(this article is reprint)
I was watching one of those HGTV shows not too long ago. Flip That House, or Sell This House or one of those. The show featured a novice investor who bought and rehabbed a 1970’s tract home. She managed an amazing transformation of the entire house. She opened up the kitchen and installed brand new cabinets and slab granite counters. She re-did both bathrooms were redone with beautiful materials.
The rookie investor did a great job on the remodel and added some real value to the home. BUT she went 2 weeks over schedule, about $20,000 over budget.
Just before the home was staged for the first showings, the show’s producers sent in 3 real world Realtors to give price opinions. They were: $519,000 ; $511,000 and $499,000. I’m assuming the rookie Fix and Flipper got that information. In a camera confession, the investor says she’s stretched to her financial limits and needs to get her money back pronto.
She lists the house for sale at $539,000. (this leads me to assume the investor agreed with Realtor #1’s estimate of $519,000, but tacked on her $20k over-run)
Big mistake. Sellers, believe me when I tell you that there is a long list of things that do NOT impact how much you can ask for your home for sale. Here’s a short list:
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How much you paid for the home
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How much your remodeling or improvements cost
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How much you “need” to get out of the sale
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How much your next house is going to cost
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How much your neighbor sold for 2-1/2 years ago
Things that impact your listing price:
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How much buyers are willing to pay for it
- How long you want to be ‘for sale’
Period. It’s really that simple. Welcome to the Age of the Internet, where buyers have access to almost every piece of information available, about every home for sale or sold in the past few years. Buyers have a very good idea of your home’s market value and they’re not going to pay more than market value. In fact, these days most buyers expect to buy homes for less than market value.
If buyers don’t see your home as a good value at the listing price, they’ll pass you by. If your home seems like a good value at the listing price, you’ll get offers.
Of course figuring out what the buyers are willing to pay for your home is the tricky bit. It’s an art, not a science. If it were a science, they’d have computer programs that picked listing prices. We Realtors would all be out of a job because the computers would be 100% correct, 100% of the time, on 100% of the homes for sale. Houses would sell in a few days and nobody would negotiate over price because the computer generated price would be right every time.
That’s fantasy land. Picking the right list price is an art. It involves lots of data analysis, a history of in-depth knowledge of the neighborhood, and a little bit of gut checking. But it should never involve calculating what the seller “needs” to recoup on their investment. The buyers don’t care about your needs; they care about theirs.
PS-The investor on the TV show sold after about 3 weeks on the market. She took $511,000. (remember this article is a reprint. the original show air-date was Fall 2008 and at least in metro Phoenix, the market has gotten worse for most sellers since then.)
Heather Barr is a Realtor. She's a chow hound, a gym rat, and the only political junkie in the USA who can actually keep her political views to herself. Instead, she focuses on educating her clients about the often-confusing world of residential real estate.
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Op Ed
A conversation between Jules Winnfield and Vincent Vega, from the movie Pulp Fiction:
Jules: Pigs are filthy animals. I don’t eat filthy animals.
Vincent: Yeah, but bacon tastes good. Pork chops taste good.
Jules: Hey, sewer rat may taste like pumpkin pie, but I’d never know ‘cause I wouldn’t eat the filthy mother-fu**ers. Pigs sleep and root in sh**. That’s a filthy animal. I ain’t eating nothin that ain’t got sense enough to disregard his own feces.
Vincent: How ‘bout a dog? Dog eats his own feces.
Jules: I don’t eat dog either.
Vincent: Yeah, but do you consider a dog to be a filthy animal?
Jules: I wouldn’t go so far as to call a dog filthy, but they definitely dirty. But, dog’s got personality; personality goes a long way.
Vincent: Ah, so by that rationale, if a pig had a better personality, he would cease to be a filthy animal. Is that true?
Jules: Well, we’d have to be talking one charming mother fu**ing pig. I mean he’d have to be ten times more charmin’ than that Arnold on Green Acres, you know what I’m sayin’?
We had a neighborhood-wide garage sale last month, where the HOA provided advertising and signage. We participated, and had a garage-full of stuff to sell. One of the things I had set out for sale was a computer monitor. I had it tagged at $40, and was expecting to sell it for $30.
Personality Minus. The very first guy to stop by our house was a jerk (or at the very least, not friendly). He showed up an hour before the sale started; I had just started setting things up & was pulling tables out of the garage. This guy didn’t say much of a hello, and proceeded to wander through my garage while I was setting up. He picked through our stuff (even the stuff I wasn’t selling) with an attitude and body language that said he was slumming and didn’t like other people’s junk. He made the hair on the back of my neck stand up.
Eventually he offered me $20 for the monitor. I declined, thinking to myself that I wouldn’t sell it to him for $40! He then offered $25, and then $30, telling me I had to be willing to negotiate or I wouldn’t sell anything today. I said flatly, “The sale hasn’t even started yet. If you want it for $40 you can have it.” He huffed at me and walked away.
Personality Plus. A couple hours later a woman asked about the same monitor. She had been in our driveway for 20 minutes already, chatting us up about the sale, the neighborhood, the weather, the holidays. She was genuinely friendly, and we enjoyed her company. Finally she got to the monitor, and asked if I would take $25 for it. My response - “you can have it for $20.”
Personality counts when negotiating your home, too. That buyer or seller you’re negotiating with is a person, and people pay attention to how they’re treated.
Another example? I wrote A Tale of Two Buyers almost 3 years ago. The story holds true today.
Your was always the “but he’s got a great personality” guy Realtor,
Chris Butterworth
Chris Butterworth is a Realtor. He's also a husband, father, writer, amateur photographer, and self-proclaimed tech junkie. And he's an all-around good guy!
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From the Trenches