During your home search, you’ve likely come across homes that are priced ridiculously high. I see it quite frequently, perhaps now more than ever. It continues to be a seller’s market and when my buyers come across one of these over-priced listings, they often assume that the sellers have become greedy and are trying to get a very high price for their home. I have a different theory altogether.
There are real estate agents that will tell sellers what they want to hear: their house is worth more than they think. They often do so with one purpose in mind - to put their For Sale sign on the front lawn. In real estate agent “speak” this is called “buying the listing”. A For Sale sign is great advertising for the real estate agent, and an effective way to promote their name. It also shows their clients that they are busy and active.
Ultimately having a For Sale sign on the front lawn for 3 or 4 months makes the agent look bad and brings negativity to the seller. I personally think this is a terrible way to do business. Stringing along a seller and giving them false hope is not a way to build a business in my opinion.
When I meet with prospective sellers, I always give them a range of what I think the house is worth based on current market conditions, not based on their needs or what they want to hear. While I am always sympathetic to everyone’s financial situation, I will give the sellers a realistic price for what the home will sell for, even if they don’t like what I am saying. I also find it equally important to give an honest assessment of what work needs to be completed to make the house more marketable to buyers. I might offer to show you other homes for sale that a potential buyer will look at in your price range to show you how your home should be priced.
Going back to the original question – why should you as a buyer try to avoid these sellers? Firstly, they have unrealistic expectations for the true value of their home and in fact these sellers may not truly be a seller and simply testing the market – which it makes it difficult for them accept an offer at the market value.
I know I’m not going to be popular with some of my real estate colleagues with this blog post, but the truth is, an open house won’t help sell your house.
Often, when I am interviewed as a candidate to list a property for sale, I often hear the “main marketing plan” of other agents is centered around the open house. I’ve even heard realtors suggest spending lots of marketing dollars on promoting the public open house through local newspapers.
However, a recent study from the National Association of Realtors found that less than 2% of buyers actually came from an open house. Not what you expected isn’t it?
So why is it that open houses are so popular if the likelihood of finding a buyer for your home is so remote?
Having an open house serves a very important purpose - for the real estate agent - it gives them a database of potential clients.
If you think about it, at an open house, you get all kinds of people walking through the home. Some people might want to get a sense of how much their home might be worth… Others walking through might just want to get a look at what's on the market. This is a great environment for a realtor to build his database of buyers and sellers.
The reality is, if you’re serious buyer – you’ll book an appointment to see the house. If you’re ready to buy and shopping around for a home, the last thing you want to do is go through an open house when there are 5 other people walking through at the exact same time. Virtually all serious buyers want to take their time to view the home and see if it is the perfect fit and they will want to do that (privately) without all of those other people there.
I won’t deny that there was a time where the open house was an important marketing tool to sell the property, but I believe the internet and the way people shop for homes today has significantly changed.
December is one of my favorite months of the year… Lots socializing… with many parties and get togethers, it’s just a nice time to catch up with friends and family. What I love about this time of year is that everyone is happy and in a good mood!
So how do you capture some of that good mood and translate that into your home or condo getting sold?
The homes or condos on the market right now are usually what I call the “left overs” from the Fall. It’s easy to tell the moment you walk into a “stale” listing… The sellers (and agent!) aren’t putting the same effort in selling the home as they were when the property first came on the market.
What do you do if you HAVE to sell your home in December? Why not steal a strategy from one of the best retailers on the planet… Starbucks.
What does Starbucks have to do with selling houses?
I think Starbucks does a brilliant job at marketing, especially at this time of year. They’ve got the red coffee cups, holiday themed drinks, as well, all of their coffee shops are (tastefully) decorated in the holiday spirit.
As a seller you have to do your best to create an emotional connection with the buyer. Make the buyer feel very much at home and have them envision themselves in your home. That is exactly what Starbucks does! They’ve created a very strong emotional connection with their customers and have made their stores very cozy and inviting.
I believe there is nothing more inviting than going into someone’s home who’s decorated their home tastefully for the holidays. I am amazed at how few sellers actually follow this strategy. It’s not that’s difficult! Don’t go overboard, but adding some holiday décor to your space will go a long way.
I know what most sellers are thinking right now… Why should I decorate for the holidays when I’m moving in a month or two? Well, if you don’t decorate you run the risk of not selling your home at all!
If you want to steal another page right out of the Starbucks manual, why not host a themed open house for buyers and realtors where you serve some hot chocolate and gingerbread cookies. (I mean who doesn’t LOVE gingerbread cookies, right?)
If you’re considering buying or selling this winter, there really is no need to put off a decision until after the New Year. December can be a great time – I am here this holiday season to help get your property sold!
I was in a multiple offer last week and shared this story with my client and thought it would make it would make for an interesting (and relevant) post this week.
When sellers are in a position to accept more than one offer, price often becomes the differentiating factor. While price is extremely important, it’s not the only consideration…
Last year my wife and I had listed one of our income properties for sale in the Beaches neighbourhood and were reviewing offers a week later. Fast forward to offer night and we 4 offers to review (3 of which I considered in the same relative ballpark).
All 3 of these offers had our desired closing date. Here is what the offers looked like:
Offer # 1 was for $462,000 with no conditions, $25k deposit.
Offer # 2 was for $480,000 with a financing condition, $10k deposit.
Offer # 3 was for $470,000 with no conditions, $30k deposit.
At first glance, Offer #2 had the highest price however I asked their agent to explain why they were including a financing condition. The agent said his client’s plans were to live in the home and he was “rock solid” and he wouldn’t have any problems with financing.
“Ok”, I responded. “If financing wasn’t going to be a problem, then why include the condition?”
The agent explained that his Banker had recommended to include a financing condition in all offers that were to be presented.
I thanked him and asked him for a few minutes for my wife and I to make a final decision.
While it was awfully tempting to take the highest priced offer ($10,000 over the second highest offer) – for a split second I thought of what I could do with that extra $10,000 if the deal were to go through. Then, I asked myself : what would I advise my client to do in this situation?
The answer was an easy one – accept a firm offer, even if it isn’t the highest priced offer. And that’s exactly what we did.
I took agent of Offer # 2 and told him we’d accept a lower offer without any conditions and gave him the following advice: Your client needs to find a new Banker. Find one that will give him a full pre-approval so he can be competitive in the next multiple offer scenario he finds himself in. The agent thanked me for the advice and went on his way.
Fast-forward 3 weeks later that very same agent gave me a call. The good news is that they got an accepted offer (in multiple offers) and was looking for the name of a of a mortgage broker to help his client. He was also looking for some friendly realtor-to-realtor advice, which I happily gave as well.
Anyhow, the story didn’t end so well for this realtor’s client – long story short is he couldn’t qualify for the mortgage and had to walk away from this great home. He simply didn’t have enough stable income to qualify for the mortgage.
For a second, I felt bad that things didn’t work out for this guy, but at the end of the day there were a couple of important lessons to be learned from these series of events. First, if you’re in the market to buy a home – contact your mortgage broker first – they’re a fantastic resource and will give you options before you start house hunting. As a seller, the second lesson was – don’t be greedy – if you’re in the fortunate position to have more than one offer on the table, always give the most weight with the unconditional offer. An unconditional offer shows that they have done their homework ahead of time and if the offer comes with a healthy deposit – this only confirms their commitment to the purchase. As a seller, you want piece of mind knowing you can focus on your next move.
I met with a prospective client, Janet who wanted to sell her cute bungalow just north of the Danforth. She was looking to move into the better school district just West of where they were. When I viewed her home, I asked her to point out many of the upgrades she had done since she bought it. As we sat down, I asked her to tell me a little more about her motivation to sell, as I wanted to get a better idea of the bigger picture.
Before asking me what I thought her home was worth, she said that she needed $450,000 to make the move. She must have seen my facial expression completely change as she asked me if that was realistic. I gave her a copy of the Home Selling Guide that I wrote and included in it was a list of recent sales. I pointed out that the range in her neighbourhood for a similar type of property was between $410k to $420k. No bungalow in her area has ever sold for more.
She kept going back to what she “needed” to sell for to make the move. I could tell she was getting very emotional. I felt like her dream-squasher, telling her the price was not realistic.
I said to Janet that the only people that would benefit by listing her home at $450,000 would be her competition.
“What do you mean – the competition?” She asked.
I explained that an average buyer views 12.4 homes in a particular neighbourhood before submitting an offer. If her house was priced outside the range of what it is worth, then it would make the other homes on the market more appealing and help those sell – not hers!
I invited Janet to view 3 homes for sale in her neighbourhood with me the following day to see what I was talking about. I asked her try to view these homes as a possible buyer and compare against her home priced at $450,000.
Janet was very quiet and didn’t say much during these viewings. Once we left the third home Janet turned to me and said: “My house won’t sell for $450,000. I can see that now.”
Janet agreed that it’s very important to know who you’re competing against. On the advice of her mortgage broker, Janet decided holding off on selling her house until the spring. By that time she’ll have full-time hours at work, which will help her qualify for the mortgage she needs to make the move.
I know Janet really appreciated the honest no b.s. advice that I gave her. My business is completely built on referrals and I will not make any unrealistic promises I can not keep.