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.

British are upset paying even 3% commissions!!

http://news.bbc.co.uk/2/hi/business/6172846.stm. Yet most people is this country still pay 5 or 6% without giving it a thought. Why such a discrepancy? For many Americans they still have this misperception that paying more in commission will result in the home selling faster or for more money. The billions of dollars spent by the high commission brokers have brainwashed consumers into this fantasy. If you are a regular reader of this blog you already know that there is not a shred of evidence to support these perceptions. In fact a lower commission does make the home more competitive resulting in a faster sale. Not paying thousands more nets the seller more money at closing and we have thousands of such cases here at Homeowners Concept.

Another reason is that many sellers cannot break away from the "obligation" to list with a high commission agent because he or she is a relative or "friend" who still charges 5 or 6% commission and in many cases is unskilled or part time in real estate. This compromises the saleability of the property and prolongs the sale.

Lastly, the consumer in this country has long felt rich and confident in the economic future that paying more for many things was part showing off and part keeping up with the "Joneses". Nevertheless, with the economic downturn of late many people are reassessing this desire to overspend for products and services. In other words, the American consumer is becoming more savvy. Maybe in the not too distant future ALL sellers will be paying reasonable commissions that wise Homeowners Concept sellers currently pay.

Paying 6% AND giving it away?

There is that persona that agents are like used car salesmen. Before I go further I want to say that I'm sure that there are a great deal of honest and ethical used-car salesmen but I use that industry because...well...you know exactly why. I must also state that for the most part, agents are ethical and look out for their clients, the seller. The bar is definitely being raised thanks in part to a much more savvy and demanding consumer. That said, it only takes one bad apple to spoil the bunch and oh boy are there some apples out there that are just rotten to the core. The following example is precisely why some members of the public continue to distrust our profession.

A relative told one of her neighbors about saving the high commission using Homeowners. Her neighbor though was "obligated" to list it with the Realtor that sold it to her and had now become her "friend" (how can one be obligated to pay someone excessive commission?). The property at 7738 W. Mt Vernon (MLS # 1086757) is in a very desirable area of Milwaukee and has a Fair Market Value of $154,000. It has a large yard, updated KIT w/SS appliances included, rec rm and it is in immaculate condition. One could see this property going for more than FMV closer to $160k. YET it was listed by the friend agent for $139,900 and of course sold in the first couple of days. By comparison 206 N. 79th (MLS 1088899) which is very close to the subject property sold above assessment. The seller probably left $10-15,000 on the table PLUS paid a hefty commission. This could have been deliberate (just to get the listing sold and out the door) or could be a case of ineptness. The agent she listed with does just a few deals a year.

We occasionally do get sellers who unknowingly want to underprice their property but we take the Realtor ethics at heart and refuse to participate in this. Our agents' expertise which is much higher than the average high commission agent (see About Us) prevents us from making errors such as this. I cannot fathom any of our agents underpricing any of their clients much less their "friends".

June area homes sales up, but prices down

A small uptick in June sales is countered by continued decline in prices. Metro Milwaukee area were up 3.6 percent in June to 1,582 versus 1,527 in June, 2008. Prices of homes though continue to decline - down 11.8 percent this year. The biggest price drop is in Milwaukee County where home prices are down 26.9 percent this year.

Milwaukee County has been a bright spot in the region for the number of home sales. June was the third consecutive month that Milwaukee County had higher homes sales than in 2008. Milwaukee County had 915 homes sold in June, up 10.8 percent compared to 2008, but down 15 percent compared to June of 2007.

Ozaukee County had 100 homes sold in June, up 63.9 percent compared to June of 2008, but still down 28.1 percent compared to June of 2007.

Washington County had 150 homes sold in June, up 12.8 percent compared to June of 2008, but down 10.7 percent compared to June of 2007.

Waukesha County had 417 homes sold in June, down 12.2 percent compared to June of 2008 and down 27.6 compared to June of 2007.

Walworth County posted a small home sale increase in June, while Racine and Kenosha counties saw declines. Home sales in Walworth County were up 0.9 percent, in Kenosha County was down 15.3 percent and in Racine County were down 5.5 percent.

With home inventory at almost 11 months (2.5 times larger than in 2004), sellers have to be extremely competitive in their pricing in order to sell. Only very serious sellers are able to sell (See blog spot of May 7, 2009 for further explanation). Sellers who are wise, use Homeowners Concept's low commission structure to sell so they can be more competitive.

Is it lazyness or incompetence?

We have run into the following situation before and brings to light that sellers get compromised despite paying a high commission of 5% or 6% (see blog post of 3/12/09 for a better understanding of why paying more commission gets you less expertise).

One of our agents is working with a buyer who decided to offer on the home at 165 N. 72nd st in Milwaukee (MLS# 1086805). As our Offer was being considered, another Offer by a different buyer came in. Evidently, the other Offer was better in price to the one our buyer submitted because seller signed off on the competing Offer.

We realize sellers do not know the proper way to maximize their selling price. This is where the listing agent, who seller is paying a high commission, either was lazy or incompetent in advising the seller to make a multiple counteroffer to both buyers. You see, our buyer was WILLING to go higher, had he be given the opportunity. By accepting the first offer, seller definitely left money on the table AND paid a high commission on top of that.

Because Homeowners Concept agents do 3-4 times more sales and have been in business for 12 years longer than the average agent, a seller can expect to net much more at closing (adding to the thousands in savings from paying just our low commission).

Low appraisals present a real disadvantage when paying 6%.

The article in the Milwaukee Journal of 6/29/09 for the home at 4421 N. Glenway in Wauwatosa points out how stingy appraisals of late can affect sales in today's market (http://www.jsonline.com/business/49390682.html). In the article, the subject property's appraisal came in $6,000 less than the sales price. Ultimately seller had to reduce his price in order to close. Seller was with a high commission broker paying probably around $11,500. Had the sellers been wise and used Homeowners Concept, the savings in commissions would have more than covered the deficit from the appraiser.

The National Association of Realtors recently reported that "In the past month, stories of appraisal problems have been snowballing from across the country with many contracts falling through at the last moment." Part of these deals are falling apart due to the cost of selling a property when one uses a traditional, high commission broker.

Just like when buyers decide on which home to make an offer on and for how much, appraisers decide the value of the property for the lender regardless of what the seller is paying in commission. Sellers and brokers have absolutely no control what the appraised value is going to be. If you plan to sell, BE WISE and determine from the start that paying a very low commission would only help to net you more money once the value is calculated by the appraiser (which may be less than what you have in mind).

Avoid agents that want to "buy the listing"

Yesterday we walked away from listing a home on Lannie Ct. in Elm Grove, very close to the property we have a pending sale at 13550 Wrayburn Rd. You see, the seller is already listed for $449,900 for almost 5 months with very little activity and no offer. He was also listed last year with a different agent for $479,900. Our expert agent Kati Fonte who sold the home on Wrayburn in two months and has been a top agent for the last 19 years with Homeowners Concept, told the seller the price and changes in the presentation it would take to sell but seller was reluctant to go there. Why? Because other agents have told him the price in the mid $450s is doable. And herein lies the problem. Sellers listening to inexperienced agents or agents who want to have a listing hoping they attract a buyer they then can sell them something else.

When we do a free market analysis we take the perspective of what it would take to get the property sold looking at it from the buyer's vantage and making sure we have the comparable sales to back up the appraisal. Unfortunately there are a lot of high commission agents that will take anything at any price just to get their name in the marketplace. Many sellers fall prey to the old trick high commission agents play which is "buying the listing". We refuse to participate in this game. THIS IS a total disservice to sellers who pin their hopes on a higher price than the market can support. For verification of this, one has to look at the thousands of properties that expire unsold each month in the Southeast Wisconsin MLS.

The 3 most important things a seller needs to do to sell fast and for top dollar.

What are the three most important things a seller should do to sell fast and for top dollar?

One: Price at or below the last comparable sale within a three to six month prior period. Take a look at the comparable sales in your area, find the sale that is closest to your property in scope, and list your property at or lower than what that property sold for. If you choose Homeowners Concept and pay just 1.5% commission, you can afford to price lower than the competition. Remember buyers could care less what you pay in commissions all they care for is the bottom line.

Two: Work with an agent who has a track record for selling many homes and has been in business a long time. All of the Homeowners Concept agents are carefully picked from many candidates and sell 3-4 times as many homes than the average agent and have 17+ years in business vs less than 5 yrs for the high commission agencies.

Three: Present your house in the best condition possible so potential buyers walk through the door and feel they could live there. Take the advice of a professional (again the Homeowners Concept is a great source of advice) in terms of what needs to be changed, removed, or added. In some cases, you might need a professional staging company to get the house ready for showings. After the property is ready, be sure to make it available for open houses and showings.