Alternative Real Estate Selling Methods

   I find myself all to often brainstorming with clients about how we can effectively sell their property in a sluggish market. The normal outcome of these sessions  usually has an aroma of marketing, networking, pricing, repairs, clean-up, landscaping, home staging  or buyer incentives…until now.

   Introducing St. Joseph the Patron Saint of Carpentry! Upon entering my office a few days ago, I find a Fed-Ex box on my desk. I am a self admitted horrible multi-tasker (my wife will back me on this) and at the time I was talking on my cell phone, so it was my natural response to set this box aside, and focus on whatever it was I was into at the moment. When I did get around to opening the box, I noticed the sender is a client of mine, so I eagerly ripped apart the seals to find not one but two smallish green packages with this Patron Saint of Carpentry situated in plastic staring out at me.  As a man that grew up in the buckle of the Bible-Belt, Catholicism was not something that was front and center in my world, so I needed a little help understanding this gift. He looked pretty sad to be a Saint, so I took it upon myself to investigate this man of history.

   I found that according to www.luckymojo.com, Saint Joseph (San Jose in Spanish and San Giuseppe in Italian) is petitioned by many conservative Catholics as one who grants an easy death, but in the wider world of Catholic folk-magic, he is the Patron Saint of real estate matters and home sales.  Eureka!  Now we’re on to something.  The reason given for this belief is that he was a carpenter who taught his “step-son” Jesus the carpentering trade, and he always saw to it that Jesus was well housed. 

  On the front of the package reads the words “The SOLD Realty Company”. clearly defining the purpose of the Saint statuette. A quick survey around the box and I find “Can’t sell your home? Ask St. Joseph… He’s helped 1000’s!”  OK, sounds reasonable to me, but how do I put this little man of power to work? I mean for $2.99 this guy better pack a big punch with that tiny 2 cm  plastic axe!

  I found that there is a method to the “mojo” of “Joe”. He is to be buried in the yard of the home you desire to sell. While differing methods seem to abound, here is a list that the handy burial instructions for him include:

• upside down
• in the rear of the yard
• 3′ from the rear of house
• facing the house
• simply on the property
• right-side up
• in the front yard
• exactly 12″ deep
• facing away from the house
• when sold remove, etc., etc.

I guess you can pick and choose from these based on how much snow happens to be in your yard.

   There is a disclaimer for St. Joseph.  ”For this practice to be fully effective, however…sellers must, of course, first do such practical yet all important chores, as completing all necessary fix-up, properly staging the home and finally, adjusting the price so as to reflect true market value…”.  It’s refreshing to know that my advice to sellers is at least on the right track (reference my opening paragraph).

   If the plastic statue can bring me such good fortune, what else is out there concerning this holy man? Referencing my favorite general information source on the planet, aka Google, I am delighted to find additional real estate help methods with the Saint’s name attached:

1 Dressed and Blessed Saint Joseph Candle
1 Statuette of Saint Joseph
1 Bottle Saint Joseph Oil
1 Saint Joseph Chromo Print
1 Saint Joseph Holy Card

  I don’t know if I will have the opportunity to explore these additional options of  serendipity. Nothing against St. Joseph, any other Saint of old or the Catholic church, but I will continue to stick with my belief of provision.  I will put my trust in the higher power of God and the work of His Son. In doing this continue to accept guidance and direction concerning life, relationship, love, business…and selling houses.

Using the absorption rate to determine the months of inventory

   Last week I wrote about the general stability of real estate values that we are seeing in Archuleta county. I also mentioned that although home and land prices are remaining very strong, the rate at which they are selling has significantly decreased. After the publication of that article I had a few conversations in which I was asked about the rate of sales, and what that really means for us in real estate. I decided to address that topic here on my blog.

   One of the measurements frequently used to understand liquidity of inventory is known as the absorption rate. This is basically the rate in which a specific sector (usually price range) of the market sells in a given time frame. An easy way to understand this is to look at it in one month increments. For example- If we were looking at home sales between 100,000 and 200,000 and we found that 60 homes have sold in 2006, this would be an absorption rate of 5 per month. (60/12 = 5) This number does us little good unless we put it in more tangible terms. When we take the number of current active listings and divide it by the absorption rate we can determine how many months of inventory we have. For our example above if we have 39 active listings then we have a 7 month inventory.

   As a general rule 6 months supply  of inventory is a balanced market. More than that and we are considered to be in a buyer’s market, less and we are in a seller’s market.

   As I mentioned last week we are in a buyer’s market right now which up until this point has not affected our sale prices, but has affected our months of inventory. Simply put, It will take a lot longer for you to sell your home if all factors remain equal.

I have compiled the charts below from the numbers found in the CREN MLS system from Nov 1st 2006-2007.

Listed below are the current months of inventory for residential listings in Archuleta County.

Here are the current months of inventory for vacant land in Archuleta County.

 

   The first two questions I get asked when preparing to list  property is 1- “How much is it worth?” and 2- “How long will it take me to sell?” Once I determine how much a home or property “should” sell for I always go to the numbers found through absorption rates and months of inventory. Then  I encourage my seller’s to determine their list price by deciding how long they are willing to wait to statistically be able to sell their property.

   If you currently have your home or property on the market and are unsure about the price in which it is listed, ask your REALTOR® about the months of inventory for your price range. If you are not currently working with a REALTOR® give me a call and I will be happy to discuss the pricing of your property with you.

 

Home buying trends of 2007

I just completed an on-line quiz to determine my level of competency when it comes to predicting and understanding on average what home-buyers are looking for. This test ,created by the National Association of REALTORS, is based on a survey aimed at understanding the ever-changing trends of our market. While every consumer has individual preferences, we live in a culture that thrives on a sense of uniformity. I wanted to take a closer look at these trends so that I may equip myself to better understand the mindset of the buyer.

     This week while looking through a home, the couple pointed out in dissapointment the tiny little master bedroom closets. I realized that this home must have been built in the 60’s  due to the closets and a few other aspects of the house. It’s hard to understand or remember the details of life 40 years ago and the reasoning behind such a floorplan.

   Here we are in 2007 with much different life priorities . For better or worse, our wants have changed when it comes to home preferences. In keeping with that thought here is a short list of the top features in 2007 that home buyers want. This list looks at home buyers overall desire and for what they are willing to pay extra. (I hope all those spec. builders out there caught those last 3 words.) The information gathered is from  purchases made starting in 3rd quarter 2006 to early 2007.

    The number one feature cited was central air conditioning. Given our climate in Pagosa Springs, I believe this one can be safely crossed off. I can only think of about  a 1/2  dozen homes currently on the market that even have air conditioning. So I will begin my list here with the number 2 choice.

1. Over-sized garage.
2. Walk-in closets.
3. Backyard with play area.
4. Cable or satellite TV readiness.
5. High-speed Internet access. 

 Over-sized garages for our purposes can be defined as 2+ cars. The real estate markets in the West and Mountain areas scored very big here. Extra garage storage is very important. 56% of home buyers will pay more for this.

    Walk in closets are the next must. This was given as the number one preference in 2004. I have to wonder what this says about the level of vanity in our culture…but I digress.

 Outdoor spaces and play areas are big on the young families list. I can relate to this. I believe this is a prime age for entertaining friends, and sometimes lots of kids are involved. Or is it that this bracket just can’t afford to go out?!

   High speed Internet access may be debatable in a town like ours, but I think the need is here also. I ran into two different couples just this weekend that are telecommuters of sorts, and work primarily off of an Internet connection.

   After finishing my quiz the results came back at a 80%. Will this little exercise help me sell any homes this Fall? I don’t really know. I do know that staying on top of trends and understanding the way of the market will help me in advising builders and investors who want to maximize profit. I will continue to pour into this type of information so that I can remain an asset to my business and to you the trusting buyer.

FSBO, Just the facts.

Every year a percentage of home sellers decide to throw caution to the wind and brave the market alone without the help of a real estate professional.

 This diminishing group of FSBO’s (pronounced fizz-bows) venture bravely into the land of marketing, screening, qualifying, scheduling, showing, relentless calling, emailing  and paperwork. All for the common goal…to save money in their home selling transaction. It’s often an experience found a little less than rewarding.

The numbers gathered by NAR  (The National Association Of Realtors) tell the story.

In 2006 12% of home sellers in the United States chose to go this route. This is down from 20% in 1987. More telling than this decline is the fact that 40% sold their home to someone that they already knew prior to this transaction.

“Yeah, but isn’t it as easy as putting out a sign, waiting for the calls, and rolling your wheelbarrow to the bank?”

According to NAR 18% of FSBO sellers indicated that preparing their home or investment property was the most difficult task when it came to selling without the aid of an agent. The next most daunting task was listed as keeping up with paperwork which came in at 16%, and selling within the desired time-frame at 15%.

“Well, the bottom line is WE SAVED MONEY, right?”

Again, citing NAR, homes sold by owner do NOT statistically come out financially ahead.

In 2006, sellers leaning on the aid of real estate professionals sold their property for an average of 32% more than FSBO sales. The median sold price of single family, stick framed homes that I gathered from our MLS looking back at the last 12 months was $274,500. Taking this as our baseline and using the number of 32%  puts an average savings of nearly $66,500 in each home seller’s pocket!

I suspect that some of these figures may reflect a number of different things. Among the top of the list is the fact that selling your home is an extremely emotional and sometimes physically draining process. It’s your nest-egg, life investment or possibly your retirement that we are dealing with here. In real estate, much like many areas of life it is important to have a third party that is un-connected emotionally to help guide us in our decision making process. Someone who can stand back objectively and speak into the situation with a little more clarity about the subject, unclouded by strong emotions. Additionally, no matter how much time, energy and research you may put into selling your home, you will be hard pressed on equaling the effort of a licensed real estate agent. A Realtor that is working full time is doing just that-putting a full time effort in understanding our ever-changing market.

The bottom line is, according to the numbers, it pays to have a real estate professional on your side when selling your home in any market.

Home Pricing- Close only counts in horseshoes and hand grenades

If I’ve heard it once, I’ve heard it a bazzillion ( which according to encarta.com is an actual  English word, but not a real number) times: “I want to leave a little room to negotiate in my listing price.”

  I can provide statistical evidence that those who choose to list their home with “a little wiggle room” never have to worry about the grueling emotional task of negotiating a lower price- because they never sell.

   In my world, the world of real estate, we have a classification of these types of listings: They are known as expireds and withdrawns. This usually means that they are priced out of reach of where the buyers are biting.

  A quick look at the past 30 days from our Pagosa Springs MLS system reveals this truth. Our area has 1817 properties for sale; 108 of these went under contract; 62 went into settlement or were sold; 143 came off of the market by either expiring or being withdrawn. Twice as many properties came off of the market with unsuccessful sales than that closed. Granted, many of these properties were re-listed with another company, but it still points out that many sellers are expecting unrealistic returns on their real estate investments in the midst of a buyer’s market. Once the sellers have switched companies, it is almost always associated with a price improvement. In the words of Jerry Driesens “I want to be the last person to list your property, not the first.”

   The sellers who choose to look at the market with discernment and realistically place their home in the market become “former” owners and move on with their lives. Many times to realize their investment profit and capitalize on great value by purchasing other properties in the current market. Here is  a recent example:

  I  received a call from a client who wanted to “move” his property. During our discussion he said “this is the bottom of where I am willing to go”. Soon enough I found a buyer who like any consumer wanted to see some comparable sold homes before he purchased this one. At this point, when showing him comps,  it was easy to realize the value based on those numbers. It was a realistic price, not a “steal”, but a fair market value. We did NOT negotiate a single penny. The buyer purchased at asking price because of the value. The property did not sale in the months before because their was “negotiating room” on top.

Leaving negotiating room when pricing is the same as placing your home on the top shelf of the candy isle just out of reach.  It’s not that your home is not desirable, its just that buyers are deterred by all of the homes on the shelf right in front of there nose within easy reach. If you price right , actually you don’t have to come down at all. Many homes in our market are selling for the asking price. These are houses belonging to sellers who dared to meet the buyers in the market instead of hoping that the buyers would come up out of the market to make an offer.

   Close doesn’t cut it in a competitive market. Close only counts in horseshoes and hand grenades. Forget about nudge room, fudge factor, or wiggle space. Place your property on the market at the right price- then hold your line. If a buyer wants closing costs- negotiate upward. There is always a good market in any market. This is found at the precise point where sellers focus on price and condition rather than a personal bottom line. Sometimes making several base hits is a lot better than a single home run.

6 Tips on selling your home in Pagosa

  All real estate is local. I did not coin this phrase although I believe it to be very true. David Lereah gets the credit for this as the title of his book published earlier this year. I hear quite often that “the national market is ___ ”  fill in the blank, when at any given time you will  find individual market conditions all over the spectrum across our nation.

   It is however wise to look at any LOCAL market and understand it for what it really is. Currently Pagosa Springs has receded from the enormous boom that it has experienced for several years. It is important to know the reasons why we are in a slight buyer’s market, “no two times or places are created equal”. Our slow down is primarily a problem of  over-inflated inventory with a hint of consumer nervousness. Both of these factors mind you can change very quickly. This is not the case for some parts of the nation ie. Detroit’s decline due to the decrease of automobile manufacturing or Denver’s sluggishness as a result of the massive over-stretching of sub-prime lending to the young tech industry buyers. Colorado resort towns are still seeing outside secondary buying power very strong. Interest rates are good and nothing has changed substantially to make Pagosa any less desirable place to live or vacation. So how can you sell your home in our LOCAL market right now?

  If you are currently in a selling position there are many things that you can do to increase your chances of a successful home sale:

Price reasonably

Without this in place you WILL NOT sell your home. There are simply too many options out there right now. The goal in this market has to be to separate yourself from the crowd and this starts by being educated on current SOLD inventory and pricing accordingly. There are ways that consumers can find this out. Sold homes are public information, but sometimes it is difficult to find out this information without doing a lot of research. On my website, chrisliverett.com, I offer an option that lets you get specific sold property emailed to you. I am sure that their are other Brokers that do the same.

Stage

 What can you do with your paint colors, furniture arrangements, accessories etc. that can set your home apart. This is so often overlooked by homeowners that are accustomed to the look and feel that their home has had for years. You must think about the first impression that your home gives when a person walk into it for the very first time. Could it have less furniture that would give a small space a larger feel? Are there unnecessary item on the bar that become a distraction? Ask your real estate broker for his or her advice on this subject, or better yet, hire a professional home staging service to help you stage your home. Statistically a few hundred dollars will make you thousands.

Creative incentives

Think outside the box. Are you selling a condo or a vacation home?  Offer 2 annual passes to the hot springs at closing. Have a home on the golf course? Provide a  membership with x country skiing passes. There are a lot of professionals that scoff at this but the name of the game is to have your home stand out from the rest and every thing that can differentiate in this market is a plus.

Show improvements

Give your Realtor® copies of all improvements to the home and any guarantees for anything like a new roof, furnace, or hot water tank. Having these things for your Realtor® to talk about during a showing can fill any dead space in a conversation with positive attributes about your home.

Quick showing time  

If at all possible have an immediate showing time for your home, and keep it clean. Most real estate professionals will do everything they can to project showings a day or several days in advance. This is not alway possible in a town like Pagosa. Many times Mr. and Mrs. buyer blow into town and hit the ski slopes, fall in love with our town , and call the first Realtor® they see asking to look at homes “after lunch”. As a home seller, you may find this annoying, but they may also be the ones to write the check for your home.

 Choose the right Realtor®

There are a lot of us out here to choose from. The longevity of any given Realtor® in this town can range from 25 minutes to 25 years. We have part time agents, full time agents, overtime agents, independent agents, large firms, small firms and all shades of personalities and experiences. These are all good things that make up a fun and diverse group of professionals. You should choose one that YOU can work with but ANY AGENT worth his commission should be able to answer some basic questions for you. How many comparable homes have sold this month in my neighborhood? What are the average days on market? What listing price puts me in the top 15% of homes like mine. None of us can shoot from the hip completely accurate on questions like these, but with todays technology we should be able to answer these and many other questions like these within a short amount of time.