Strategies Used to Make Home Sellers More Money
Selling a home is one of those things that a lot of people
think they can do and about 8% of them decide to go ahead and go for it. While
a majority of the sellers who initially went the “For Sale By Owner” route
ended up using a Realtor anyway, it’s not always a disaster to tackle it on
your own. My question is, “Why?” Yes, of course, in almost every case, sellers
sell on their own in order to save on the real estate
commission. Unfortunately, they don’t realize that the time and effort is
well worth the cost, and in many cases using a Realtor will net them more
money.
According to the latest survey put out by the National
Association of Realtors, approximately 8% of all sellers in the country
sold their home by FSBO. Among all of those FSBO sellers who were surveyed,
here were their most difficult tasks:
41%
did not market their home.
18%
struggled with setting the right list price.
13%
had problems with preparing their home to sell.
12%
wrestled with understanding and executing the paperwork.
3% had
trouble with closing in the specified amount of time according to the
contract.
3%
said it was difficult having the time to complete all of the aspects of
the contract.
Let’s face it, we are good at what we study and work at in
our daily lives. I’m not familiar with how to put brakes on my truck, so I call
a mechanic. Could I put brakes on my truck? Yeah, I probably could, but I don’t
really want to do it. So, I bring up selling FSBO versus using a Realtor, because I strongly
believe that most sellers will make more money by the mere fact of working with
a Realtor.
Most of the hard-working Realtors that I know (including
myself) put in way more than 40 hours a week, and they strive every day to get
better at their craft. If we’re not showing property or going on listing
presentations, we’re educating ourselves constantly, working on marketing,
writing real estate market reports, etc.
So let’s look at reasons or strategies why sellers will make
more money by working with a Realtor . . .
Understanding real estate market conditions is a skill that
Realtors learn in order to price your home correctly. It is absolutely a skill
because digging into the sales data is a science that determines value. If you
price your home too low, you lose money. If you price it too high, you run the
risk of your property sitting on the market going stale. Plus, if you do happen
to get an offer after pricing too high, you’ll be worrying that your home won’t
appraise at the sales price. This is exactly why 18% of the sellers who sold on
their own struggled with setting the right list price.
Being able to interpret local real estate data is so much
more than just looking back to see what homes have sold in the past 6 months.
Real estate is hyper-local, meaning that homes in Neighborhood A may be selling
for $200,000 but across the street in Neighborhood B they are selling for
$250,000. Why is that? Well, you have to dig into all of the data to figure it
out.
Are you in a buyer’s market or seller’s market? If you are
in a buyer’s market, what is the selling to list price ratio? When is the best
time to sell your home for your area? It’s not necessarily in the Spring. Are
home sales trending up over the past 3 years? Why are properties in some
areas on the market for 120 days while in other areas they go under contract in
60 days?
This is all information that a great Realtor will be able to
interpret in order to set your price correctly. So, hopefully, you can see why
working with a Realtor who understands real estate data will be helpful in
making a seller more money.
Although the goal is to get the seller the best possible price, every home will sell
for the right price. Setting the right price for a home is the key to selling
your home in a reasonable amount of time without leaving money on the table.
That’s actually my mission as a listing agent, to sell your home for the most
amount of money, in the least amount of time, and with the least amount of
hassle.
Let’s look at a scenario . . .
You’ve prepared your home to sell, and you’re ready to put a for
sale sign in the front yard. Although you have a Realtor in mind, you’re
kicking around the idea of selling FSBO, so it’s time to come up with a price.
You start to wonder where you’re going to get this information. Yes, you can go
to the city’s public records, and you manage to find 3 properties that sold in
your neighborhood within the past few months. You also go to Zillow to get
their “Zestimate” on your home. By looking at the figures of all 4 sources, you
decide to list your home for $300,000. After several months on the market, you
finally get an offer and sell your home for $295,000.
Ok, I’m trying to paint a picture here and, yes, this story
is fictional but it rings true in real life. Let’s continue the story . . .
You later see your friend who’s the Realtor, and after
talking about your experience selling, the Realtor says that he had already
worked up a comparative market analysis (thinking he was going to get the
listing) and he had figured that you should list at $310,000 and close at
around $305,000.
What you didn’t know was that because you didn’t have the
adequate tools to look at all sales data, you missed a sale. You happened to
miss a home that sold for more than the 3 other comparables that you used to
determine a price. Because you didn’t work with a Realtor, you also didn’t
realize that your area is in a strong buyer’s market, and buyers are getting an
average of 3% off the list price. And, to top it all off, you didn’t realize
that Zillow readily admits that it’s impossible for them to obtain all
comparables that have sold, and it’s typical for their “Zestimate” to be up to
10% off.
This is why working with a Realtor can make you money.
Seeing a problem coming from a mile away may not seem like
an obvious way to make sellers more money. If you’re having issues during the
initial negotiation of the offer, you’ll probably have more issues after you go
under contract. If the buyer is hell-bent on going back, 4 or 5 times over $500
now, they will probably want everything and the kitchen sink during the
negotiation of repairs as well.
Another problem that we can thwart is if you happen to be in a multiple offer situation and the
sales price keeps raising, the Realtor will see that their client might run
into a situation where the home won’t appraise for the final sales price.
Unless the buyer pays the difference in cash, the seller will have to drop the
price to meet the appraised value or the buyer can get out of the contract.
Top Realtors utilize the technology of the
day. Honestly, it blows me away sometimes to see some of the listing
photos that people voluntarily put out for the world to see.
It’s a fact that 95% of all home buyers search online for
their next home, and if a listing has poor pictures the buyer will immediately shove the listing
to the side.
With 95% of home buyers searching for their next home
online, it’s essential to be working with a Realtor who has a strong web
presence on their website and social media. Don’t be fooled though. Every real
agent out there has a web “page” given to them by their brokerage company, but
most of them will never be found. If you want to sell your home, work with a
Realtor who has their own established website. There is a sea of web pages out
there with real estate agents’ name on it, but if no one knows they are there,
how is that going to help you?
If you do work with a web-savvy Realtor, your listing has a
better chance of being in front of thousands of more people than it would
otherwise. The more buyers, the more competition. The more competition, the
more money in your pocket.
Top Realtors know how to target audiences in a few different
ways. One, you can work to attract Millennials. Millennials are the largest purchasing group in the country right now, so writing content in listings in a way that highlights what
Millennials like is a winner. Another way to target audiences for listings is
to pay for ads in social media that single out certain age groups that would
typically purchase a home you’re trying to sell. There are lots of ways to do
this and by doing so, you’re creating more traffic which makes more money for
the seller.
Homes eventually break down or just become outdated, and the
small to-do list that you had a year ago has now grown
substantially. Well, there are dozens of projects that you can do
around the house that can actually bring value to your home.
Remodeling Magazine puts out a Cost VS Value Report every year and provides us all with a
great resource to determine which projects will give you the best Return On
Your Investment (ROI). Through past experience and staying up to date with
articles like these, Realtors can give you tips that can add money to your
bottom line. While some repairs you would have to make anyway just to keep a
sustained quality of life, there may be other improvements that you could take
on that will make your home more appealing to buyers.
Keep in mind that out of 29 projects that the article
covers, only 3 give you a ROI that is over 100%. Most of the projects still
return over 60% on your initial investment and that updated sink could be that
one thing that puts an offer on your kitchen table. The general public does not
have the experience in this area like many Realtors do so working with Realtor
should help the seller make more money.
You can read books like “The Art of the Deal”, but you won’t
really get good at negotiating until you have some time in the saddle. I’ve had
clients tell me that they wanted to offer X amount of dollars and after looking
at the numbers, I thought they could do better. I did save them another $5,000,
making them more money. Successful negotiating is when both parties get
something they want. It is a little give-and-take, but good Realtors will
always try to get every penny for their clients.
Although we Realtors are competitors with each other, we
always work together to sell our homes, especially within our own office. So,
you’ll multiply your efforts exponentially just by working with a Realtor. We
all talk with each other, and we all have the same goal – to sell homes. If
you’re not working with a Realtor, it would be impossible for you to have
access to this pool.