors and landlords make…and you don’t have to.

I could sum up these seven short but important points with two words: “Don’t wonder!”

1: Don’t “Wonder” what you should buy. Know what you should buy.
If you don't know, learn.  I you don't know where to learn, ask someone, anyone who's achieving the results you'd like to achieve.  Do the research on your own.  Understand the difference between what you want to buy and what you should buy. This is a huge step and has to come before any other step.

You have to be honest with yourself.  Don't get drawn in by your personal feelings and emotions. Knowing what's best requires substantial research.  That said, when it comes to market research, ‘substantial’ doesn’t mean difficult. It doesn’t even mean that you have to do any of it yourself.  Call a Realtor or two, or ten.  Not only do they do this type of research…but they do it all the time…for free!  Use this research to bring certainty into the process. Be sure to know what you should purchase, create a plan, and then stick to it.

• Only spend the amount that makes financial sense.
• Determine how much cash flow you need to make.
• Never let emotion override the numbers. 

Be thorough in your internal research as well as your market research.  Do you need your property to be local, or can it be in an area where lease prices are higher and home prices are lower?  Are you going to manage your rental(s) yourself or will you be using a property management company? Should you buy a condo?  A duplex? An older home? Is there new construction, with loan programs that provide easy AND responsible entry into the rental market? Are there limitations as to how many units must remain owner occupied? All of these questions, and dozens more, are vital to decide on BEFORE you get in your Realtor’s car to go house shopping.

2: Don’t wonder how much should you spend:
First, determine how much you can spend, then determine how much you should spend. Do you have funds in reserves to update/upgrade/repair your prospective property, or does it need to be turn-key? Do you have funds to cover vacancies; months where you may have vacant properties? Find a lender near you that will sit down and discuss special loan programs?

3: Don’t wonder what your prospective property will rent for:
Ask a Realtor, or a team of Realtors to draw up a lease/rental survey for the area(s) you’re looking to purchase in.  Also, and this is key, do a simple ‘rental survey’ of your own!  Often, Realtors use MLS exclusively to find rental properties for their clients.  At the time of writing this post, my local market showed 51 homes for rent.  Compare that to 181 homes for rent in the same areas on Craigslist.  Use ALL of the data you can.  It’s all relevant, and it should all be considered.

4: Don’t wonder if the information you have on prospective homes is accurate:
The internet is full of sites posting real estate listings online, but is that information accurate? Virtually all of the information you’ll find online is fantastic.  Very little of it is inaccurate, however, I have seen, and continue to see gross miss information on several internet real estates. Beyond the miss information is the fact that the asking price is just that; an asking price.  The sales price is virtually always less than the asking price.

Each of these sites pulls data from the regional Multiple Listing Service; MLS, which all real estate agents have direct, live access to. However these online sites do not always pull the best, most accurate, most up to date information. For this reason, it’s important to get in touch with a local real estate agent that you can trust to get you the facts.  What is the property tax rate on the property that you’re writing on? 1%? 3%?  Is the Home Owners Association really $485 annually, or is it actually $485 monthly? Is the HOA solvent? In litigation?  Your iPhone friendly app may not give you answers to the really tough questions.

5: Don’t wonder what the seller property is looking for:
Even the smallest part of an offer can land you the deal you’d been looking for. See, "How to get your real estate offer accepted."  Proceeds, timing, a possible rent back, a quick close, a long close, inspections, etc. You/we may not know (although there are strategies to find out) the real motivating factor behind the sale of a property you may have interest in.  So addressing ALL possible terms of an offer will leave you with the best odds of having your offer accepted.

6: Don’t wonder what you’re getting:
Do your Due Diligence. If you’re not an absolute expert, or you’re not buying new construction, I strongly advise that you hire an inspector to perform a home inspection and a pest inspection.  Don’t let the market or a pushy agent lure you into buying without inspections.  If you have sufficient funds to literally demolish your new home and replace it, go ahead. Save the $225.  If not, don’t let a few hundred dollars stand between you and your security.

7: After it's yours, don’t wonder if your new property is being cared for:
Use a property manager. Include landscaping and/or housekeeping if you must, but don’t let your property go.  I personally know dozens of landlords with wonderful and respectful tenants, and I know dozens who've gotten out of the income property game all together. Realize that the behaviors and actions of your tenant can help or hinder the value of your home. This might include dangerous behaviors that may need to be disclosed to prospective buyers, in the event you choose to sell some day.

Now there are many, many more influences, considerations, and concerns to keep in mind but I hope that this post has at least given you more tools than you had prior to reading it.

All for now.

#RESN

How To Start Each Day As A Realtor

As Realtors, we're often stuck in that cliched "Analysis Paralysis".  No sure where to start?  Here are 16 specific tasks that might help nudge you toward productivity.

If you don't have a target...you're ALWAYS going to miss.  So, WHATEVER you do today, make sure it's focused directly on the specific market that you're going after.  Your goal ought to be to absolutely dominate in a particular market, development, side of town, price range or style of home, etc.  Focus on your target.  I've seen newbies dethrone the incumbent King or Queen of an area in as little as 18 months.

"But what do I do right now?"  Focus and execute, even the smallest tasks.

1. Schedule and Promote Your Open Houses
2. Call a past client to say hello. DO NOT talk about Real Estate unless they bring it up.
3. Generate Un-Solicited CMA's for homes in your target market (Comparative Market Analysis, or Comp Report)
4. Send Out 3 hand written notes that simply say hello, or happy birthday, or congratulations, etc.
5. Get in your car and preview properties in your target market. Leave cards.
6. Complete CMA's on 2 Expired Listings, then send to the owners with an invitation to meet so that you can explain likely reasons why the property didn't sell.  
7. Buy a coffee or tea for a friend you've not seen in a while.
8. Send Hand Written "Market Updates" to your target market.
9. Volunteer at a venue that your target market supports.
10. Schedule a training session for the part of the job that you feel least comfortable with.  For me, it was Transaction Coordination.  Despised it.  So I took a TC course and ended up loving it.  
11. Meet with a colleague to talk about what's working for them.  Share what's working for you.
12. Update your contacts.  Email, phone, address, Social Media.  
13. Effectively use social media for 30 minutes (10 each, for 3 platforms)
14. Claim and update your professional profile on ALL real estate websites.
15. Create an introduction video and post it to YouTube and Social Media.  
16. Contact 3 distant friends or relatives and ask them for referrals.

This list could go on forever, and each point ought to be done with undivided attention.  Give it a shot.  We'd love your feedback.

#RESN

How to Price Your Home For Sale

Home is where the heart is, but it can also be where the anxiety and stress is if you're planning on selling anytime soon.

Although selling your home can be incredibly stressful, with the right guidance and support it can be (and should be) a smooth, exciting, and lucrative experience.

One of the biggest sources of anxiety and stress come while trying to arrive at...and agree on...your home's list price.  Below I share a number of ideas, thoughts, strategies, and points of view that will leave you best equipped to tackle this seemingly daunting task.  Let's call 'em "the Dos and Don'ts of Home Pricing."

DOs

Consider your motivation and moving time frame
Do you have a new job that you're moving too?  How about kids starting at a new school? Be at peace with the reality of your unique set of circumstances.  Be realistic.  Do you really have time to 'test' the absolute limits of the market, or are you serious about making your move?

Consider all of three of these points of view when determining your list price.

Wear three sets of glasses!

• From A Buyers Perspective: You HAVE TO think from your buyer's point of view. How do they look for a home?  If you were a buyer...what would attract you? Your buyers are spending countless hours on any number of ubiquitous real estate apps or websites. Remember that.  In fact, your buyers' Realtor is doing his or her own version of the same process directly on MLS. 

• From the Buyers' Realtor's Perspective: You have to think about your buyers' Realtor's point of view.  Your buyers' agent is actually the one that influences the buyer.  Think about it like this.  Most parents don't go to the store with the idea of buying Captain Crunch cereal and Sponge Bob Krabby Patties!  But kids influence their parents' actions. Influencing your buyer is fantastic, but in if you influence your buyers' Realtor, the buyer's will be more prone to take action.

• Ah yes; From the Appraiser's Perspective. You have to think from the appraiser's point of view as well! If you've overpriced your house and you're still fortunate enough to find a buyer to pay that inflated price, the appraiser will probably pop that bubble, bringing you all back to the negotiating table. 

Rely on clearly understood "Comps."
Comparative Market Analysis, CMA, or "Comps." Using the following criteria will help establish a realistic starting point:

• City, town, or area: Outline your specific development on the map and use homes that are 'model matches' of your particular house.  If you can't do that, start with a half-mile radius from your home.
• + or - 10 years from the year your home was built
• + or - 10% of the square footage of the home
• + or - 20-30% of the square footage of your lot
• # of bedrooms...until you get to 5, then simply use 4+

This is a sound starting point. You'll want to find at least 5 properties that are very similar in kind to yours that have closed recently (within the last 90-180 days). If you don't have 5, broaden your search criteria. However, the less refined the search criteria, the less dependable your comp data will be.
Look at the median number of days homes are on the market; DOM:
Look at homes that have been on the market for 90 days or more without selling!  As of the date of this post, the average DOM for local homes is 41 days. If your "Comp" is still on the market after 90...there's a good chance that it's overpriced. You might not weight that comparable home as heavily as another.

What time of year will you be selling?
Ah, spring is here. Spring is considered the best season to sell a home since families are trying to get situated before the start of the next school year. However, fall is a close second since it comes right after the quiet days of summer when most people are away on vacation. Winter is usually the worst season -- especially in areas where it snows -- but also because of the Thanksgiving, Christmas, and New Year's holidays when people's minds are on socializing, not buying or selling a home. Note: This can be an excellent time to buy!

Look at inventory
Inventory simply means the current number of comparable homes for sale.  This is right out of ECON 101. Supply & Demand are inversely related.  Simplified...lots of inventory means that each home is worth less, and little inventory means more buyers bidding on each house, driving up prices.  What's your current inventory level? Are there more or fewer homes than there were 3 months ago? Is inventory increasing or decreasing?

Inventory above shows a 37% decrease over 2 years.  This reduces supply and ought to increase prices with all other variables remaining equal.

Consider the arbitrary but psychologically charged price caps
Although these numbers are truly arbitrary, we live in a society where they actually matter! We don't see a candy bar on the shelf for $1.  It's on sale for 99¢.  Billions; probably trillions of dollars have been spent by marketers around the world verifying that yes, we actually DO think that 99¢ is less than $1.  What does this mean for your home's list price? Don't list your home for $510,000.  List it for $499,900.  At $510,000 you'll miss ALL of the buyers who are willing and able to pay that much, but they never even saw your house because their search criteria was randomly capped at $500,000! On the contrary, if your home is undervalued at $499,900, it will receive multiple offers and likely bid up to or even beyond your estimated value of $510,000.  If that strategy doesn't actually work...guess what...your house wasn't worth $510,000 in the first place.

Look at Current Mortgage Interest rates
Interest rates change buyers' behavior

Low rates = More Buyers = Higher Demand = Higher Prices

Stable rates = Current market data becomes even more relevant

High rates = Fewer Buyers = Lower Demand = Lower Prices

Look at expired and cancelled listings
Almost nobody looks at these numbers, but they tell the rest of the story. This is a look into the recent past.  If a home didn't sell, it's a virtual certainty that it was overpriced. Keep that in mind when pricing your home.

Look at List Price vs Sold Price
This adds credibility to your "Comp" data.  It shows recent trends with regard to homes selling above or below their initial asking price.  For example: Over the past 90 days 144 homes sold.  Their combined list price was X and their total sold price is Y. Comparing those two numbers illustrates a trend of overpricing vs. under-pricing.  It usually only varies by about 4%, but can really help guide you in terms of direction.

Contact a Local Area Expert
The “art” of choosing the right price for your home comes after you've pulled the data you need to make an educated choice.  Your Realtor's experience & knowledge of your local market is not a logarithm or spreadsheet.  It's expertise.  Chef Ramsay can't tell you exactly how much salt to use, he tastes...and makes a judgement based on decades of experience.  Local experts intimately know things that home sellers have likely never even thought about, like...

• Which HOA is having financial troubles or is in litigation? 
• Which side of the street sells for more money; the hill-side, or the golf-course side? 
• Which developments have excessive special tax assessments or Mello Roos? 
• Did the school district change its boundaries recently, or is it going to? 
• What is the city doing with that empty lot on the corner? 
• Have you seen that updated FEMA Flood Map? 
• Are there any short-sales or bank owned homes left in your area?  

ALL of this knowledge comes from your Realtor's time and commitment. It's knowledge that your iPhone app and your aunt Mable who's a Realtor from out of town couldn't possibly know.

DON'Ts

DON'T look at your Zillow Zestimate as anything but a generalization

Ethically, Zillow notes that Zestimates should not be used for pricing a home.
Go ahead, use this figure as your starting point, but don't take it as a fact. These "Zestimates" are admittedly inaccurate.  In fact, Zillow  advertised, to Realtors, a free downloadable PDF file on how to overcome objections to their own data.  These Zestimates are virtually always wrong.  Sadly, sometimes they're HORRIBLY wrong!

DON'T consider what you paid for your home
Maybe you still owe $500,000 on a $280,000 house. Maybe you inherited the home and paid nothing! The only thing that matters is your home's value right now, not what you paid or what you owe.

DON'T listen to the News; both local & national
Ignore the News. No matter how "local" the news claims to be, it's not local enough to do anything other than create hype or scare the pants off of you.  That's what the News gets paid to do; freak you out.  What's happening within a major metropolitan area is rarely what's happening in your town...much less on your street.  Don't believe the hype; good, bad, or indifferent.

DON'T put too much weight into what is currently on the market.
Sure, those homes might be your competition, but they also could have been on the market and are never going to sell!  I recently saw a listing that had been on the market for 985 days.  How relevant is that?  Remember, what your neighbor 'wants' for his house and your other neighbor 'wants' for hers is no guarantee that either of them will get it. Yes, look at the active market, but more importantly look at what has closed recently (lets call 'recently'...90 days or so depending on location and price-point).

I encourage my clients to list at absolutely the most competitive price possible. This creates the highest number of showings. It also creates a bit of a 'feeding frenzy' which plants a seed of urgency within your buyers. Buyers usually have lots of options, and they won't have time to look into all of them. Price is always a motivator for prospective buyers and their Realtors, so let's make the list price an intelligent and competitive one. Consider best-case and worst-case: If the offer you receive is too low, you can accept it or make a counteroffer.  If your price is too high...you'll never get an offer to accept or counter.  That idea alone illustrates the importance of not overpricing your house.

Having a stale, overpriced house on the market is ineffective, inefficient, and frankly...embarrassing for the sellers and their Realtor.  When your home is priced right...it feels right, and the activity you'll see proves that it is.  THAT is when you know you hit the sweet spot.

RESN

What Makes Luxury Real Estate...Luxurious?

We created this article with both buyers and sellers in mind, in an effort to avoid misunderstandings, bruised ego, and delayed or cancelled transaction. Below I’ve listed a number often misunderstood features and items that both sides of a Luxury Real Estate transaction should keep in mind when determining a realistic listing price or offer price for a truly luxurious home.

What is (and isn’t) the ideal luxury location? America’s most highly sought after locations feature an uncommon blend of three distinctly different attributes: A view, a sense of safety and serenity, and believe it or not, good old fashioned practicality.  There’s nothing sexy about practicality, but it’s valuable none the less.  Properties lacking any one of these elements will never capture the high ‘dollar-per-square-foot’ list price of a home that proudly boast all three of them. 

Unique Architectural Design: Beauty is in the eye of the beholder, true, but which architectural styles fetch the highest price in today’s luxury real estate market?  There’s a simple, almost boring answer to this question but it’s an important one. The most valuable homes are simply the homes that most people like! With the highest demand; the more people who are willing and able to buy your home, the higher the sales price. It’s that simple. Unique, striking, and dynamic architecture is a plus for sure, but keep in mind that when the day comes that you want to sell…”Striking and Dynamic” might be not translate to a “Loved By All” bidding war!  

The most valuable properties don’t just possess striking Interior and exterior designs. The design and style must be durable as well. By durable, I don’t mean that the structure can withstand a hurricane or an earthquake, but durable in a sense of “timelessness.” That timelessness ensure that you’re home property will never truly be “out of style”.  Modestly sized, mid-century homes by designers like Wallace Neff and Hal Levitt occasionally sell for over $10 million. I’d call that timeless value.

What’s not Luxury? The clichéd McMansion; just another big house.  5,600 sq. ft. doesn’t make a home luxurious. It just makes it big. America is still reeling from the effects of its unquenchable thirst for size. Tract home developers churned out millions of “Luxury Estates” which really amounted to a bunch of big, poorly specified and poorly crafted big boxes with fancy names.  Yes, size matters.  But size and luxury don’t have to walk hand in hand.  Fine things come in small packages as well. 

One last point about architectural design.  Don’t confuse architecture with design style or even a home’s décor.  Architecture is, for all intents and purposes, permanent.  Homeowners can simply and cost effectively update and upgrade a home’s finishes. Updating the painting and flooring is easy enough. Kitchens and Bathrooms are a bit more involved. But unless you’re a developer or a general contractor, make sure you love the “Sticks & Bricks” of the Luxury Home that you’re buying.  Changing a home’s architecture can become a monumental task.  Moving interior or exterior walls, making room additions, and reconfiguring rooms, with all of the complications of engineering, permits, plumbing, and electrical can be cost prohibitive, or at least a bad investment. Luxury architecture: It’s unique.  It’s custom.  It’s artistic. It’s inspired.

Design.  Whether buying or selling, don’t fret too much current the current design detail of the home. Real estate stylings and décor share the same vicious cycle as fashion.  What’s popular today…won’t be in near future, and often simply because the design and décor industry decided so. 

Take solid surfaces in the kitchen, for example. Solid surfaces in the kitchen serve three practical purposes: 1) Aesthetics. 2) Durability. 3) Ease of cleaning.  But if these surfaces are beautiful, long-lasting, and easy to maintain, why are luxury homeowners “upgrading” to concrete, quarts, marble, or even going back to tile?  In my opinion, it’s because they saw it in a magazine or on TV.  You know, on that show that’s sponsored by the big Home Improvement center! 

Photo courtesy of Pyrolave

I recently called on a property located on The Strand in Manhattan Beach, CA.  The listing agent humbly conceded that the home I was calling on was “dated” and needed upwards of a $500,000 in upgrades.  And I quote, “…the property still has granite counter tops. Can you believe that?” Evidently the owner was not “keeping up with the Kardashians”.  So, what’s hot this week?  Enameled Lava counter tops! Yep. You can run out right now and pay an estimated $400 per square foot for counter surfaces if that’s something that’s important to you.  Personally, I’d look into buying another investment property before I spent that much “upgrading” my counters.  Or would I?

Quality and Finish. One of the primary differences between a Luxury Home and a home that’s simply ‘big’ is the quality of materials and craftsmanship.  Take marble flooring for example.  Marble floors adorn the most opulent foyers, but how much does marble flooring actually cost?  You can get marble tile flooring for under $3 per sq. ft. if you’re not too picky.  Another $6 per foot to install and that 1,100 sq. ft. foyer and living room comes in at a cool $9,900.  However, for a finer cut of marble at $20 per sq. ft., and a more highly skill tradesman for $10 per sq. ft., setting the price tag for that Luxury foyer and living nearly $35,000.  Oh. I’m sorry.  You want real luxury?  Use marble slab at upwards of $100 per square foot and yes, you’ve got yourself a $110,000 entry to your living room.     

Is the home built Outside-In?  Another important feature of a Luxury Home is a floor-plan and

design that invites the beauty and views of the outside to become part of the inside.  This type of design, bringing the outside in, truly is a timeless attribute.  Whether you’re in Uptown Manhattan, Trousdale Estates, or Lake Tahoe’s Emerald Bay, soaking up the views from the comfort of your family room won’t just bring a smile to your face…but might bring an extra zero to the end of your listing price as well!

Tall Ceilings. At the time I wrote this post, I was sitting in an elegant formal living room. Albeit modest in terms of square footage, it was truly luxurious in terms of the sheer volume of space and the feeling it conveyed.  Its footprint is only 14’ by 20’. That’s 280 square feet; not huge by luxury home standards. However, when you add the ceiling height (22 feet) to the equation, the sense of grandeur is unavoidable.  It provides an anchor; a center for the entire home.  Yes, at 14’ x 20’ x 22 feet high, the living room is actually taller than it is long.  Compare this room with a room of the same square footage but an 8’ ceiling height. At 14’ x 20’, both rooms would be 260’ square.  Add volume to the equation and you go from 2080 cubic feet with an 8’ ceiling to 6,160 cubic feet. That’s 296% bigger.  It’s three times the size, and it feels like it.  So, unless you’re in the most highly sought after neighborhoods, or happen to own a mid-century architectural gem, a property has got to have one or two rooms with ceiling heights in the 12’-16’ range, or higher. There are very few homes with 8-foot ceilings throughout that truly warrant a “Luxury” price tag.

Storage. Convenient. Neat. Aesthetic.  Perhaps I’m biased on this one, being involved in many, many activities. But seriously, how can we live without lots of closets and ample additional storage that’s out of sight, but not out of mind.  If I had a buck for every three or four car garage I’ve seen that somehow doesn’t have room for A car…much less 3 or 4.  We’re American.  We keep stuff! Kitchen cabinets, a pantry, hall closets, linen closets, walk in closets, storage sheds out buildings, and on and on.  If designed intelligently, adequate and convenient storage might be the one feature that gets your contract signed.

I’ve not discussed a number of other items such as garages and car-ports, maids’ quarters, humidors, or bomb shelters, but I think you get the point. Certain traits and characteristics are timeless and will bring timeless value to any home, not just those of the rich and famous. So keep these in mind, whether the next home you buy cost $500,000 or $5 Million.