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Will VA Financing be a Factor in the 2013 Residential Real Estate Market?

January 23rd, 2013 | Posted by Dick Thackston in Mortgage News | News | Real Estate News | Uncategorized - (0 Comments)

VA Financing may be a significant factor in the residential real estate market in 2013. VA Financing has been a factor off and on again over the years based upon the number of eligible Veterans in the population. In the south where there are large numbers of large military bases, as well as a large number of military retirees and eligible ex-military civilian retirees, VA Financing has been a fairly consistent factor in the residential real estate market, but in the Northeast as well as other sections of the country with minimal active military, VA Financing has not been a significant factor in many years.

Why has VA Financing not been a factor? Well, it has to do with who can obtain VA Financing. VA Financing has a very limited pool of people that can take advantage of the program. The way the program works is a lender makes a loan to an eligible individual and the VA guarantees the loan; if the VA borrower defaults on a loan, the lending institution is typically made whole and the VA takes responsibility for the loan and its costs, but the VA rarely if ever actually funds the initial loan. VA Loans can be sold by the initial lender to other lenders, or investors, or held in the initial lender’s portfolio as well, but in the last thirty years the majority of VA Loans have been sold into Ginnie Mae loan pools, so the loans are effectively funded on the secondary market like most other home loans today. VA Loans will be a growing factor in the 2013 market because of the large number of VA eligible service members that have been created by our country’s recent overseas military engagements and the way these engagements have been handled. The US military called heavily upon National Guard and Reserve forces over the last decade more so than at anytime since World War II as a proportion of our military. Traditionally Reserve and Guard Troops do not have enough active time in the military to be eligible for VA Financing or other benefits, but since the military chose to use Guard and Reserve troops in our most recent military campaigns a much larger pool has been created, especially in New England where Reserve and Guard Troops have significant repeated tours of duty, many of whom where on continuous rotations through conflicts. While New England does not have any really large military installations when compared to say, Georgia or South Carolina, we do have a long tradition of Reserves and Guard Troops – going back to Lexington and Concord in the Revolutionary War – the military needed to take advantage of it to execute its plans. This has meant that all these men and women now have 180 or more days of continuous active military service which is the minimum threshold for VA eligibility.

So here’s who’s eligible for a VA Loan: Veteran’s with 181 days or more of continuous active military service that have been honorably discharged from the armed forces of the United States, their spouses and/or their unmarried widows or widowers. VA Loans can only be used to purchase a property that is intended as a principal residence of the VA borrower; they can not be used to purchase an outright investment property. VA eligible borrowers can use their eligibility to purchase a multi-family property in which they intend to occupy one or more of the units as their home as long as the property has four or less units. VA eligible borrowers do not have to pay off or refinance the VA loan if their circumstances change and they no longer choose to occupy the property they financed through the VA due to an unforeseen circumstance.

VA Loans have some unique features which typically makes them the very best for an eligible borrower to purchase an eligible property: VA Loans do not require any down payment; there is no limit on the amount of seller concessions that may be paid by a seller on behalf of a buyer – I have had VA purchases where the seller paid all the buyers closing costs, pre-paid items and paid off the buyers credit cards and car loans!

VA Loans currently are not available to domestic partners that are unmarried or same sex couples that are married unless both individuals are eligible for VA benefits. Often in this situation if one party is eligible (if they have enough income) the home is just purchased in a single buyers name and an equitable right to the property is transferred over to the non-eligible domestic partner after closing, however the VA buyer will always be the only oblige on the mortgage to the VA.

 

By Dick Thackston CRB, ABR, ABRM, Broker NH, MA & VT

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What do Banks Expect from Agents that Handle REO Properties?

August 17th, 2012 | Posted by Dick Thackston in Uncategorized - (0 Comments)

What is an REO? REO stands for “real estate owned” – it is a class of property owned by a lender. Most consumers don’t realize it but lenders that have REO Properties have very strict guidelines for the agents that work for them as Neighborhood Listing Agents helping dispose of REO inventory. The first tasks that REO Agents are charged with by lenders are to make sure that all transactions are done in compliance with all applicable local, state and Federal laws. The last things anyone wants in the REO industry is to have a property tied up or a sale to fail do to non-compliance with the rules. Legal issues, tenancy status, zoning and code violation, recording of deeds etc often make the initial phase of getting properties on the market slower than many anxious buyers would like, particularly if a buyer has targeted a property for some time. Any title issues need to be resolved no matter how long it may take even though it may be mind numbingly long to the uninitiated buyer. That being said, in the case of all these things, consumers are well served to be patient – as a general rule any problem not resolved prior to closing can come back to haunt an REO homebuyer tenfold after closing, and the REO seller’s work diligently to resolve these issues. After the legal issues, there are three basic areas that all REO sellers’ have made of super importance and abundantly clear to their agents: these are Information Security, Anti-Blight Campaigns and Relocation Assistance Programs.

Information Security is a huge concern to all of us in today’s hyper technological world of money and transfers; we’ve all heard horror stories about identity theft. REO Seller’s, who use the internet extensively to manage their assets, don’t want consumer data lost or used inappropriately. Most non-REO trained real estate agents are part-time and do not have extensive computer skills – many “do business the way we always have” and actually can be dangerously ambivalent to the level of private information. REO Sellers know that part-time and “old time” real estate agents are on the top of the target list for professional identity thieves and want to know that the REO Agent’s they hire are doing all they can to protect consumer’s personal information. REO Agent’s typically are required by the bank’s that list REO properties with them to follow these basic policies: 1. Maintain lockable file cabinets. 2. Have a clean desk policy – meaning files are left out of unsecured storage when they are not in use. 3. Confidential documents should be shredded not just thrown in the garbage. 4. Use encrypted e-mails when sending personal information. 5. Never send copies of checks, checking account numbers, Social Security numbers or credit information over the internet. 6. Avoid clicking on unknown links. 7. Maintain written Security Policies and make sure they are understood and enforced within the organization.

Anti-Blight Campaigns have become significant factors in the REO business over the last few years. Banks with REO Properties and Foreclosed homes do not want consumers to be go down the street and be able to pick out the REO’s do to lack of yard care and basic maintenance. Fannie Mae and Freddie Mac as well as many large regional banks know that the money they spend on maintenance will be paid back to them many times through quicker, easier sales requiring less discounting of price. Code Violations, unsecured properties, health and safety issues are all issues that the Full Time Professional REO agent is supposed to handle for the REO Seller. The REO agent is the number one point of contact and serves as the eyes and ears of the REO seller in neighborhoods. REO sellers are increasingly following up with random property checks and requirements for weekly dated photos to be sent to assist in verifying that the lenders REO’s are properly cared for and marketed.

Cash for Keys and Relocation Assistance Programs once unknown are now common place in the REO Industry. These programs are designed to help the occupants of homes that have gone to foreclosure move on. Many times REO properties are occupied by the former owners who have become what is legally know as “Tenants at Sufferance”. Many times they occupied by the friends, relatives or tenants of the Former Owners, any and all of whom need to have their occupancy resolved before the property can be sold as an REO. It is not unusual for an owner to have moved out of a property after it has gone to Foreclosure and rented it after the Foreclosure – this is not actually a valid lease – but the occupants needs still have to be addressed in some form. Most REO institutions have strict policies for agents who negotiate with occupants of Foreclosed Properties: 1. The owner’s of REO are making a Relocation Assistance Program/Cash For Keys offer to encourage occupants to leave as soon as possible – less time than an eviction would take. 2. REO Institutions have a range of offers that a REO Agent can make general determined by the property type location and condition. REO agents are not allowed to offer less than these amounts. 3. REO agents are expected to deal with occupants honestly ethically and fairly but remember they do work for the REO Investor and must keep the REO Investors interests first.

 

By Dick Thackston CRB, ABR, ABRM

Broker NH, MA & VT

 

 

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Frederick Law Olmstead and the American Dream of Home Ownership.

August 10th, 2012 | Posted by Dick Thackston in Community | News | Real Estate News | Uncategorized - (0 Comments)

In the two generations after the Civil War, no single figure stands out more than Frederick Law Olmstead when considering the development of American Landscape Architecture. Prior to Olmstead, urban design and development was characterized by two basic styles: paved cow paths and cart roads that had simply “happened” as the early eastern cities grew from colonial villages to towns, and cities or “Grid Iron” plans that were laid out in the pattern of square blocks following the military planning model of frontier out posts used since the Roman Army conquered Britain at the end of the first millennia BC.

The three most outstanding examples of this are Boston, Philadelphia and New York City.

Boston was and is a collection of alleys and small streets that follow no particular pattern. Streets in Boston were simply paved and expanded – sometimes – where they first developed as the city grew back from the sea. Philadelphia is a simple grid laid out between the Delaware and Schuylkill Rivers – east-west; north-south. Manhattan is a hybrid of the two however primarily a Grid Iron. The City of New York, after The Great Fire in the early 19th Century, decided to lay out a grid system of streets and avenues over existing streets and villages all they way up Manhattan Island. Too many buildings were already in place below 42nd street so the city planners choose to straighten out as many streets as possible, but the vestiges of the early Dutch settlement is clearly visible below Wall Street, and the colonial City of New York is clearly visible between 14th Street and Wall Street.

Frederick Law Olmstead changed America’s perception of City Planning and Landscape Architecture. In the years immediately after the Civil War Olmstead began write, about designing “Street Car Suburbs”. Previously Americans had either lived in the country or in the city. In the earliest colonial periods it was not unusual for settlers to purchase a city lot for their primary residence and acreage out side the city to maintain a farm. Olmstead’s idea of Street Car Suburbs can be seen in communities he designed starting with Riverside Illinois, just outside of Chicago, as well as suburban communities around Washington D.C. and most major American cities east of the Mississippi. Olmstead’s rural “Romantic Style” of design, essentially a stylized country village with curving streets and public open spaces and parks with plenty of trees, shrubs and lawns, became the fundamental basis for the “Romantic Style Suburbs” built between 1860 and 1920 i.e. Short Hills, New Jersey; the “Garden Cities” and “Greenbelt” towns of the 1920’s & 1930’s i.e. Greenbelt, Maryland and finally the “New Towns” of the 1960’s & 1970’s i.e. Reston, Virginia and EPCOT at Disney World.

 

By Dick Thackston CRB, ABR, ABRM

Broker NH, MA & VT

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Royal Barry Wills and the Great American Cape

July 16th, 2012 | Posted by Dick Thackston in Uncategorized - (0 Comments)

The architecture and style of Royal Barry Wills and its impact on real estate and housing trends in modern America is with out peer. Wills career and impact spanned the mid section of the twentieth Century starting in the 1920’s boom years and running into the early 1960’s. Housing trend varied widely through-out that time period due to economic and social changes all too numerous to mention through out those years but the clean simple lines of Wills designs and his focus on the traditional Cape style home and its flexible and elegant design are both consistent and unique.

Cape style home take their name from the Cape Code region ofMassachusettswhere these dynamic little homes first appeared as such in our country. Capes first appeared in the seventeenth century and where vaguely patterned after English farm houses but with several modification that make the quite different. Capes were and are built with low profiles which early settlers learned by experience was the best way to reduce wind damage in Cape Cod’s windy weather, much lower than a traditional English farm house. Capes while typically built with a post and beam construction like an English Farm House but were built with the timbers inside protective clapboard siding rather than with exposed beams and wattle & dub or stucco walls as in England. This is due again primarily as a result of the significant weather differences between New England and Old England. Early settlers realized immediately that their homes would both last longer and be much warmer in winter if they enclosed the structure in subsiding and clapboard. (It is interesting to note how practical early builders of Capes were in New England. Older Capes subsiding is typically straight cut lumber where you can see that the tree was not squared up but simply sliced and laid in courses reversing the direction with each board so they fit together.) The clapboard exteriors provide greater insulation than the solid stucco walls of English farm houses because of the dead air space between the exterior clapboard and subsiding and the interior split lath and plaster. (Split-lath is typically made from a sheet of walnut that is nailed and split into a “Z” pattern with plaster laid over it.) The bottom of interior walls typically had wainscoting installed to provide yet one more layer of insulation at the bottom against the often heavy winter snows.

Royal Barry Wills began his architectural career in Boston providing advice and writing newspaper columns in the Boston papers. Wills saw the efficiency and flexibility of the Cape design at that time which had long fallen out of favor with Americans as the style was viewed as an “old fashioned farmer’s house”. Wills changed this by completing designs that incorporated modern features and designs that were both modern and creative. His signature on a design was typically a large center chimney that raises the eye up and to the center of what might otherwise appear to be a rather low lying building. By adding box dormers to the front he was able to visually crenelate and break the roof line while adding light to the interior second floor rooms and by adding shed dormers to the back he was able to use the second floor space in a much more comfortable way for modern living and furniture. Hyphenating additions and garages with breezeways was another typical design technique that we take for granted today that was a Wills creation as well as his use of telescoping designs that used one or two apparent additions of increasingly smaller capes across the front that allowed the building to add space while not adding to proportions or  building mass.

 

The great American Cape as we know it today is largely a gift of Royal Barry Wills efforts to create visually appealing housing designs that are both creative and inexpensive to build that allow well proportioned interior space that draw upon traditional American home designs.

By Dick Thackston CRB, ABR, ABRM

Broker NH, MA & VT

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ServiceLink and PartnerFirst recently announced a renewal of their agreement in providing solutions for the nation’s housing crisis.

March 21st, 2012 | Posted by Dick Thackston in Uncategorized - (0 Comments)

CORONA, Calif., March 12, 2012 /PRNewswire via COMTEX/ — PartnerFirst is pleased to announce the renewal of its contract with ServiceLink as its nationwide short sale agent network. Through this alliance, now entering its third year, thousands of distressed homeowners can use PartnerFirst agents to resolve their mortgage problems.

PartnerFirst powers the ServiceLink Short Sale Agent Network which connects distressed homeowners with qualified real estate professionals. Through its education platform, including the Pre-foreclosure Specialist Certification (PSC), PartnerFirst educates agents to help distressed homeowners.

Regarding the ongoing alliance with PartnerFirst, Leo Esposito, ServiceLink’s Senior Vice President of Loss Mitigation and Asset Disposition, said, “ServiceLink is pleased with the agent education services and the quality of agents provided by PartnerFirst to power the ServiceLink Short Sale Agent Network. This marks the third year that the two firms will be working together to achieve solutions for the nation’s housing crisis.”

ServiceLink, the national lender platform of Fidelity National Financial, has managed over $10 billion in short sale transactions, working with five of the nation’s top ten lenders. With its experience in working with lenders, investors, mortgage insurers, and junior lien holders, ServiceLink has the flexibility to provide efficient solutions and expeditious closings.

The short sale alternative preserves neighborhood values, minimizes loan loss severities for investors, and provides a dignified resolution for distressed borrowers.

For more information, or to sign up as a ServiceLink short sale agent, visit: http://www.servicelinkfnf.com/downloads/ShortSaleAgentPackage.pdf .

SOURCE PartnerFirst

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Whats Real Estate Gonna be Like in 2012?

January 5th, 2012 | Posted by Dick Thackston in Uncategorized - (0 Comments)

WHAT’S REAL ESTATE GONNA BE LIKE IN 2012? By Dick Thackston CRB, ABR, ABRM, Broker NH, MA & VT

2012 is looking like it’s shaping up to be the year of the buyer. The winter months so far here in the Northeast have been unusually busy with buyers poking around virtually ever listing – mind you it has not been hundreds or even dozens of buyers coming out to Open House like in the mid 2000’s but there’s been plenty of action. Over the holiday week virtually every REO listing I have has had one or more showings.

Conventional wisdom says that the buyers are going to remain primarily investors and first time buyers.

The investors were out in force in the month of December probing banks and making low offers hoping that banks would take massive price hits to get properties off their books and closed by 12.31.11. I don’t know of any of these offers that went anywhere, clearly these investors do not understand the obligations or objectives of asset manager’s or company’s working out REO inventory on behalf of investors. The truth is that it costs very little to hold a property and with rare exception the REO assets are priced to the market and there is NO incentive for REO assets to be dumped just because it’s the end of the year. As a practical matter most lenders run on fiscal years that don’t end on 12.31 so it’s just another day – many do not even use natural quarters of the year for the end of their businesses. That being said many excellent transactions were originated in the month that were great opportunities in the medium and long time frames. I had one experienced investor come into my office and talk for about forty-five minutes today about how he has changed his strategy to conform to the current climate.  Now mind you this man has been buying, selling and building houses in this region for over thirty years. Traditionally he has picked up land and renovation projects in the down turns and built new homes or renovated and flipped, but he has changed his tack for now. He can’t build profitably and doesn’t want to “build for practice” so he’s banking land assets and buying moderately poor condition homes and stabilizing them with the plan of renting them out. I asked him how many did he plan on doing and he said he’s done nine clean-up and rent outs in the last six months of 2011. His business model is to acquire single family homes and renovate for a total of $75,000 or less which gives him about a 20% gross return based upon is average rent of $1,200. Not bad when you look at your other investment alternatives.

First time buyers are also out in force. They are of course first time buyers and have lots of information, most of which is bad, and lots of input from family, most of whom know less than the first time buyers. These folks are getting transactions together and they are closing, but it is very painful for them because regardless of the input from REALTORS who are actually trained as a buyer’s representative, (like me I am both an Accredited Buyer’s Representative and an Accredited Buyer’s Representative Manager through the National Association of REALTORS), they tend to listen to friends and family who bought homes at sometime in the past, and this is definitely not your Uncle Louie’s real estate market. Big changes for buyers are that no REO Manager will consider an offer that doesn’t have a high quality pre-qualification letter along with it – these REO managers don’t do wishful thinking, they want to know that the buyer can perform or they won’t consider tying up inventory. Other big changes are that when the REO contracts are accepted and they call for closing by a specific date there are penalties to the buyers for not closing on time or not completing inspections on time. The REO managers aren’t kidding when they say as is where is and close on time – this is very different from what most buyers came to expect in the last few years of the real estate boom. Most sellers and their agents became really flexible on dates and repairs because they knew intuitively no mater what the buyer wanted they were still making a killing on their property: that would not be the REO market – no matter what the REO’s are loosing money for the investors behind them and they are tremendous opportunities for the buyers who will live in them for a period of years and pay down there loans and sell later in a better time.

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New Hampshire Housing, News for Participating Real Estate Professionals

July 14th, 2011 | Posted by Dick Thackston in Uncategorized - (0 Comments)
www.GoNewHampshireHousing.com

New Hampshire Housing Launches New Website!


Take the Guess Work Out of Buying Your First Home


To take the guess work, confusion, and anxiety out of becoming a home owner, New Hampshire Housing has launched a new website, GoNewHampshireHousing.com.


GoNewHampshireHousing.com walks buyers through the home ownership process step-by-step and helps answer important questions such as:

 

  • Am I ready for home ownership?
  • How much home can I afford?
  • Do I qualify for a New Hampshire Housing mortgage and/or its other helpful programs?
  • How do I go about finding a home to buy?
  • How do I locate a good lender or real estate professional to work with?
  • What should I do to protect myself from buying a home with severe defects?
  • What do I do after my loan closes and I move into my first home? 

 “Guiding first-time buyers through the complex process of purchasing their first home is an important part of what we do as an agency,” said Dean J. Christon, executive director of New Hampshire Housing. “Go NewHampshireHousing.com will provide buyers with valuable information to help them prepare for home ownership, help them safely navigate the home buying process, and help them become successful home owners.”

 

 

 

Last Chance To Sign Up! 

 

Don’t miss your chance to sign up for our FREE one-credit elective course! 

 

On Thursday July 14th from 1:00 pm to 3:00 pm New Hampshire Housing will be offering its newly approved 1-credit real estate course titled “All You Need to Know About New Hampshire Housing.”  The course, which runs approximately 1.5 hours, will help you understand New Hampshire Housing’s first-time home buyer financing program. 

 

By taking the class you will learn:

  • how we assist first-time home buyers with our unique home ownership programs;
  • about our free home buyer education;
  • about our programs to help with repairs (Great for those REOs);
  • and about our down payment assistance programs

As a bonus, real estate agents who attend New Hampshire Housing’s FREE 1-credit CEU class will be listed on our new website for up to 1 year.

 

To register online to attend one of these free course offerings go to http://www.nhhfa.org/bp_retrain.cfm.

Read original article here.

Scared of Your Shadow Inventory? Home Warranty of America

June 20th, 2011 | Posted by Dick Thackston in Uncategorized - (0 Comments)

View Original Article here: Scared of Your Shadow Inventory? Home Warranty of America.

RISMEDIA, April 14, 2011 – This big inventory of homes – 90 days or more delinquent on their mortgage payments, currently in foreclosure or now REOs – at last count was 2.1 million. It’s enough to make you plop, plop, fizz, fizz, worrying everyone from the banks to the sellers and most of the rest of us in the real estate industry. Adding the shadow inventory to the current visible inventory at about 4.2 million units, creates a 23-month supply of potential homes for sale when a 6- to 7-month supply is in the normal range.

But for all the reports of this shadow inventory in the news, none really factor in elements of our economic recovery that will effectively lower this inventory and perhaps even keep a good deal of this housing from ever coming to market.

First of all, the jobs outlook is improving, and while many are still feeling the pain of this downturn, it’s at least going in the right direction. According to a survey by the National Association for Business Economics in January 2011, “sales have strengthened and economic growth has picked up while the percentage of businesses expecting to increase payrolls during the first half of 2011 exceeded the share projecting more firings by 35 points, the most since the question was first asked in 1998. More than half of these businesses said they planned to boost spending on new equipment, up from 48% in the October survey.”

As we continue to move in a positive economic direction, the shadow inventory will shrink as the newly employed seek to keep their homes through continued modifications or take advantage of price declines and purchase homes. It has been stated that it could take as long as four years to eliminate this shadow inventory, but perhaps not if the economy stays on this track of growth.

Certainly there are parts of the country where this inventory is very high, such as Florida, California and Michigan. Recovery will be spotty, that is certain, and some areas may still see some price declines in the near future. But let’s stop with all the numbers because, in the end, we still believe in the American Dream, and at the core of this dream is owning a home. Yes, there will still be those that pick up and leave their homes for various reasons, but even as this happens and changes in the younger generations’ mindsets occur, Americans’ homes will still be where their hearts are!

Chris Kaucnik is Chief Marketing Officer for Home Warranty of America, Inc.

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New data according to TRULIA.com : Home inventory rises as prices continue to get slashed

July 21st, 2010 | Posted by Dick Thackston in Uncategorized - (0 Comments)

New data according to TRULIA.com : Home inventory rises as prices continue to get slashed

“Seller’s are feeling the heat this summer as the economic recovery simmers down and home inventory levels climb,” says Pete Flint, co-founder and CEO of Trulia. In July’s price reduction report we discovered that 24 percent of US listings have experienced at least one price reduction. That’s a nine percent increase from the previous month. As more and more sellers reduce their home prices, the total dollar amount slashed has risen to $27.3 billion.”

 

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What Sells a Home and Why Most Agents Wont Like This Article

April 28th, 2010 | Posted by Dick Thackston in Uncategorized - (0 Comments)

on Friday, April 23, 2010

By Scott Friedman
Read the original article here: <http://brokeragentsocial.com/ScottFriedman/>

Chances are you are not going to like this article.

What I am about to write flies in the face of the vast majority of real estate agents in North America today.

That is, the number one thing that contributes to the sale of a home, in any market, is the price of the property.  That’s it.

Location, features, benefits…all of those have a price tag.  What that means is, if I had a dump of a house in a dump of a location, it would sell if the price was low enough.

That being said, what’s low enough for a buyer to want to buy may not, in fact, be low enough for a seller to want to, or be able to sell.  Yes, that was simple economics at it’s best and it lends to explaining much of what has gone on the last few years…the price a seller would/could sell a house for far exceeded the price a buyer would (and sometimes could) pay for the house.

Now, let’s get back to the reason you, and most agents, might not like this article.

Both when practicing real estate (May 1998-Dec 2006, top ten percent in my market 2001-2006), and more recently as a coach, I’ve heard the arguments against price being the number one reason homes sell.  Most of those reasons center around an agent’s ego and/or the huge misconception as to what their job actually entails, as well as some sort of misplaced loyalty to the seller and the price they say they want.  (Before I go any further, I’m not in any way advocating that you shouldn’t be loyal to your sellers.  I’m saying defending a random price a seller tells you they want, ignoring comps and any sense of reality, is misplaced loyalty.)

Some of the arguments from agents:

“If price is the only thing that matters, then we real estate agents aren’t needed.” – Guess what?  That’s actually kind of true.  If you’ve ever heard of a FSBO selling on their own, then you automatically realize selling a house can be done without a real estate agent.  The good news is that the vast majority of FSBO’s do not sell without the help of an agent (even if only on the buyer side – but most end up listing).  And, unfortunately for the FSBO seller, they get a very low list to sale price ratio as compared with when listed by an agent (both stats are published by NAR).  So, on some level, my fine fellow agent, you are definitely needed…so breathe a little easier.

“All you want to do is lower the price as far as you can, darn the seller, and take your quick commissions!” – A buyer will not buy something they don’t feel is priced correctly; plain and simple.  I’ll explain more about that later in this article.  In the meantime, I can only go on statistics/facts.  My personal statistics in my former real estate practice showed my listings selling for an average of 4-9% more and up to twice as fast my market’s average, depending on the year.  Simply put, I was getting my sellers more money, and selling their homes much faster than the market average.  So how was I harming the seller?  I don’t know many sellers that want their home to sit on the market for a long time, do you?  Do you know of any seller’s who want LESS money for their home?  I sure don’t.

And where does this false sense of loyalty to the seller’s price come from?  I’m sorry, but it’s so misplaced.  I always wanted to get as much money as possible for my sellers, and did my absolute best to make that happen.  But just because a seller WANTS a certain price doesn’t mean they’ll get it, or, in most cases, that it’s even realistic.  I’m sorry if the seller paid $400,000 and owes $350,000.  If the comps say it’s worth $275,000 then that’s what it’s worth.  Listing it at $400,000 so the seller can feel like they broke even does NOT mean the home is WORTH $400,000.  Nor does it mean they will get anywhere near that.  In fact, in my example, with it being so far overpriced, if there isn’t a significant price reduction, the house likely won’t sell at all.  How is that protecting the seller?

I don’t want to digress too much, however in a previous article I wrote on negotiating, I discussed the issue of many listing agents being egotistical about the price they set on their listings.  If a buyer comes in low, the listing agent scoffs and postures to the buyers agent about how the home is worth every penny of what it was listed for, etc.  Please.  The only true test of what a home is worth is what a ready, willing, and ABLE buyer is willing to pay…not what the listing agent or the seller thinks its worth.

“It’s not price, it’s marketing.  Staging, open houses, broker opens and advertising are all where it’s at.” – This is the reason for the big chasm between the average agent (selling between 2-5 houses a year, on average, according to NAR) and the higher producers (over 25 homes a year).  Agents who sell a lot of homes know how to SELL, and know that their job is to SELL the home for the most money possible.  Agents who don’t sell a lot of homes typically aren’t good salespeople, don’t actively prospect for buyers and sellers and think their job is not as a real estate SALESperson, but rather a real estate MARKETINGperson.

Simply put, you can market a house to the hilt, but it will NOT sell if the buying public thinks it’s overpriced.  In fact, today’s shrewd buyer who combs the internet and does their homework, won’t even look at home that they feel is overpriced; unless they think they can get a tremendous low-ball deal.  And, if you want to take a notorious low-ball buyer around so he/she can throw offers up on a wall and see what sticks, have at it.  You’ll end up doing a lot more work and probably be very frustrated.

So, let’s investigate some of these marketing ideas:

Staging – I’m always amazed at how someone comes up with something for agents that doesn’t sell homes, yet agents buy into it in droves.  Text “MOVE” to 12345 and receive no obligation information on this listing.  That worked for about a minute until buyers realized they would get called back from agents they didn’t want to talk to.  Now, it’s no better than a regular sign with a regular phone number or website.  Or, how about the private radio station that drive-by buyers can tune into and hear all about the house?  Way to go!  You just bought something that assures you of never hearing from your buyer leads!  They won’t need to call you to find out information because you gave it to them on their car stereo.

Staging is one of those tools that doesn’t sell a house.  Yes, the house should always look its best.  And, yes, if you stage a house, it will look better than the competition.  BUT…staging only works better to sell your house versus the competition if the home is priced competitively.  Let’s say you’re in a development, and two identical houses on the same street are for sale.  One is for $350,000 and NOT staged.  The other is for $425,000 and is staged.  The seller or agent who paid for staging of the $425,000 house doesn’t know anything about sales or economics and wasted their money.  No amount of staging in the world can trick a buyer into grossly overpaying for a house.

Open houses – This is the biggest real estate scam ever perpetuated on sellers.  And the funny thing is, many sellers will fight tooth and nail for the right to leave their house for multiple weekends in a row so that you can park yourself there for 4-6 hours at a time and put balloons out front.

NAR itself puts out a report every year that shows a very small percentage of buyers buy the home they saw open.  It’s usually around 1%.  That is an astonishingly low rate of return on your marketing efforts.

Open houses do provide buyer leads for the AGENT, not the seller.  All listing agreements should come with a disclaimer showing the past year’s NAR percentage of homes actually bought due to the open house.

Low producing agents love open houses because they haven’t been taught, or are too afraid, to prospect for business.  So, the idea of sitting in a home and having potential buyers come to them seems good.  Never mind that most people are just looking, and the percentage of leads converted to actual buyers (and the time it takes to convert them) is no better than a call in on a sign or website.  And let’s not mention the fact that you may sit all day at a house and have NO traffic.  God forbid if it’s a rainy weekend.

Broker opens -   These have a small chance of helping you sell the home because it can get you exposure to agents who missed it in the myriad of listings on the MLS.  However, it’s usually not worth doing a broker open until well into the listing term, and is most effective to get a price reduction for the seller by having the agents write their pricing opinions on a survey card (darn, there’s that pricing thing again).  And here’s the fundamental flaw – top agents, you know the one’s doing 90% of the business, are typically too busy to stop at broker opens.  So you’re exposing the property to a handful of agents who have nothing better to do than to eat your free lunch.  Look, I know I’m sounding harsh, but my big concern is that many agents think their job duties entail hosting and going to things like broker open houses and working on making a pretty brochure…things that DON’T help sell a home.

Advertising – Here’s another scam on the seller.  NAR reports a very small percentage of homes are sold as a result of being advertised.  I will admit they also report a slightly higher percentage of homes are sold as a result of the buyer calling in on a different home, so advertising can help (but the home still has to be priced right).  For the sake of this article however, I want to stick to the specific house you have listed, and I’m talking about advertising over and above the norm.  I mean the type of advertising where the agent thinks it’s the solution to why the home hasn’t sold in the last 90 days.  We all know that every agent does some form of advertising, whether it’s the MLS itself, the various websites that agents/companies have, the websites that pick up listings from the MLS, or the newspaper ads your company provides.

Here’s the flaw:  If your local grocery store paid for circular ads in your town’s Sunday paper, and advertised premium, no-filler, turkey lunchmeat at $50 a pound, how many people would buy it?  The answer is nobody.  Two things would happen.  People might still visit that store, but they would buy another brand of turkey lunchmeat (congratulations, you’re overpriced turkey ad sold the competition), or people will go to another store all together to buy that brand at its normal price.  In any case, the store could have spent millions of dollars on ads all over the place and it wouldn’t matter a lick in regards to the sale of that brand of turkey.

Yet sellers and agents all think that more advertising will equal a sold home.

The bottom line is that your job as agent is to educate the seller and list the house at a price that will cause the home to sell.  Stop kowtowing to the seller who wants to overprice the home.  Stop with the false sense of loyalty to a pie-in-the-sky price, against all reasonable economic sense as evidenced by the comps.  Stick to your guns, be professional and price it right.  Or, horrors, be willing to say “no” to the seller, and walk away from listing the home if they insist on overpricing it.

You’ll be doing yourself a huge favor, I promise you.  Even if another agent lists the property, don’t worry.  It’s not going to sell.  Look at your market.  Look at any market.  Overpriced listings don’t sell.  Why do you think there are so many expireds?  Oh, right, I forgot.  The agents all must not have staged those homes.  Yeah, that’s it.

Scott Friedman is a former top producing agent from New Jersey.  He is a speaker, coach and co-founder of You’re The Difference Sales Coaching.  He is also co-author of the highly acclaimed objection handler book Now What Do I Say?  If you’re interested in learning what to say and how to say it so that you can sell more homes, visit www.yourethedifference.com for more information on the book and other products, as well as training and coaching.  To ask Scott a question about your business, or hire him to speak or coach, email scott@yourethedifference.com, or call 609-601-1296.

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