No one has been more affected by the last few years of real estate devastation than my old friends, the Sellers. If its been more than five years since you’ve sold property, then you really need to forget much of what you thought you knew about the process. Its a new world out here. So as we approach the beginning of the Autumn selling season, here are four points that every Seller needs to take to heart.
1. You were never as rich as “they” said you were. Who are “they”? Appraisers, bankers, even the algorithm at Zillow… but its not their fault. In most cases (except probably Zillow) they were giving you valuations on your home based on what was current market price. Unfortunately, most property owners took this inflated value and carved it in stone under the heading of “Personal Net Worth” and — even to this day — are having a difficult time adjusting to the fact that those monumental numbers just are not true. But if you own a stock and you want to sell it, you ask the question, “What is Triple Y Corporation stock selling for today?” Not last year. Not in 2007. If you try to place a sell order on Triple Y that is based on what the stock sold for in 2007, your stock broker will laugh you out of the office.
Selling your home works exactly the same way. And just like the stock market, that valuation is different today than it was three months ago, as values have continued to go down in most markets. If you list your home for sale today, you need to think about what the value of it is TODAY, and kiss farewell to what you thought it was worth yesterday. You’ll also likely have to re-think the asking price if you should be on the market in two months, because the market may continue to decline.
2. You are selling a product and a lifestyle — not just a house. You need to find out what the competition looks like. Get your Realtor to take you through the properties that you’re going to compete with in the marketplace — certainly every one of your potential Buyers will have seen them, so you need to see them too. The Buyer doesn’t really care how you’ve lived in the house, they want to see how they might be able to live if they bought your house. By comparing your home to the competition, you get to see the competing visions that are out there, and you can craft your product presentation to outshine the rest. This is the basic philosophy of staging, and you can use it to varying degrees, but if you’re not actively trying to change the way you think about and look at your home and trying to see it through the eyes of the Buyers who tour it, your home will likely be one of those that sit on the market for awhile, with multiple price reductions, and a sales price much lower than you had hoped.
3. Some of your competition isn’t trying to turn a profit. Now, this is a tough one to wrap your head around if you’re a Seller. Every individual Seller approaches a real estate transaction with visions of finally-realized equity with which they will fund something, whether its a bigger house purchase, a downsizing with money left over for a new toy or a beefed up IRA, or at the very least, a clean balance sheet with debts paid off. In this market a significant number — if not a majority — of your competitors have already given up on making a profit. These could be residents approved for a short sale, or banks and mortgage companies — even the government — selling foreclosures, or people who have been on the market so long that they are desperate just to get to that new job in another city. This is yet another argument for getting to know your competition, and if you can’t compete with their prices, then figure that out before you list and save yourself a lot of heartache.
4. Buyers don’t shop for homes the way they used to. The process that Buyers use to become educated on the market has been completely revolutionized in the last few years. The National Association of Realtors conducts a study every year that asks successful homebuyers questions about the process of buying their home. The results are important because they point out the most successful ways to market a home — and marketing a home is THE most important task that a listing agent performs. In just the last decade, the percentage of Buyers who found the home they purchased on the Internet has skyrocketed from 8% to 37%. Those who found it in print advertising, such as newspapers, has gone from 7% down to only 2%, and if you look just at those slick homebuyer magazines, the current number is below 1%. Even the trusty yard sign, which accounted for 15% of discoveries in 2001 has declined to just 11%.
So, what does this mean if you’re the Seller? It means that among the most important qualities you need to look for when selecting a listing agent is that agent’s comfort level with mobile technology and the Web, because that is where most homebuyers are hanging out, looking around, and eventually deciding on which homes to visit. And don’t doubt that you DO need an agent. If you combine the Buyers who found their homes on the Internet and those who found them through the recommendation of their agent, you account for 75% of successful home purchases in 2010.
That’s a chunk of the marketplace that you must be able to access if you wish to sell your home in 2011.