Pricing Your Home in a Correcting Market

These three strategies are the keys to pricing well in a correcting market.

How do I price my home in a correcting market? Many people are asking this question lately. With this, there are a few common things people are talking about: rising interest rates, decreasing sales, and increasing inventory. Does that mean we are going to experience a housing crash? I don’t think so. After two years of an incredibly hectic market, we’re just settling down to a normal seller’s market. Therefore, how do we price accordingly?

1. Don’t be overpriced. There are many things you can do to get your home ready, but this is not the kind of market to test a higher price. In the previous market, we could take the last sale and ask a little higher, but that is no longer the case. The last thing you want to do is chase the market down, as that leaves you looking desperate and open to lowball offers. 

   “We’re just settling down to a normal seller’s market.”
   

2. Price below the market value. This works well because, as the market is shifting down, we’re already below the sales that we are comparing to. If you have a lot of comparable sales that are waiting on the market, you can undercut them and sell quickly. 

3. “Test market” your price. How do you test the market without actually being on the market? We use a comprehensive, pre-market strategy called “test marketing”. We come up with a price range and shop it around to buyers in the area, like a pre-sale. Then we gather that feedback and use it to prepare your home and get it priced accurately for the market while building interest in the home.

These are my favorite strategies for pricing in a correcting market. To learn more about them, reach out to me for a consultation. Call me today, I’d be happy to help you out.

Selling Over the Holiday Season

Historically, December is a better month to sell than the rest of the Fall or Winter, which is generally considered part of the "slower" season in real estate. There are a few reasons why this is the case and why it might be a good time to consider selling your house around the holidays. We also have a few tips and answer some often asked questions that you should need to know about if you are planning of selling during this time. And be sure to check out Patrick on Fox 7 below as he shares his tips for selling during the holidays.

Serious Buyers Only

This is one of the best parts about selling in the "slower" season - you're really only going to attract serious buyers. While this can seem like a bad thing it is far from it. This means that the buyers you get are extremely motivated to move on a house and they aren't as finicky and flaky as some spring buyers can be. Beyond this there are some specifics that make December a great time to sell if you are willing to play it right. 

December Buyers are usually some combination of this:

• People that are relocating for jobs. There are lots of people that are relocating around this time of year and have a strong need to buy. They are usually under a time constraint and are looking to buy fast. 
• People with a little extra cash to spend. This is the time of the holiday bonus; large cash bonuses get paid out when companies do well and this usually happens around the holidays. This means that there is a good chance that buyers have a little extra cash to use for that downpayment. 
• People with time off. In December you have 2 weeks of downtime that you just don’t get any other time of the year. That means people who are looking to buy have a larger window of time to look and want to visit and see more houses.

Low Supply 

December is historically one of the months with the lowest number of houses on the market. In December of 2015 there were just under 8,000 active listings on the market in Austin. For the months of May through September there was over 11,000 listings. That is 3000 less homes available to buyers in December than in the Spring. What this means is that there isn't a lot of competition from other sellers. Additionally as we detailed above the buyers are more motivated during this time of year, this can lead to low supply and high demand - which is always beneficial to the seller. 

The Election

Now these reasons are general to most Decembers, however its important to remember that some effects are specific to certain years. For this December we just went through a very contentious election that had a lot of people on either side concerned. And traditionally when people are concerned about jobs or the future they are less likely to spend money, especially when it comes to something like a house. Now that the election is over we can expect a bit of a bounce back and some people who were thinking about buying in November but didn't, start their search up again. 

Best practices for marketing/selling:

• Should I/should I not put up holiday decorations?

  • Yes, but keep it tasteful, don’t go overboard. It can create an emotional connection for the buyer as well. Still want to declutter/depersonalize.

•  What do I do if someone wants to see my house on Christmas?

  • Yes. Only a very motivated buyer wants to see homes on a National holiday.  

• Pictures of the home during winter should be done sooner than later before the leaves change and before decorations go up. 

Love It Or List It? A BIRDHOME Recap!

SHOULD I LOVE IT OR LIST IT?

We had the joy of participating in an amazing event last night with the incredible Amity Worrel & Co. that we just had to share with you! Over the past few month they have been putting on their Design 101 events to help share professional advice on interior design, architecture, and real estate amongst other things. We were ask to contribute to their Love It or List It event last night and it went so well that we decided we need to share some of the knowledge and advice from the event with you! So read our recap below and be sure to check out the three amazing ladies that we had the pleasure of speaking with last night: Amity Worrel, Dianne Kett, and Maureen Hodges. They are inspirations to us and we can't recommend them enough!

1. Make a list of what you love and what you don't love!

Even if you think you already know you want to renovate your house, its always good to go through and make a list of everything you love and don't love just to make sure you don't miss anything. And be sure to include things beyond just what is in the house itself, consider the neighborhood, neighbors, commute, and location as well! This will help you narrow down your list to the things you can change versus the things you can't and you can decide if you can just renovate or if you need to sell and something different.  

2. Talk to an interior designer and architect

Once you have your list of what you love and don't love you can talk to an interior designer and/or an architect to get their opinion on budget and feasibility. A good general rule is that if you are just changing the setup of a room its okay just to reach out to an interior designer, but once you start talking about moving walls, changes plumbing or electrical, or adding on the house you'll need the knowledge and expertise of an architect as well. And any good interior designer will help you find one that you can trust! So make sure to reach out to them early and often - they are always will to help and get you moving in the right direction.  

3. Decide - Love it or list it!

Now that you've talked to an interior designer and an architect its time to make that decision. Are you going to love it or are you going to list it.  Maybe the architect comes to you and tells you that you can't add a second story or there is a heritage oak preventing you from extending that porch. Or maybe the budget and time just doesn't work for you. Or perhaps everything lines up perfectly and you're ready to move forward with making your house into a dream home. Either way - you'll be confident that you've got all the information to make the right decision for you!

4. Run the numbers

Either way though, once you've decided on what you're going to do make sure to reach out to a trusted real estate professional. Because a good agent will help you run the numbers. As we tell people all the time, buying or selling your house is a business transaction so its important to treat it like one. We can provide a valuation of your house currently and then what it would be after you renovate. If you are going to sell, we can help you through the process to make sure you can get top market value for your house. So don't hesitate to reach out to us, we understand that while this can be a very emotional moment it is also a very important financial one as well. 

5. Think Like a Buyer

So once you've decided to sell and interviewed and hired your real estate agent its important that the goal of selling your house becomes the priority. And the best way to do this is to take it from being your home to becoming a house that someone else can turn into their home. We always recommend to our clients to run through our Seller's Checklist and start to think like a buyer. The easiest way to do this is to have a stager come in and make your house appeal to potential buyers, they can remove the emotion from the process of selling your house and make it so much easier for a buyer to imagine and dream of living there. This is such an important part of selling a house that we started our own staging company!

We hope this helped you as you consider remodeling or selling your house and if you have any questions please don't hesitate to reach out to us or the wonderful women that spoke (we'd be happy to connect you as well). And if you're interested in attending the next Design 101 class be sure to sign up to be on Amity's mailing list!

Top Ten Interview Questions You Should Ask A Real Estate Agent

Why Interview a Real Estate Agent?

For a lot of people, buying or selling a home is the largest monetary transaction they will make in their lifetime. Beyond a home being just a place of shelter, it's the place where family and friends gather and where our children grow up. It is also a savings account. In a lot of ways a home, when sold, can represent a large portion of many people’s retirement funds.

With the home buying or selling process representing such an important piece of many people's financial future, it is important to do you research when choosing a professional to represent you on something so large and important.

The good news is that 1,000’s of homes sell all over the country everyday. If done correctly, this can be a very smooth, seamless and rewarding experience. On the other hand, if handled improperly, it can make the process of selling your house a miserable and overwhelming experience. 

To better help you make a more informed decision when choosing a Realtor to help sell your home, it is important to take the time to interview them. We created a basic list of questions and why you should be asking these specific questions. These questions will pro-actively help you avoid the above issues. We've also included all the questions as a PDF that you can download and take with you when you go to interview a potential real estate agent. 

10 Questions To Ask When Interviewing A Realtor!

1. Tell me about your experience? How long have you been an agent in Austin?

I know this is a relevantly straight forward question, but the truth of the matter is, so few people we meet with ever ask. Without asking this question, you put yourself at risk to hire someone who, quite frankly, may not be qualified to advise you on such matters.

Experience is important for 2 reasons:

1. You only truly learn by doing. Passing a real estate exam, does little to nothing to educate someone on how this business works. There are hundreds of moving parts for every transaction and if you don’t know how the process works, it can cost your clients thousands.

2. The barrier to entry for someone to get a real estate license is about on par with learning how to properly swing a golf club. Anyone can get the general idea of how it should work, very few can drive a golf ball 300 yards down the middle of a fairway.

What does this mean in real estate terms? Is your Realtor up on national and international markets--both real estate and otherwise and how they will affect your bottom line. Do they understand how the timing of getting your home on the market can make the difference between selling at $400k or $425k? Can they tell you about supply and demand and how to properly take this into consideration when you are trying to come up with a price to sell you home.

Yes, we are in a sellers market. Most people think that means that all you have to do is put a sign in the yard, put the listing in the MLS and hold your hand out. People are leaving thousands of dollars on the table everyday by not hiring a Realtor with experience in both up markets and down. Worse, they are going to trust this massive transaction someone who probably won’t be in the business in 2 or 3 years.

2. Have you been through the home buying/home selling process yourself personally?

This is really important for 2 reasons… the first is financial stability. I don’t know how many times I’ve heard a potential client tell me they plan to work with their sister, cousin or friend to buy or sell their home because they want to “help them”. I always ask, aren’t they supposed to be helping you instead of the other way around. I’ll tell you right now, you are helping no one when you putting one of the largest transactions in your lifetime in the hands of someone who can’t help themselves. If your Realtor is going to put their financial gain above yours, that is a huge red flag. When you aren’t stable enough to put your clients first, you give bad advice and make poor decisions.

The other part of this question is about understanding how large a decision buying or selling a home truly is if you haven’t bought or sold a home yourself. Growing up in the real estate world I had my first experience buying and selling when I was 17.  My Dad and I flipped a home together; he had a client that really just needed to get rid of a home. It had been his Mother’s and she had really let it go. We got the home at a great price, then my Dad and I put together a budget, estimated our profit on the sell, and we setup a bank account to pay for the updates and repairs. Every few days I met with the contractors, wrote checks and kept up with their progress. Let me tell you, the responsibility of something so big...especially at 17, has stuck with me to this day. It was one of the greatest lessons of my life. Selling a house takes time, dedication, hard work, and willingness to do anything and everything to get it done. 

3. What exactly will you do to find buyers for my house/property? Do you have a system and plan for your listings?

Most Realtors do what we call the 3 P’s. They PUT a sign in the yard, PUT the home in the MLS and then they PRAY it sells. And in this market, it can sell a home. But typically, this approach leaves thousands of dollars on the table.

Ask your Realtor what they do “Pro-actively” to get your home sold. Do they have a written plan that they can present to you? More importantly, do they have systems in place to achieve that plan and track the results?

On the buyer side, with so much competition out there for the few homes that come on the market, what will your agent do to find you the home you’re looking for? What will they do beyond setting a search in the MLS and showing you homes as they come on the market?

In addition, when your dream home comes on the market, what will they do to ensure that your offer is accepted? What process do they go through to writing the perfect offer and present it in a manner that gets the offer accepted? Ask them how often they win when there are multiple offers, you’ll find that most Realtors don’t have a real answer. It’s like a batting average; if you don’t know how many hits you get versus how many times you strike out, how will you ever improve?

4. Are you a full time or part time agent?

Did you know that the average Realtor does less than 5 transactions per year? At a median price of $292,000 (the median price in Austin as of this writing) the average Realtor makes about $43,800 in gross commissions annually. That doesn’t seem like enough to live on and should beg the question: do you really want to hire someone who does real estate part time, or has another job or, worse, whose business is failing? I recommend you find someone who does at least 15-20 transactions a year. If they work with a team (and that’s even better for reasons I’ll get into later) make sure their team is doing about 15 per agent. Less than that and I would start to wonder “why?” What’s wrong with the way they do their business that they can’t do at least a couple of deals every month? Clearly someone doing less than a deal every month is doing this as a hobby and not a profession.

5. Are you an individual agent or do you have a team?

Hiring someone on a team, or that runs a team is preferable. Why? Because the number one complaint I hear from people about their last agent was that they didn’t communicate enough or that they somehow felt that their agent didn’t have time for them. You already know I’m recommending you hire someone who’s busy. I think you should want to find someone doing a lot of business, and unless they have a team, you run the risk that they won’t have time for you. Ask them who they have on their team and what their roles are. This varies widely and there’s not just one way this is supposed to look. What you want to know is that they have both the office staff to handle the paperwork and logistics of the transaction as well as other trained agents who can communicate and work with you should your agent not be available. Find out if the person you are interviewing will be working with you personally every step or do they have specialists to handle various aspect of the transaction. There are advantages and disadvantages either way, and the important thing is you are comfortable with how they do it. Find out if they have hours or days they don’t work. Some people don’t work after 6:00 or Sundays. Is that OK with you? Some people like their employees to be available nights and weekends and some people are less demanding. You’ll need to make find out how your agent and their team operates and decide what works for you and your needs. And unless you get this clear you run the risk of hiring someone whose style won’t work for you.

6. What parts of town are you most familiar with? How many homes have you sold in my neighborhood in the past year or two?

This is important because every part of town, every neighborhood has a different supply and demand and different reasons why people do or do not want to live there. Wouldn’t it be good to know that a home was built on an old landfill and soil tends to shift and cause foundation problems? (This is an actual neighborhood in Austin). School districts as well as specific schools play a huge part in coming up with a home value. Its important to have an agent who knows the knows that areas that you want to live in, someone who can guide you accurately when looking for your dream home. 

7. Do you have a marketing/advertising plan? Can you tell me about it?

It is important to have an actual written marketing plan with systems and processes behind it. How else will you hold your Realtor accountable to the actions they are supposed to be taking to ensure that your home sells and sells for top dollar. When a Realtor doesn't have a firm plan of action in hand for your house there is an large chance they will be leaving money on the table or be unable and unprepared to command the highest prices from the market.

8. Who answers your calls and shows my home if you’re not available?

Your Realtor can’t be everywhere at all times. It is crucial that they have a team that supports them to ensure that every showing happens and every question is answered. Harvard Business Review did a study and found that if a call is answered and/or returned within 5 minutes, that potential business is customer is 75% more likely to make an appointment. If your Realtor doesn’t have a team, it is important that they have some sort of back-up if they aren’t available. And it is important that they communicate this with you upfront!

9. Can you provide me the names and phone numbers of past clients as references?

Beyond having some testimonials, it is important that you have references that will speak to your Realtors competence and character. For all intents and purposes, this is a job interview and should be treated accordingly. Not only that, but as we have repeatedly discussed, selling your home is a huge undertaking and you need to be absolutely sure that you can trust your real estate agent beyond the shadow of a doubt. Reaching out to past clients can provide you with the assurance that your Realtor is integral and trustworthy. 

10. Why should I hire you over the other 12,000 agents in Austin?

Your Realtor should have a unique selling proposition. Something that they do very well that sets them apart. What’s their marketing plan look like? What is their negotiating style? How do they help advise you to pick the right offer if you do receive multiple offers on your home? Can you trust them - do they have an established reputation? You need to know what your agent can do for you that no one else can. 

Selling Your Home: Getting More Than An Offer

Everyone knows that Austin is a seller's market right now. You all have heard some variation of the following story….

“We put our home on the market, had 8 offers in 2 days and sold it for $12,000 over our asking price!”

That’s exciting, right? And honestly, in this market we experiencing right now, this isn’t hard for any Realtor in our market to accomplish. The market can do a lot of the work if your goal is ONLY to get an offer. If your goal is to get it SOLD, then keep reading!

HOMES NOT STAYING SOLD

A new common trend that a lot of people ARE NOT talking about is having their home come back on the market after receiving multiple offers and having a bidding war.

Let’s first look at the statistics and see how common this trend is…

According to the Austin Board of Realtors, in the last week 465 homes have gone under contract in Austin. During the same period, 93 homes have gone under contract and come back on the market. That is roughly 1 in 5 homes not staying sold after initially going under contract!

From my experience, once your seller has picked an offer, most of the other buyers go away. They move on to other properties, their initial enthusiasm has waned and/or they rethink their initial bid. Losing out on this initial “herd mentality” can really suck the wind out of a home sale/sail. See what I did there…

The top reasons buyer’s back out of contract (in no particular order):

1. - They are not financially qualified to purchase the home
2. - They are having regrets about paying so much for the home after bidding it up
3. - The buyer and seller cannot agree on repairs during negotiations.
4. - The home not appraising for the agreed upon price AND the buyer and seller not agreeing on how to proceed forward
5. - Miscellaneous reasons: lost their job, lost their minds, were crazy to begin with, divorce, natural disasters, etc...

The sad reality is that most, if not all of these issues could have been easily avoided. The worst part is that, if the buyer AND the seller would have hired a more qualified Realtor to represent them, reasons #1-4 could have been avoided. 

If you want it to stay sold AND sell for top dollar, there are a few things you need to be thinking about.

 

#1 - Qualify the Offer

This is the simplest and first step you should take when receiving offers.

• Make sure the terms are fair and reasonable for all parties.

• Make sure the contract is completly and properly filled out. (You can’t imagine how many contracts I see with major mistake that can cost buyers and/or sellers a lot of money)

• Run a Seller Net Sheet on each offer to help compare offers and see which one will bring you the highest net proceeds at the completion of the sale. (Sometimes it is not always the highest offer that nets you the most, there a lot of other factors to consider)

• If any of the terms aren’t clear, call the buyer or buyer’s agent for clarification to ensure you know what you are accepting, countering or rejecting.

#2 - Qualify the BUYER

Let’s start with the premise that all buyers are emotionally drained, crazed lunatics who’ve made ten offers on ten houses only to be rejected. They are beaten down, kicked around and will do just about anything to get a house. We will call this buyer "BOMB BUYER", ready to explode at any point.

What we are trying to ensure is that your buyer IS NOT a bomb buyer. That they have thought the purchase through and are in a good state of mind to buy. It really helps when a cover letter is attached to the offer telling us a little more about the buyer. It is also prudent for a listing agent to have a conversation with a buyer’s agent. It’s amazing how often this does not happen and how amazing having a five minute conversation can get everyone on the same page. Texting/emailing does NOT count as a conversation.

Questions to ask are:

• How many offers have they made?
• How long have they been looking?
• Have they walked away from any purchases after going under contract?
• Are they first time homebuyers?

This line of questioning should get a good conversation going and help you understand how likely they are to continue forward if you decide to accept their offer.

#3 Qualify the Buyer’s Lender

This is another easy phone call that a good Realtor will make on behalf of the seller. Having them have a quick conversation will help give you a better understanding of how strong of a borrow the buyer is. It is also prudent to find out if the lender qualified them based on a conversation or they actually collected pay stubs, ran credit, etc.

Some good tips for working with lenders are:

• Are they local? Can you physically go visit them?
• Do they have a direct phone number you can call to reach them?
• Do they have an in-house loan processor that they can access quickly and easily?
• What is their track record for closing on time?
• Have their appraisers been coming up short on appraised values? Are their appraisers vetted and scrutinized regularly.
• Do they do a lot of the type of loans they are qualifying the buyer for? I.e. FHA, VA, Jumbo loans, condos loans, 1st and 2nd mortgages, etc.

If I am raising more questions than answering them with the above line of questioning, feel free to reach out to me so we can dig into why these questions are important.

Buyer tip: In a competitive market, choosing a lender based on interest rates and closing costs is not always the best idea. You need the lender who will go the extra mile, ensure you will close on time and make you look good to a seller. It’s about winning in this market, not about getting the best deal.

#4 Qualify Your Buyer’s Realtor

This is another area where you need to know you can trust the other party to perform and see the purchase all the way to closing. Believe it or not, there are a lot of Realtors out there who seem to enjoy having contracts terminate. They create emotional drama instead of being the calm voice of reason in the transaction.

Thousands of real estate transactions close everyday. Everyone agrees to the terms, all parties are happy and it is a win-win for both sides. There is no reason that the sale of your home shouldn’t happen just like clockwork as long as everyone is doing their job. Remember, clear and consistent communication by all parties involved solves 99% of problems that arise.

Make sure the buyer is represented by an agent who has experience (or is being mentored by an agent with experience), make sure they understand the type of property their client is buying and how the process works for the specific property--i.e. condos, land, multi-family, ranches all have different things that need to happen.

 

In summary, make sure due diligence is done before accepting an offer. This market moves fast and emotions run high. Have a plan on how you are going to review and respond to offers and stick to it. When offers come in, don’t stray from the plan. And if I didn’t touch on it enough, make sure your agent is picking up the phone to have real conversations with prospective buyers and their agent. Communication ensures you will net the highest amount and reduce the likelihood of contracts falling apart. If you have any further questions about selling your house or want to know more about something specific I touched on please don't hesitate to reach out. I would be happy to help you out in any way I can.