Proper Pricing is Key to Selling.

Anybody who has ever found themselves trying to sell a home invariably struggles with the question “What price should I set on my home?” While normally this is an important decision for a homeowner to make, today it is one of the most critical decisions in order to sell a home. The Metro Milwaukee real estate market appears to be similar to most real estate markets around the country. There is a huge inventory of homes and buyer activity has dropped off from years past.

Supply And Demand Dictate Home Values
We must never forget that real estate is a commodity and as such the laws of economics apply. Many of us think of our home as a unique place on this world, and while we are living there, it really is. But once we decide to sell it, our home becomes a house, a commodity that must be sold or traded in a market filled with competition. When supply outpaces demand, values fall. When demand exceeds supply, prices rise. We typically see a balanced market when inventory is 5-6 months. Anything less than that is a sellers’ market, and of course greater is a buyers’ market.

With about 11 months of supply of homes (was 3-4 months in 2004), we are clearly in a buyers’ market. The inventory has been very slowly coming down in the last few months with some sellers taking their home off the market until conditions improve and the $8,000 buyer credit contributing to the small decline.

Avoid The Biggest Mistake That Home Sellers Make
The biggest mistake I see from people who want to sell a home comes in both good and bad markets. They price their home too high (because they do not want to “leave anything on the table”). While this appears to make sense, it actually works against them as studies have found that the “freshest” homes on the market sell for a higher amount.

In an upwards moving market, a home that is priced too high will eventually sell when the market “catches up” with the higher value the seller demands. On the other hand in a declining market of the past couple of years, a higher price makes the home completely unsaleable as prices for comparable homes keep dropping.

Chasing The Market Is The Biggest Mistake A Seller Can Make
We refer to the actions of a seller who prices the home too high in a declining market as “chasing the market.” In this type of market as prices erode this seller has to keep reducing but never enough to undercut the competition (similarly priced homes which are SELLING) are bigger or nicer. What is truly tragic for this seller is that the home, in order to sell, has to get to a price much lower than it would have sold for, at the start of the marketing period.

How To Price A Home To Sell
This is a tough real estate market and roughly only half the homes that are offered for sale are going to sell over the next 12 months (based on data from the last 12 months)! If you do not need to sell your home, help everybody out (including yourself) and take your home off the market. But if you do need to sell, work with a real estate company such as Homeowners Concept that has real estate Professionals with vast knowledge in proper pricing, staging, negotiations, closing and offers extensive marketing. This is critical. Pricing your home correctly at the start, plus marketing it in key distribution channels will allow you to be part of the 1 in 2 happy home sellers that actually sell their home. Of course saving thousands off a 6% commission is nice too.

Tips to make sure your home does NOT sell.

Warning: there is some extreme sarcasm in this post and might offend some but it is based on 25 years of real estate experience and tens of thousands of sales. Proceed at your own risk.

Many articles and web sites exist that give sellers tips on selling their home. With thousands of properties in SE-WI on the market for over a year now I thought it was appropriate to put forth a list of 5 major tips to make sure your home fails to sell.

GO AT IT ALONE. This one is a no-brainer and I wrote about being FSBO in the previous post. Despite the great odds some people still try this route wasting money and time. Interestingly though the vast majority of these FSBOs will gladly pay a broker a commission (a cobroke) if they bring the buyer which is more than our 1.5% commission. Amazing!

USE A FLAT FEE BROKER. This is another avenue of selling with very low odds of whereby sellers pay up to $550 UPFRONT. The post of 3/25/09 really explains why the reputation of “list them and forget them” exists in the industry. Most of these outfits are doing just MLS data entry, and they could care less whether the home sells. Thousands of sellers have fallen victim to paying the hundreds of dollars upfront, wasting months or years on the market and having to turn to another broker or Homeowners Concept to eventually sell.

CASUALLY CHOOSE YOUR AGENT/REAL ESTATE COMPANY. The third biggest mistake out there is thinking that all real estate companies (and all real estate agents) are alike. Huge mistake. The fact is, real estate is an industry that is easy to enter and many people do so every year. In fact, the National Association of REALTORS® once published a report showing that 9 out of 10 people who get into real estate are out of the business within two years. Of all the major real estate companies in Metro Milwaukee we are the only one with the least amount of turnover. By far!

Selling a home is typically a very important, and costly event for most people. It involves their most expensive asset, so it always blows my mind when sellers pick their friend who “also does real estate.” Think about it, in every profession you have the “best in the business,” and then you have everybody else. Why trust this most precious asset to somebody who cannot deliver the very best for you? How can anybody who does real estate part-time and for a just a few years compete with those of us who do it full time and are veterans in the business? Also lets not forget that those same friends and relatives who happen to be agents still sock you with a 6% commission.

PRICE YOUR HOME TOO HIGH. Up until the 2005 peak in sales, a common method for marketing a home was to put a high price on it and then “let people bring you offers.” This made great sense, as you know everybody wants a deal, so you might as well build in some wiggle room. Another reason that this method was not so bad is that real estate always appreciated! No matter what price you put on the home, eventually the market would catch up to it and you would be able to sell your home. But not now. Prices are dropping. If you are overpriced today, the market is not catching up, it is leaving you behind.

IGNORE BUYER FEEDBACK. f you listen really closely, the market will tell you everything you need to know. First of all, when a great agent lists your home (which all of he or she will tell you on how best to position and price the home to attract an offer. Also a great agent will also get good feedback from the buyers that view your home. How does the home show? How does it compare to other similarly priced homes? So the key to not selling your home is to either not ask the questions, or at least ignore the answers.

Selling a home is not rocket science, paying attention to the above tips and using a company such as Homeowners Concept where an expert Realtor costs much less can aid tremendously.

Why selling For Sale By Owner is a losing game.

The odds to sell FSBO without any assistance from a broker are incredibly low especially in today's market. In the past year only 9% of sellers who tried FSBO sold that way. 91% failed. That is extremely long odds, yet some sellers try FBSO only to get disheartened and chuck it all and list with a high commission broker.

The very reason Homeowners Concept even exists today is because our founder walked away from buying a For Sale By Owner (FSBO) property in 1984 and in the process realized that many other buyers probably do the same and bypass the FSBO route. An extensive research of 100 FSBOs from 6 months earlier validated the theory and Homeowners Concept was born as the missing link between FSBO and paying a hefty 6% commission.

In essence, many sellers think that if they just stick a sign in the lawn and have an attorney to handle the paperwork, they are set. This assumption is far from reality as buyers do not use the sellers' attorney. Buyers have to retain their own lawyer at a substantial upfront expense without even knowing that they will get the house. Buyers still have to navigate everything on their own including issues with inspection, financing, appraisal, etc. No wonder then that buyers shy away from FSBOs unless the property is one heck of a deal. With odds of FSBO success this low one can see why Homeowners Concept has grown and flourished over the past 25 years assisting the wise sellers who are looking to save the high commission AND have an expert Realtor handle the sale.