Getting Something Read Into the (Real Estate) Record

"Funny, I Didn't See Him at the Meeting"

Politico's know that a Congressman who never actually delivered a speech in the Senate or House chambers can nevertheless have their remarks "written into the record," or transcript, of that body's deliberations.

Real estate has something similar.

After each local real estate office holds its weekly Tuesday meeting, the Office Administrator ("OA") assembles and circulates a list of their office's Pre-List's, Price Reductions, Buyer Needs, etc.

Can't make the meeting (because you're prepping for Tuesday tour)?

Just email the OA.

Buyer's Agents & Networking

Peeking Under the Curtain

Last Sunday I showed my clients five homes in the west suburbs that all met the profile of what they were looking for: within 20 minutes or so of downtown Minneapolis; around 3,500 FSF; at least 4 Bedrooms; a nice master Bath; price between $600k and $750k.

So what?

Only one of the five homes I showed was already on the market.

The other four were either pre-lists or one-time showings.

Missing Out

One of the things prospective Buyers not represented by agents don't know is that homes are often quietly for sale well before "the curtain goes up," i.e., they formally debut on MLS.

Behind the scenes, Buyer's agents are busy broadcasting their clients' criteria, while listing agents are busy promoting their upcoming listings through a variety of pre-list marketing.

Not surprisingly, technology and social networks make this kind of pre-list activity easier and cheaper than ever.

And therefore more important . . .

How Long Should a Listing Contract Be?

Realtors' Investment?
Skill, Time, & Marketing $$

How long should a listing contract be?

The short answer:

Long enough to sell the property being listed.

How long that is -- assuming that the home is well-priced, staged, and marketed -- is typically a function of price.

Under $200k in the Twin Cities today, you'd estimate 2-3 months of market time.

For a move-up home ($250k - $450k), 3 - 5 months.

As homes cross mid-six figures ($500k-plus), average market time locally can easily be six months now; double that for homes over $1 million.

For each of the above categories, add extra time for properties that are especially unique, or only appeal to a narrow slice of the market (automatically the case for homes over $1 million).

Step 2

Step 2 of calculating a contract term is to allow additional time for the home to close, once it's under contract.

From the time the last addendum on the Purchase Agreement is signed off on, that's typically about 10 days to remove the Inspection Contingency, than another 4-6 weeks for the home to appraise and the Buyer's loan to be finalized.

Bottom line: to sell a $399k Twin Cities home today, just as an example, I'd typically ask for a six month listing.

Listing Contract "Subtext"

Why not a shorter listing contract?

Or none at all?

That's certainly possible, but that really isn't fair to the Realtor -- at least one who is conscientiously doing their job.

That's because much of the Realtor's investment of their time (and marketing dollars) is made upfront.

That's when the Realtor conceives and implements their marketing plan -- making sure the home is staged to maximum effect; professionally photographed; and all the marketing materials proofed (and re-proofed a couple more times).

Of course, before any of those things happen, many Realtors work closely with their clients making sure that their home is in good repair, and advising "strategic" (cost-effective) updates, if that's indicated.

While all that's going on, a good Realtor is already doing what's called "pre-list marketing," i.e., promoting the home to prospective Buyers, and building market awareness.

Sprint -- or Marathon?

Hopefully, all those efforts produce a quick sale at a good price.

If they don't, however, it is the Realtor's job to support the listing with ongoing marketing.

That means making sure that the home continues to look fresh -- both online and in-person; and keeping the home in front of prospective Buyers by continuing to "plug" it at Realtor meetings, through email, ads, etc.

Too, it is incumbent upon the Realtor to tell clients when a price reduction is indicated -- then aggressively market the new, lower price.

It's certainly possible to have a client extend an about-to-expire listing in the middle of all that.

But it's preferable -- and easier -- to simply ask for the right amount of time in the first place.

Weather (& Buyer Traffic) Patterns

The Car Wash Model

No, it's not good for showings, or broker and Sunday open house traffic, when the weather is especially frigid, or a snowstorm temporarily shuts things down. In other words . . . today (at least in the Twin Cities).

But experienced Realtors know that it doesn't really matter, for two reasons:

One. It all averages out.

Two. Concentrated activity is better than diffuse activity.

What do I mean by that?

If 20 people are going to come through my open house, my druthers would be for them to all show up at the same time.

That way, there's a buzz, and buzz heightens interest. Heightened interest, of course . . . . leads to offers!

Think of it as the "car wash" model: the longer the cold snap, the longer the line of cars -- er, prospective buyers -- when there's a thaw.

P.S.: the same principle helps explain why FSBO's sell their homes for much less than Realtors do (statistics suggest about 15%). Instead of "collecting" prospects' names and concentrating interest ahead of their market debut, they deal with them one at a time, diffusing interest.

Building prospect awareness and anticipation is precisely why good Realtors spend a lot of time and energy promoting their "pre-lists."

Why It's Impossible for a Good Realtor to Underprice

Meticulous Prep + Market Exposure = Full Price

The corollary to "Overpriced? How to Tell," is that it is impossible for a good Realtor to underprice.

Why?

Because good Realtors make sure that the homes they list are in optimal condition before they hit the market, then benefit from a tsunami of marketing exposure before, during, and after their market debut (especially just before).

Step #1: Meticulous Prep

Meticulous prep means that the home is in good repair, well-staged, and -- regardless of whether the home is an estate that hasn't changed hands in decades, or a newer home with all the bells-and-whistles -- presented in the best possible light.

If the home has untapped potential, prospective Buyers know that as well.

Too, the Seller's disclosures are all in order; any municipal inspection requirements have been satisfied; the photos are especially flattering (after all, they were professionally taken!); and the copy in the marketing literature skillfully shines a spotlight on all the home's strengths, while acknowledging -- but defusing -- any weaknesses. (Call that, "good offense/good defense.")

Step #2: Market Exposure

Once all those things are in place, a good Realtor makes sure that the home is well-marketed -- that is, the world knows about it.

A good Realtor, supported by an effective broker, has a huge repertoire of tools to make other Realtors and the general public aware of a new listing.

That includes pre-list networking on an internal company bulletin board (Edina Realty's is called "Network One"); prime exposure on the listing agent's personal and company Web site; blast emails and flyers; personal networking at various company meetings; direct mail; paid and unpaid ads; trumpeting the Broker's open, when new listings typically debut; and myriad other marketing tools.

Do all those things . . . and there's guaranteed to be a line waiting to get in the home when it hits the market.

If, by some quirk, the home happens to be underpriced, the foregoing marketing campaign ensures that multiple agents and their Buyers will know about it -- and be poised to make a move.

A good listing agent will leverage the resulting, intense interest -- in a fair, transparent way -- into a premium that more than recoups any list price "discount."