From the category archives:

Sellers

Update Your Listing or It Will Never Sell

Every couple of days I sift through various areas of the MLS, taking a look at new million dollar homes that have hit the market, and others that have sold. Believe it or not, there are plenty of high priced homes selling…it just depends on how they are marketed.

This week I saw two very pretty million dollar listings that caught my eye and I wondered why they haven’t sold yet. After further investigation I discovered a couple of things:

  1. Photography: Believe or not, one of the homes had ZERO interior photos. The house sits on a lake and has some great views, but after five different angles, you kind of get the picture – this house sits on a lake. What buyers really want to see is interior photos of the rooms, kitchen, and bathrooms. Now this home had just sold in early 2007, so I was able to look at the previous listing and see what the home looks like, but the public can’t view old listings. For $1.4 Million, an agent should really be getting interior photos taken of the home by a professional, even if the home is vacant.
  2. Time on the Market: Amazingly, both of these homes have been on the market since summer of 2007. This isn’t necessarily a kiss of death, but neither listing has ever expired…they both have had the same MLS number the whole time. Now one thing buyers look at is the time on the market. While the homes have been on the market a long time, a new MLS number every six months refreshes the listing and puts it back on top, so to speak. These two listings are STALE.
  3. Price Reductions: in over 450 days, neither listing has reduced their price. If you have your home on the market for the same price as almost two years ago, and you have not reduced the price (nor sold it for that matter) then you are living in la-la land. Yes, I hate to be the bearer of bad news, but someone has to speak the truth. I refuse to sugar coat the market, but the reality is, if your million dollar home has not sold in a six month period, then you MUST reduce the price.

I have to ask the question of what the agents holding these listings are doing. They don’t appear to be guiding their clients in the right direction…getting the home sold. With market conditions for upper tier homes declining over the last two years, it is amazing to see a home still on the market for the same price as in 2007.

The fact is, if you are not updating your listing to current market conditions, keeping it fresh, or having top notch photos taken of the home, then no one is going to buy your home. If your home hasn’t sold with your current agent of two years (and no price reductions) then maybe it is time to go shopping for a new agent to represent you.

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Your Home Isn’t Selling Because Your Photos Stink

Yes, that’s right, your home isn’t getting sold. Why not, you ask? Have you checked out your home photos that your Realtor took when she listed the home? If you are like most sellers, you have never seen the photos of your home.

I took my two young sons to get some professional photos taken this weekend here in Minneapolis. I’m a pretty good photographer, but I don’t have the tools to make them look “studio quality”.

As I was sitting there, I had to laugh. Here I was, spending extra money to get some good photos of my most precious things, but I see sellers all the time penny pinching on quality of photos for their most precious thing, their luxury home. Looking through the MLS listings every day, I see Million dollar homes with pictures that are fuzzy, snow on the ground in July, out of focus, too much/too little light, not level, etc. And I just don’t understand how the seller could allow this to happen.

I have actually gone to listing appointments in which the sellers are looking for a new agent, and they ask me what price they should be at. See, they believe the price was the reason the home didn’t sell the first time. I look at them and tell them presentation is EVERYTHING. Then I show them their last photos on-line. Most are shocked, as they had no idea. With more than 70% of buyers looking on-line for homes before they start hitting the pavement, sellers really have to have top notch photos to impress that buyer.

So when you start looking for an agent to market your home, ask them what type of photos they will take. If you hear the photos will come from their camera, then move on to the next agent. Look for the agent that is willing to spend the extra money for professionally done photographs. Minneapolis has some great photographers that have experience with luxury homes, so be sure to look around, or ask your agent for referral advice. Put your best foot forward from the beginning, so your home is SOLD, not still SITTING!

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Selling a Historic Home

A few months ago, I had the pleasure of viewing a historic home that was going up for sale. It was in need of a lot of work, as many 150 year old homes are, but the home owner was asking way too much for the home. The kitchen had carpet for flooring and was in terrible shape. The plaster walls were cracked and coming apart, ceilings had water damage, and the bathrooms were a 100 year old disaster.

As I walked through the rooms, my rehabber eyes caught many things wrong with the home. The home owner and I sat down to discuss my thoughts on a list price, and if there was anything that could be done to make the home look better. My motto is complete honesty, and I asked how honest they wanted me to be. Of course, the answer is always, complete honesty, even when sometimes, that might not be the case.

I told the owner that if they really wanted to sell the home, that their price must reflect the repairs and updating that will have to be completed by the future owner. I could easily see 100,000 going into the home, as the kitchen and two bathrooms would be total guts. The house needed a lot of work. The response I received was mixed as the seller was having a hard time stomaching my suggested list price. They had the home on the market a year before, during the boom, and now I was telling them a price $300,000 less than what they had originally listed the home for with a previous Realtor.

They had two options:

  1. Sell at a lower price which reflects the condition of the home.

  2. Put some money into the home, fix it up, and then sell for a higher price.

Luckily, they had 100% equity in the home and had the option of pulling some money out to fix the place up. The home is now on the market, with another Realtor. (you can’t win them all) I plan on going by the home to see just how much they fixed it up, as it will be interesting to see if the home sells quicker, or languishes on the market at the higher price.

My main point is that when listing a historic home, you really have to look at the homes condition when coming up with a price. While the home might have a prime location, buyers will discount the list price according to what repairs will need to be completed upon purchase.

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A New Twist to the Minneapolis Real Estate Market

Everyday I hear the same old story…the real estate market is tanking, buyers are scared to buy, bla-bla-bla. Even though us real estate agents scream to the roof tops that housing markets are local, the media negativity drowns the truth out.

The only thing we do know is that the number of foreclosures has increased and so the perception is that the Twin Cities real estate market is going down, down, down. Luckily, some savvy people at the Minneapolis Association of Realtors have created a new report that better outlines what is really happening here in Minneapolis.

Some say that statistics don’t line. However, statistics themselves can be a problem if they don’t take special circumstances into account. Case in point, all the stats that come in for the Twin Cities includes data from both foreclosures, short sales, and traditional sellers, saying that median home prices have fallen 10.3% in the last year. If you were to separate the two bank related sales from traditional sales, you would have a very different look for our local real estate market. Home sales NOT related to foreclosures or short sales are actually only down 3.9% from this same time a year ago in 2007.

Yes, foreclosures do effect the market, but sellers not facing foreclosure can now look at real information that shows the future is not as bleak as the media paints it. The same goes for buyers. While the national media might be reporting the sky falling, sellers are not giving away homes as you might like. There are good deals to be had, but if you want a steal, the best bet might be too look at a foreclosure.

You can read more of the report at the link above, which also has a break down of foreclosures by price range and housing type.

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Sorry, but I Had to Throw You Under the Bus

As some of you know who might read my other blog, we recently moved into our new home we had built. We were lucky to buy one of the last lots, so the builder was giving away some great incentives to close out the subdivision.

This past week, two homes have gone up for sale in the neighborhood, and both are priced differently. The neighborhood is only two years old, so these are two of the first homes to be resold.

  • the first home is on a flat lot and was bought for $280,000 a year ago. They are now asking $300,000 for the home, but have also finished the basement. I viewed the home two weekends ago with a client, and thought that the asking price was very fair to the current market.
  • the second home just went active a couple days ago at a price of $380,000, which is the exact same price they paid for it two years ago, during the height of the market. It is a walkout lot and has a finished basement. However, I knew right away that in this current market, it was way overpriced.

Of course my husband teased me, saying that I wasn’t a very good real estate agent, not getting my name out to the neighborhood already. According to him, we have been here a month and a half and I should have already canvased the area with promotional materials. At these times, I just have to roll my eyes and ignore his “sarcasm”.

Then a funny thing happened on Monday. I received a phone call from an appraiser representing the relocation company taking care of the owners of the second home. The appraiser wanted to speak with me about our house, as it seemed to her to be a very close comparable to the home. I told her about all our upgrades, as we had many due to the huge incentives, that we had a finished walkout basement, and that our lot was far superior to the second home. Ours sits on a cul-de-sac with woods and a natural area behind it, but theirs backs up to other homes and has a smaller lot.

Of course during the conversation I told her I was a real estate agent, and we talked for about half an hour about other homes in the neighborhood that had recently closed with the builder. She then asked me the question that I knew was coming:

“In this market, what do you feel is the market value of this home?”

I told her, that “I hate to throw the agent and the owner under the bus”…but the home is not worth the money they paid for it. Looking at the current solds in the neighborhood, the house is probably worth $350,000, which is $30,000 less than they paid for it in 2006. Surprisingly, the appraiser agreed with me and stated the other comparable homes she was coming up with were not supporting the current list price either.

You can’t pull the wool over the market’s eyes. The truth will always come out, and buyer’s, with so much information at their finger tips, can easily judge for themselves what current market value is. It is sad that so many homeowners are faced with a similar situation, but they will be thrown under the bus if they over-price their homes. What’s a real estate agent to do in a market like this, but present the real picture to sellers and buyers. Unfortunately, not everyone wants to listen.

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"Writing" Up an Offer

If you plan on putting an offer in on a luxury listing, you might want to make sure you not only put in a fair price (at least what you think is fair), but also make sure the purchase agreement is typed up.

Today I had the pleasure of receiving an offer on one of my listings. The only problem was that I could barely make out the buyer’s name. It looked like a second grader, who just learned to write, had written in out by hand. I had to read the whole thing a couple of times to make sure I was reading it correctly.

The sellers were less than impressed by the offer. The reason? They felt the buyer’s agent was inexperienced. See, one of the things you have to remember when working in the upper-tier, is that sellers and buyers expect more from their agents. They definitely expect the agent to be professional, and one way of seeing this is how the agent presents themselves. Whether through dress, etiquette, hand shake, presentation, or paperwork, affluent clients are always observing how an agent acts….and they are taking notes.

So when an offer comes in that looks like it was written in Sanskrit, luxury home owners are not impressed. In fact, the offer itself might be good, yet the sellers don’t like it because of the way it was presented. It just puts a bad taste in their mouths. If you want your offer to be taken seriously, take the time to open up a Purchase Agreement in Acrobat Reader, and type in the fields. Not only will it look more professional, but is will put the seller’s mind at ease, that they are working with a competent agent.

And if you are working with an agent who does not type up their documents, you might want to consider hiring someone else to represent you!

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Gravity Furnaces in Minnesota Historic Homes

The gravity furnace is also commonly called the Octopus furnace because it has long ducts coming out of the central unit. It can be quite a sight to behold and even scares some buyers the first time they see it. These types of units were installed in homes built in the late 1800’s and early 1900’s. There are still many homes in Minneapolis and Saint Paul which have this furnace as their heat source. Slowly, home owners are replacing them with more efficient HVAC units, as well as replacing the duct-work throughout the home.

The concept of the Octopus Furnace is that heat rises and cold air falls. Heated air rises through the heat ducts and then the cold air sinks, entering the return air ducts, where it is reheated again. The original fuel source for early models was coal, but many since then have been converted to natural gas or oil. The above diagram is a great example of how it works.

Reasons you might want to replace your Gravity Furnace:

  • energy efficiency – gravity fed furnaces are 50% less efficient than a conventional heating system
  • most gravity furnaces contain asbestos. Asbestos is not harmful if left untouched, but if you do plan on replacing your gravity furnace, a licensed abatement contractor will most likely seal off the basement and safely remove any hazardous material.
  • they take up an enormous amount of space in the basement
  • you cannot install a whole house air conditioning system with this type of furnace

I have shown homes to buyers with Gravity Furnaces and many are shocked to see one for the first time. Some even fear purchasing the home, but they are easy to get along with. If you plan on purchasing a home with a Gravity furnace, DO think about replacing one in the near future. It will save you money in the long run.

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Look to Motley Crue for Guidance

If you have ever been to a Motley Crue concert in the last few years, you would know that their stage theme is absolutely fantastic. The reason? They create an environment that not only tells a story, but they evoke emotion and engage the fans. I attended a concert a couple years back, and while not a raving fan, had a fantastic time. How could you not with all the fire works, dancers, music, and fun?

In the soft real estate market today, homes are taking longer to sell, and many times, home owners are reducing their price to get someone, anyone, to take the home off their hands. Sadly, many probably wouldn’t have to undercut themselves if they looked to Motley Crue for inspiration.

Excuse me? Motley Crue?

Yep and for obvious reasons. Buyers want to walk into a home and immediately feel like it is theirs. They want to be inspired…they want to see fireworks.

The best way to do this is to “stage” your home. While many of us might think our home is decorated just fine, nothing could be further from the truth. Those walls that are painted a deep purple…gotta go. The 1980s wallpaper with Paisleys…gotta go. The little figurines you collect which are scattered throughout the home…gotta go.

Why? Because a home looks better when it is depersonalized and neutral. If you want to see some great before and after shots of staged spaces, and get an idea of the difference staging your home can make, please visit this site. The effect staging has on a home that is for sale is obvious once you see these photos. What emotions come over you? Would you want to buy these homes if you saw them in the “after” state?

I would have to say yes. Staging a home will not only make your home show BETTER, it most likely will help your home sell FASTER, and for MORE money. Here is an idea I want to leave you with. Instead of reducing your home $5000 or more, why not look into a consultation with a professional home stager? With the little money you spend on staging your home, you could actually net more in the end and walk away with a great story on how you sold your home in a market when so many other sellers are failing.

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Appraising a Luxury Home

So, you are looking into buying a high-end home, most likely priced above $1 Million. You ask your buyer’s agent to pull some recent sold data and find homes which to compare against the listing you love. You think this is going to be an easy process – just pull solds from the last six months with the same square footage and whalah, you’re done!

Whoa there Nelly! Not so fast. This is not a $300,000 listing in which every home on the block is a good sold comparable. Most likely, this million dollar home only has a handful of homes similar to it, and of those, maybe one or two have sold in the last six months. You might even have to go back a few years and look at those sold figures.

What? Go back to over a year ago? You can’t do that! Everyone knows that the most an appraiser will go back for a comparable is a year. You don’t know what you are talking about!

Well, if we were talking about a home under, let’s say, $800,000, then you would be correct. But once you breach that million dollar mark, the “rules” go out the window. In some areas, there are so little high-end sales that finding something similar can prove difficult. One of the biggest problems with appraising a luxury home is working with an agent that doesn’t understand the new rules.

I ran into one such agent this weekend. She doesn’t sell luxury homes, but happens to have a “luxury” buyer. The agent presented me with some “comparables” to justify the low offer presented by her clients. Unfortunately for her and her client, these comparables didn’t compare at all to this home. Here were a few mistakes made:

  1. Some were built 12 years ago or more
  2. Some were on much smaller lots
  3. All were of lower quality construction
  4. Most were in the wrong school district
  5. Some had unfinished basements
  6. None had any luxury amenities, and lastly,
  7. she was sticking to homes sold in the last year

The problem? None of these homes are comparable. To find equivalent high end homes, you have to go back 12-22 months ago. You need to compare apples to apples, not apples to prunes. Of course I was told that this wasn’t possible. When I heard this, I knew right away the agent wasn’t familiar with how luxury home sales work. Sadly, she convinced her buyers to go the wrong direction with faulty data and they are losing a wonderful home because of it.

Luxury Home Appraisal 101

  • Sometimes you have to go way back to find a good comp
  • Don’t force the CMA by using homes of lesser stature
  • Stay in the same school district
  • Look for homes with similar acreage and lot features
  • If in doubt, hire an appraiser that has experience in high-end homes
  • Market conditions don’t affect the luxury market as much as it does lower priced homes
  • Choose an agent that specializes in luxury homes

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No Soup for You

Even luxury homes get low-ball offers, and owners have no problem turning them down.

Case in point, Columbia law school professor Hans Smit. He has his Manhattan mansion for sale at a price of $30 Million . The Real Estate Journal reports that he supposedly had an offer come in at $20 Million. Of course, he turned it down.

Low ball offers are nothing new in the luxury field. Many times, people that can barely afford the lifestyle, try to buy the lifestyle through below market value offers. Sometimes they find a seller willing to take their price, but most of the time, affluent home owners say no.

Some think, “Hey, what’s a couple hundred thousand off list price to the seller”…”they’ve got enough”…”it won’t hurt their pocket book”. However, what many forget to see is that the wealthy became wealthy by making sound business decisions, and usually not letting emotions get in the way.

Of course, there are some luxury home owners that do get emotional, and let a perfectly good offer slip through their fingers. It’s hard, as a real estate agent, to see this happen. You can council someone till “the cows come home”, but if they don’t listen, then all you can do is throw your hands up in the air and give in.

When ever a listing of mine has an offer come in, I prepare my clients for the possibility of a low offer. I tell them to not be offended. Any offer is a good offer, in my opinion. All you have to do is counter back at a higher price. Sometimes, buyers really want the home, but are just fishing to see if they get lucky. Remember, the secret of any real estate negotiation is to not get emotional!

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