Buyer Feedback: 'Win, Place, or Show'

Category #4: 'Out of the Money'

My favorite metaphor for how close a listing is to selling is temperature ("Listings and Pots of Water").

So, a new listing starts out at room temperature, heats up as showings (and second showings) accelerate, and reaches a boiling point by the time a strong offer (or two) comes in.

I still think that that applies, but based on the feedback my listings have been getting recently, a new metaphor seems in order: horse racing.

Four Categories

Specifically, listings these days seem to fall in to one of the following four categories:

Win: The best of what's out there. Offer imminent.

Place: First or second. The Buyer's next likeliest step is a second showing, to see both homes "fresh," dig in on the Seller's Disclosure, etc.

Show: Top three. The home had many nice attributes, and the price is in the ballpark -- but it was eclipsed by the finalists being considered by the Buyer.

Out of the Money: Didn't make the cut -- no further interest.

If a home is repeatedly "out of the money," action on the Home Seller's part is indicated: that can be either reducing the price and/or enhancing the home's appeal (by addressing whatever the most consistent objections have been).

On the other hand, if the home is making Buyers' short list, "standing pat" -- i.e., waiting for the competition to sell -- can be an option (and is certainly the path of least resistance for Sellers).

However, in a Buyer's market, I wouldn't recommend it.

That's because it risks being overtaken by new, better-priced horses -- er, listings, as well as existing listings that are not standing still, and instead are aggressively improving their price and/or appeal.

Surprising Obstacle to Virtual Staging

Not So Virtual "Virtual Staging"

So, what's holding up virtual staging? (see also, "Virtual Staging: Ready for Prime Time?")

Not Realtors, who by and large are game (even if they have to dig a little deeper into their pockets to do it).

Not clients, who stand to save a small fortune on actual staging costs.

And not local Boards of Realtors, who as best I can tell are behind the curve addressing the issue -- but have hardly forbidden the practice.

Give up?

The virtual staging companies themselves.

(Legal) Boulders in Road

I'm in the process of doing virtual staging for the first time, and was eagerly awaiting a phone call from the (Atlanta-based) vendor, who contacted me Monday.

"Can you give me an idea what would you like the rooms to look like?," he asked.

By way of introduction, I explained that the home has a traditional look and formal floor plan, so therefore the furniture choices and arrangement should reflect that.

However, my highest priority -- and the reason I was popping for virtual staging -- was to be able to show prospective Buyers how the house would look without the dated, loud wallpaper -- and with the oak hardwood floors uncovered (now obscured by equally loud, decades-old carpeting).

"Check on the furniture, but can't change the flooring or wallpaper," the virtual stager told me flatly.

Litigation Risk -- And How to Avoid It

"Huh?!?," I said incredulously.

Due to litigation risk, he explained, the company's policy is not to alter a room's physical attributes, only to show how it would look with furniture and accessories added.

For a virtual staging company, isn't that like tying 1 3/4 arms behind your back?

Or, as Henry Ford might say, "you can have any color Model T, as long as it's black."

"One Size Fits All" Policy, For Now

I proceeded to explain that I am a former lawyer, and had no intention of using the staged photos in a misleading or deceptive fashion; or getting myself, my broker -- or them -- sued.

Specifically, I said that I would:

a) stipulate that I would not use the photos online or in MLS marketing materials, but only as "blow-ups" that I would display, physically, in each of the rooms, to contrast the "Before" and potential "After" appearance;

b) understood that each of the blown-up photos would be stamped with a conspicuous "virtually staged" disclaimer; and

c) would present prospective Buyers and their agents with a written acknowledgement for them to sign before entering the home and doing a showing.

What Buyer could claim that they'd been deceived after complying with all that?

"No go," came the quick answer.

Clearly, the virtual staging companies are risk-averse, and don't want to be in the business of policing how Realtors use their photos once their computer whizzes (electronically) ship the photos out the door.

I get that.

But by declaring the best applications off-limits -- at least for now -- the virtual staging companies are very much undermining demand for their services.

"Getting One's House in Order Last"

Housing Market "Chicken & Egg" Problem

Aren't people supposed to "put their houses in order first?"

That's not what I've been seeing lately, at least in the housing market.

Instead, the agents showing my listings all seem to be reporting that their clients can't do anything until they sell first.

So, why don't they?

Maybe because they need to find something they're excited about buying first.

P.S.: thanks to City Lakes office manager Josh Kaplan for this insight.

Listing Prices & "Leaving Room to Negotiate"

No Discount on This One

In a Buyer's market like today's, it's not unusual for gun-shy Sellers to want to "pad" their initial asking price.

Their rationale?

No matter where they set their initial asking price, aggressive Buyers are simply going to discount further from there.

So, why not pick a listing price that "leaves a little room to negotiate?"

There are three reasons that's not a good idea:

One. Self-selected peer group.

If you set your price too high, your home will be compared to more impressive homes asking the same price. And found wanting.

So, yes, you may have "left yourself room to negotiate."

But that hardly matters if there aren't any offers (or even showings).

Two. Even in a Buyer's market, well-priced homes can sell quickly, for above asking price.

Case in point: 5035 Glenwood Ave. (pictured above) in Golden Valley.

Listed in late March for $289,000, it sold -- in multiple offers -- the first week.

Ultimate selling price: $305,000.

Three. No Realtor can promise their client that they won't receive lowball offers (for all I know, the owner of 5035 Glenwood received lowball offers, too).

But lowball offers are a lot easier to repel when there is also a full-price offer -- or even better, multiple offers above list price -- on the table.

For Sellers, negotiating leverage is all about how many prospective Buyers are interested in your home.

If you price too high, the answer is usually few . . . or none.

P.S.: another fringe benefit of pricing well, and attracting broad interest: Buyers tend to pull their punches when it comes to negotiating any inspection issues.

Home Sellers and Buyers' Intentions

Hiding the Wrecking Ball

Does it matter to the Seller if they know that their Buyer intends to do a "gut rehab?" (pretty much what it sounds like).

Sometimes.

There are certainly some home owners who are so psychologically identified with their home -- and think that its condition and appearance are so perfect, just the way they are -- that any suggestion otherwise is construed as a personal affront.

However . . .

Usually it's pretty apparent -- to prospective Buyers if not the Seller -- when a home is need of a total renovation.

Sellers who hear the same feedback, over and over, eventually become inured to the idea that the next owner of their home "may be making some changes."

Lots of Showings

Too, Buyers planning on doing extensive renovation will usually show their hand in the course of doing showings.

A lot of them.

Of course, the purpose of multiple showings -- typically with contractors in tow -- is to determine the feasibility and cost of the project(s) being contemplated (as a listing agent, I encourage this process -- to a point; much better to have no deal than one that blows up after lots of time wasted on negotiation).

Eyes on the Prize

At the end of the day, though, most home Sellers (properly) are more focused on whether the Buyer is able to perform financially, and what price they're getting for their home.

There can even be offsetting advantages when the Seller knows that the Buyer intends to do a major renovation (or more).

So, a home that might otherwise get picked apart on inspection instead can get a "pass."

There can be exceptions to that, though.

I handled one deal, the sale of a 19th century Victorian, that almost fell apart when it became apparent that the Buyer planned to do a tear-down.

The issue?

Both the owner and the Buyer wanted the home's gorgeous (and quite valuable) leaded glass windows.

Perfect Cover for Home Burglar

"For Sale" Homes & Security Systems

If I ever need to make a living as a home burglar, I've got the perfect cover: impersonate a Realtor (complete with business cards), and enlist as confederates a "traditional" family (husband, wife, and 2.3 kids) to come along.

I unwittingly tripped across this strategy yesterday in the course of showing a Golden Valley home that -- yup -- had an armed security system.

After (hurriedly) calling the listing agent's front desk to get the code and disarming the alarm, I waited for the inevitable police squad car(s) to show up.

Which they did. Quickly. (One of the great things about Golden Valley, by the way -- very safe).

Seeing me, my clients -- and, no doubt, my license plate ("MyRltr") -- we all made some amiable chitchat, and the police quickly drove off, no more questions asked!

P.S: If you are a home owner selling your home and have a security system, there are about 37 reasons to deactivate it while your home is on the market.

Reason #1: it gives the impression that no one's showing your home (certainly true in this case: with all the drawn curtains, clutter, etc., it looked like the last showing was . . . 1998).

Realtor "True Confessions"

This summary is not available. Please click here to view the post.

What is a "Cooperative Client?"

How Realtors Grade Clients

Clients may have a select few words for their Realtors, but Realtors also have some favorite words for their clients.

No, not %!%*#!

Rather, how "cooperative" they are.

What do I mean by that?

For Sellers, client cooperation boils down to these three things:

1. Pricing. A cooperative client picks a listing price consistent with what the Comp's suggest is fair market value for their home.

Should no offers emerge after a reasonable amount of market exposure (40 to 120 days, depending on the price bracket), they'll entertain a 3%-5% price reduction, as market conditions and feedback indicate.

2. Staging and Prep. A cooperative client repairs anything that's broken, and, if their city has a point-of-sale inspection, does what's required to pass.

Depending on their home's size and condition, they also spend a reasonable amount -- typically anywhere from $200 to $2,000 -- on staging and cosmetic updates (painting, light fixtures, etc.). Or, they expend the equivalent in "sweat equity."

3. Showing-Ready. Once their home is on the market, a cooperative client keeps their home in impeccable condition, and is accommodating about allowing showings.

In addition to the foregoing, a cooperative (model?) client is someone who refrains from calling after hours, unless there's a major issue (negotiating a deal qualifies); is relatively conversant with technology (the easiest way to shuttle documents around is electronically); and is generally appreciative of your efforts.

And guess what?

A client who does all those things makes it easy for their Realtor to do the best possible job for them!

Realtor Cost Saving Tips

But Do They Ask for Directions?

I got a great idea from a colleague today on how to save on my gas bill -- and car washes, too.

When she shows homes, she lets her client drive, and she navigates!

But for the fact that I'm prone to motion sickness when I'm not driving . . . I'd definitely consider it!