From the category archives:

Sellers

A Home’s Entry Point Can Make or Break a Showing

Twin Cities Luxury Home EntrywayMost retail businesses have their customers enter through a main entrance. This entrance is attractive, easy to enter, and immediately lets the customer know what the store represents. They want you to feel at ease and like what you are about to see because as the old saying goes, “You only get one chance to make a good first impression”. Businesses know that if you walked in through the back door, you would most likely would turn around and walk right back out. Simple concept, right?

So why do I see so many home owners not thinking about the importance of a buyer’s first impression? I can’t tell you how many times I have walked into a home via a backdoor or garage. Trust me, it doesn’t start the showing off with a bang as usually the first thing the buyer sees is a basement door, mudroom, or kitchen.  You don’t want them seeing your muddy shoes or kids backpack – you want them to see the beautiful foyer, grand staircase, or open floor plan. Even if you don’t use your front door, it is extremely important to have any potential buyer’s enter through it.

Buyers are pickyer than they have ever been, and they will quickly write off a home with just one small negative. Do yourself a favor, spruce up your front entrance and make the “window of your home” more presentable. It will give a better first impression to a buyer, and give you, the seller, a better chance of getting that offer you have been waiting for.

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Days on the Market for Twin Cities Luxury Homes

The Difference in Days on the Market

Days on the Market for Twin Cities Luxury HomesReal estate agents in the Twin Cities metro area are pretty lucky. We have Realtor associations that produce outstanding market statistics, which other cities across the nation lack. One bit of data that is extremely important to us agents, and our seller clients, is the number of days that a home is actively for sale before a buyer produces an acceptable offer – otherwise knows as DOM, “Days on the Market”.

When these numbers are compiled, they are usually presented in generalities. We might have a number that is averaged out for a certain county, city, or neighborhood, but usually the detailed numbers per zip code are over looked. All price points are usually included, so the statistics can be skewed depending on how many high-end, or low-end homes are included.  For instance, the current DOM for the Twin Cities market is 118, so an agent that comes into a luxury listing appointment using this generic stat in their CMA (Comparative Market Analysis) could be doing the seller a disservice. 

Instead, the agent should be taking into account the area the seller lives in, and presenting those statistics. As an example, in Excelsior, where homes are much more expensive, the average days on the market is around 79. Wayzata is 144. Around Long Lake, it’s up to 173. The difference is staggering for luxury homes, especially if there is a lake nearby, or if the number of homes available to purchase is less. My main point is that when dealing with upper bracket real estate, sellers should be making sure they get the most accurate and detailed market statistics available for their home. And the only way to do this is choose an agent who specializes in the luxury home market.

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Are Your Real Estate Photos Killing the Sale of Your Luxury Home?

It continually amazes me how home owners don’t realize the poor quality of photos that their real estate agent is using to market their Million dollar homes here in the Twin Cities. Just today, I have been going through luxury homes stretching from Stillwater to Lake Minnetonka, and probably 90% of the homes priced over $800,000 have agent taken photos that are out of focus, tilted, angled, poor lighting….you name it, these photos stink!

In case you wonder if they really make that big of a difference, well I have to tell you that they do. If a buyer is looking at purchasing a luxury home, they want to see the home showcased at its finest. This means that quality photos must be taken by a professional photographer, and edited in the best way to show the homes highlights. Hey, I consider myself a decent photographer, but I leave the high-tech photo business to the professionals when it comes to my luxury listings. This means I spend money to get the quality I expect and the quality my clients deserve.
After all, what are they paying me for? My job is to market their luxury home to a luxury audience. Agents that bring their point-and-shoot cameras into a million dollar home should be kicked out on the spot. They don’t know what they are doing, and the people who will suffer for it are their clients.
Want to know why your home has been languishing on the market for over a year? Over two years? Take a look at the photo below. It represents the only photo for a $1.5 Million listing in Minnetonka. The description in MLS sounds great, but there are no photos to back it up. Do you think a buyer would really want to set up an appointment for this type of listing?
Or how about this home below that started out at $2.4 Million in Eden Prairie? It is has been on the market for a while, and now is reduced $500,000. Could it be that the really poor photos, and there are more, are killing any potential sale for this home? I certainly think so.

As a home owner looking to sell, you really need to question the agent you use and how they are going to professionally market your luxury home. Luxury home specialists know that money has to be spent on quality photography and marketing pieces to attract buyers. Ask your agent for marketing examples and past experience in the luxury home market before you sign a year long listing because if you don’t, the quality you could be getting could resemble the photos above.

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Not All Negotiations are Nice

In Minnesota, the term “Minnesota Nice” is thrown around alot to describe just how great the people here are. But when it comes to negotiating deals in real estate, that nice attitude can sometimes be shed, especially when two parties have a hard time agreeing to terms.

Recently I had a transaction in which from the beginning, there was conflict. This happens sometimes when a buyer presents an extremely low offer which in turn greatly offends the seller. In this case, the seller stuck to his guns and refused to give into the buyer’s demands. Frustrated, but really wanting the property, the buyer gave in and agreed to the sellers terms. From that point on, there was hostility from the buyer during the inspection period, during those negotiations, and up to the end. Of course, they pointed the finger at the seller saying he was being difficult, and the buyer’s agent was wonderful to tell me what she really thought of my client.

But the point is this, not every deal is peaches and cream, and not every buyer or seller walks away from a sale feeling it was a win-win situation. Such is life. Negotiating a real estate sale can be down right unpleasant due to so many emotions getting in the way, however if you can keep the emotions out of it, you have a better chance of creating a pleasant atmosphere which will bring the “nice” back into the transaction.

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Where Do Minnesota Buyers Find Their Homes?

Whenever I speak to a Minnesota home owner who is thinking about selling their home, I discuss the technology I use to help market the home, and how implementing the power of the Internet is a big factor in my real estate success.

Statistics are extremely important when selling a home, so some data that I go over with a seller includes the infamous “Where do Buyers Come From?”. Below is current information for the 2008 real estate market in Minnesota. As you can see, 33% of home buyers found the home they bought through a real estate agent. (Please note, this means the agent showed them homes and one of those homes was bought by the buyer. It does not mean that only 33% of buyers used a real estate agent to purchase a home.)

The next piece of data which is so important is that 45% of Minnesota home buyers found the home they bought via the Internet. Wow! That is huge, and shows right away how important it is to market a home for sale on-line in our state.

Please also note, for those of you who still believe in print advertising, that in Minnesota, only 2% of buyers found their home from the newspaper, and only 1% found their home from a home book or magazine. Print advertising is dead and just doesn’t bring in the buyers.

Now looking further into the national statistics for “How do Buyer’s Find Homes?“, the National Association of Realtors has compiled data since 2001 of real estate trends concerning this issue. As you can see in the below table, over the last eight years, buyers finding their home, from the research of a real estate agent, has decreased 14%. At the same time, and probably the most dramatic change, is that buyers have increasingly found their homes via the Internet, up from 8% in 2001 to 32% in 2008. Wow!

When you look at Minnesota versus National, you can easily see that the Internet is more readily used in a buyer’s home search, 45% to 32%. So for home sellers, if you don’t hire an agent that is Internet savvy, you could be losing market time and money in selling your home.

For the small minority of people out there who feel the Internet is making the real estate agent obsolete, please know that even with all these buyers using the Internet to search for homes, 86% of these buyers are still utilizing a real estate agent to help with the home search and purchase. The good agents are using the power of the Internet for success, integrating it into their marketing plan to help facilitate the sale of their client’s home.

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Luxury Home Short Sales

Working with Luxury Short Sales in the Twin Cities

While high end homes don’t go into distress too often, the current market is causing some home owners to pursue the short sale route when selling their home. With home prices dropping in expensive neighborhoods, and seeing as many were artificially inflated due to the real estate market a few years ago, luxury homes are now seeing a much needed market correction.

Unfortunately, there are not as many buyers out there who can afford an expensive home (not to mention the high property taxes that come with million dollar homes). Currently the most concentrated area in the Twin Cities Metro area for short sales is in and around Lake Minnetonka, including areas like Chanhassen and Medina. But you can find a luxury short sale here and there throughout the Metro area.

Having worked with high-end short sales, I can say that they are quite different than the normal sale. The ones I have worked have almost always involved a higher up…not the average remedial negotiator who could give a rats butt, but someone who understands the potential huge financial loss that a million dollar home would create on their books. A $1.5 million dollar foreclosure is so much worse than writing off a few hundred grand in a short sale.

Case in point, a luxury short sale listing I successfully sold this spring became a success because I got the ear of the Vice President of the bank. He agreed that a $400,000 loss was much better than a $1.4 Million loss. Granted I am sure they would have gotten some money back if sold as a foreclosure, but it would have been much less than that of a short sale, not to mention the court and lawyer fees that would have been tacked on to the net. Working like a team to reach a common goal, the bank and I were able to negotiate very well together, creating a deal that helped the home owner out of a jam, and got the buyer a super deal in an expensive neighborhood.

If I had to give one piece of advice for a home owner looking to sell their expensive real estate as a short sale, than I would recommend finding an agent that not only specializes in luxury homes, but also has experience in short sales. (There are very few of us that do.) For the short sale million dollar homes currently for sale, most of them have an agent that has little to no experience in either. Sadly, this really only hurts the home owner as they don’t get what they really need – the successful sale of their home and avoiding foreclosure.

If you have any questions regarding the short sale of your home, please feel free to contact me anytime!

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The Per Diem Charge and What it Means to a Transaction

Probably the second number that a home owner looks at when they receive an offer on their home for sale is the Closing Date. It can mean the difference between a quick close or extended close. The accepted average number for closing a transaction is 30 days, but sometimes a luxury home buyer will be using jumbo loan financing, and it is not uncommon to request 45 days or more to close.

As it sometimes happens, the lender is not able to get their underwriting process in line with the contract closing date. Both buyers and sellers are left wondering what they should do. Technically, if the transaction does not close by the agreed to date, than the party at fault is in breach of the contract. Let me make this clear…the contract is NOT “null and void” as some agents will falsely tell their clients, but is instead “in breach of”, and of course, there is a remedy.

What can a seller do?

  • Well, first off, you want to let the buyer know you are willing to wait for their lender to get their act together, and thus extend the closing.
  • Next, utilize the “Per Diem” charge for each calendar day they do not close from the original contract close date. Since sellers are now incurring daily charges via mortgage payments, taxes, etc, that they had not initially accounted for when calculating their bottom line, it is in their right to make the buyer pay for these expenses.

Case in point, a luxury home listing of mine which closed recently utilized the Per Diem charge. When the buyer’s lender failed to get the documents processed and through underwriting by the closing date, we told the buyers they would be responsible for this daily charge. Considering it took another four calendar days to close, this added up to a decent sum of money. While the buyers were angry at the lender for this charge, the sellers were fairly compensated for the buyer’s breach of the contract.

There are obviously many ways to structure a Per Diem charge in a closing, and as always, many ways to negotiate the fee. Charging a Per Diem amount not only helps the seller escape additional expenses created at no fault of their own, it gets a fire lit under the buyers to pressure the lender to get their act together.

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Should a Seller Reduce His Home Price Just because it hasn’t Sold Yet?

Many agents will tell you that the answer is simply “Yes”. Keep reducing the home until a buyer comes along and puts in an offer. This works for the most part in the lower priced market (they have a larger pool of buyers available to them), but for higher end homes, especially those priced above a million, reducing the home does not always sell it.

Expensive homes have always taken longer to sell. In fact the housing supply in the Twin Cities for homes priced above $1 Million is 40 months. For homes priced between $500,000-$1 Million it is 20 months. Are these sellers freaking out and reducing their homes to drastic levels just in order to sell. The answer is “No”. If anything, they take it off the market for a short period and give it a rest.

Now don’t get me wrong, there are times that price reductions are warranted. Some sellers are unrealistic about the market and overprice their homes. Then they refuse to reduce them, or negotiate when an offer comes in. They quickly become frustrated and take their homes off the market. Sometimes they blame the agent. But the truth is, the pool of buyers is much, much less in the luxury home market, so it naturally takes longer for a home to sell.

There are many buyers out there right now looking to buy a million dollar luxury home for nothing. They want to live the life, but not pay the price. Many sellers see right through them, and refuse to reduce their home’s price, or except a low ball offer. Even agents fail to understand how the upper bracket home system works. For that reason, make sure you work with a luxury specialist when buying or selling a home.

As a buyer, don’t rush to judge a high end home based on its market time. For the most part, market time doesn’t mean that much.

As a seller, don’t get discouraged about the market time for your home. If you can, stick to your guns and wait, a buyer will come along to buy your home!

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Million Dollar Homes Should have Million Dollar Photos

Ok, so I would hope people would know by now that one of my biggest pet peeves is real estate photographs. It really drives me crazy with all the terrible photos I see constantly in the MLS database. I can understand terrible photos for $100,000 homes (but even those tilted photos get under my skin), but when it comes to terrible photographed homes priced in the million dollar range…I just don’t get it.

Homeowners – When you hire real estate agents to sell your home, do the agents even tell you about their marketing plan? Better yet, do you even ask? Do you ask them how they will be photographing the home? Do you ask to see the end result?
Why does this matter? Because photos sell a home. Let me tell you something…agents have NO excuse for not paying for a professionally photographer to come into your luxury home. If you are letting them get away with walking into your home with their point and shoot camera, then there is probably a really good reason your home is not selling. Your photographs stink!
Agents – Who do you think you are? Professional is NOT the word that comes to my mind. If you are listing a high-end home, then you better be shelling out the dollars for high-end photos. You are doing a huge disservice to your client and not giving them the proper exposure they need for an expensive home. Either spend the money for a professional, or leave the luxury home market.

In this post you will notice the photos I have used. All were taken from active homes in the MLS system, high end homes currently listed for more than $2.4 Million. See the problem?
  • the first photo is pretty dark and not too inviting. A professionally photographer would have lit up this room with his equipment, lit the fireplace, and created a photograph that presented a cozy living room space.
  • the second photo is always the main feature of the home which buyers want to see – the kitchen. This tilted photo makes the room look narrow and small, most likely scaring buyers away. If a wide angle lens was used and the room professionally lit, then the kitchen would look like a gourmet space, without having an ugly flash bouncing off the far cabinet.
  • the last photo, just makes you want to jump in that tub…I don’t think so. The room is dark, and I just “love” the shadow of the agents head taking up a quarter of the photo.

So hopefully, you can now see my points. Professional photography MUST be used when listing an expensive home. I see well known agents in the Twin Cities shooting million dollar homes themselves, and I am amazed that they keep getting hired. Sellers really need to understand that to attract buyers who can afford luxury real estate, you need to present the home as a luxury property. If your home photos stink, then maybe you should think about hiring another agent, one that specializes in selling luxury homes.

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Being All Things to All People

The one thing I have learned from my time in real estate is that to be a true professional, you cannot be all things to all people. What I mean is that I truly believe that in order to be successful and give your clients your best, you have to be a specialist in a certain market area. Now an agent’s market area can literally be an area/city, or it can be a type of real estate. I know agents who specialize in Saint Paul, downtown Minneapolis condos, South of the River real estate, etc. But there are those of us that approach things a little differently.

As you can probably tell, the niche markets I have chosen consist of luxury real estate and historic homes, including waterfront/lakefront properties. I don’t really concentrate by city, instead choosing to specialize in properties on various lakes, and historic home districts in the Twin Cities. By limiting the markets I concentrate on, I am able to keep better track of market trends and homes for sale. If I was like most agents out there, who do anything they can get their hands on, my head would be spinning.

For sellers and buyers, it is important to select an agent who specializes in what you are looking for, especially if you are in the market for a home that is not an average home. For historic homes, go with an agent that knows about historic home construction and the costs that come along with an older home. For expensive homes, go with an agent that understands the luxury market, the types of loans that go with it, and the marketing funds to support such a listing. There are many agents who would love to list high end homes, but just don’t have the ability to sustain them.

While I do list and sell homes out side my niche, I don’t actively seek them out. People find me from my website, blogs, and past clients, and ask me to help them out. I’m all for selling homes, no matter the type, but choose to concentrate overall on a type of real estate. Next time you are looking for an agent, don’t forget to find out if that agent has a real estate speciality.

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