DROdio Real Estate

An interesting article appeared in the "Washington Post" this morning entitled "Not even for a car" which details the extreme lengths some Sellers will go to in order to sell their homes. The Sellers, in this case, had a property located in Woodbridge, VA and decided they would offer their 2000 Mustang convertible as an incentive to get a qualified buyer to choose their homes. As Sellers struggle to compete in the current marketplace they are upping the ante by offering prizes, commission bonuses to agents and even auctioning and raffling off their homes. A Realtor friend of mine even had a Seller who was offering a time-share! The question is, do any of these unusual marketing efforts work?

As the Sellers of this Woodbridge, VA house found out, the answer is a resounding "no", despite their best efforts these sellers did not receive an offer and didn't even increase the number of potential clients who viewed the property. So, you might be wondering, if cars, time shares, vacations and cash incentives don't work, then what does? What does it take to get that qualified buyer over the threshold of your door and then make an offer?

The 2 secrets that will sell your home:

Realtors have known the secrets of selling a property for a long time and they are deceptively simple. The secrets are number one: price and number two: condition. I know, I know....it doesn't sound all that flashy or exciting, it's easier to think you can offer up a car and buyers will come beating down your door to make offers. It's kind of like that new cutting edge diet that allows you to eat all you want, not exercise and still lose weight! Everyone wants to believe there is a magic formula that's yet to be discovered that will sell your home and not require any work from you or cut into your profits. As a real estate professional, I really want to tell you differently, that I can work my marketing magic, hold an "open house" and presto! your home is sold. The fact is, there is no substitute for proper pricing and a home that is in "buyer ready" condition. I define "buyer ready" as a home that has great "curb appeal" and a home that needs very minimal (if any) cosmetic and or mechanical updating. Unless a property is priced at a truly "bargain basement" level, most buyers in a market rife with so many choices, will not choose a property that needs any kind of work or updating.

Keep in mind that the majority (more than 80%) of buyers will begin their home search online, so the way your home is represented on the internet is an especially important consideration. Some things that improve the way your home appears online are using adequate lighting, having spare, clean surfaces (removing any clutter) and using the services of photographer to capture your home in it's most flattering light.

A buyer's perspective:

Let's say that you are in the market to buy a home. You jump onto the "DROdio" website and plug in your criteria. You can purchase a home in Prince William County and go up to $350,000 and you want a single family home with 3 bedrooms and 2 baths and a nice backyard. The search engine comes back with 500+ homes in your price range and area which meet your criteria. The homes are priced anywhere from $199,000.00 up to $350,000.00 Once you start looking through the listings in detail, you realize that some of the lower priced ones are in need of a lot of work and you eliminate them from your list. A detailed examination; however, shows that some of the lower priced ones are in good condition, similar age and share the same amenities as the higher priced homes and you are elated!

What's a Seller to do?

As unpleasant as it may be, the first step is to accept that you are in "Buyer's Market". This type of market occurs when the supply of homes far exceeds the demand for those homes. As a natural consequence of the abundance of homes, there is downward pressure on home prices and buyers can effectively "name their price".

Once you have faced the reality of the market head-on, then you have some decisions to make. The first thing to consider is timing. Ask yourself, "Do I really need to sell right now?" if the answer is "no" and you have the flexibility to wait until the market becomes a bit more balanced, then that might be your best bet at this time. If, on the other hand, you really do need to sell your home right now, you will need to decide what price you can and are willing to accept for your home.

I strongly recommend having a real estate professional come to your home and evaluate it and give you an opinion on where he/she feels your home should be priced in order to be positioned competitively in the marketplace. This real estate professional should provide you with a CMA or comparative market analysis. This analysis will give you the basis for any discussion about the pricing of your home and should include recently sold homes (preferably homes that have sold within the last 3 months) pending sales (homes under contract but haven't gone to settlement yet) and active homes (currently on the market ie: your competition).

Pricing a home correctly from the outset is crucial. This is because studies have shown that the moment a new property goes on the market the interest level is the highest and that is when you, as a Seller, have the highest probability of getting prospective buyers to view your home. A house that is priced right will stand out in the crowd, it will be the nicest home in it's price range and in a buyer's market, it must be in order to sell. A lower price also increases your potential pool of buyers, this is because the lower the price the more buyers can qualify to get mortgage financing for the property.

Take a "field trip"!

If you are really having trouble narrowing down your price range, ask your Real Estate professional to take you on a "field trip" to see your competition in any given price range. This will give you a great idea of how your home will fare in comparison to your competition and give you the ability to accurately pinpoint the best price range for your home!

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Despite the constant media reporting of foreclosures, predatory lending, and falling house prices—people still would rather own a house over paying monthly rent. However, so much media talk about the “mortgage crisis” and “recession” is scaring Americans to thinking twice before considering buying a home.

Find any major daily newspaper or turn on your local cable news channel. News outlets cannot go one day without mentioning something related to the housing market. If they don’t directly talk about the housing market, they quote “analysts” who connect the fall in stock prices or the price of eggs to the mistakes of the housing bubble.

It is not uncommon for the media to quote statistics from the National Association of Realtors, Mortgage Bankers Association, or Realty Trac and use them to support a story. The media wants us to believe that we are in a huge crisis. Emotion and drama attracts and audience and increases advertising.

Don’t believe me? Look at the media’s coverage of the 2008 Presidential election. The media’s stories revolve around the “horse race” and not policy issues. We are constantly reading about what each candidate’s strategy is and what they did wrong or right in order to gain an advantage among voters. Where is the discussion of platform issues? Go up to someone who watches or reads main stream media and ask the what each candidate’s platform is. Very few will actually be able to answer you. The drama is in the horse race not boring policy issues.

Americans have a history of being skeptical of government, so when it is reported that the government is helping homebuyers, it is bound to stir up emotions. On May 19, 2008, media outlets in DC and Virginia reported that Va. Governor Tim Kaine announced that there will be free government sponsored foreclosure prevention clinics in various Va. cities. Peoples’ first reaction – if the government is getting involved, then it must be bad.

Of course we, as Americans, are planning for our financial future. Hearing the constant mention of “recession” by the media makes us dubious about our economic future. Hearing this creates an emotional bias that affects our economic decisions.

I am not saying that the stock market is down. It is true that people who should not have been loaned to were approved for mortgages that they could not pay. What I am saying is that the media has a tendency to distort the facts and report foreclosure numbers that are misleading. Media wants us to believe that we are in a huge crisis. The crisis is a fabrication created by the media to create drama. If enough people say it, people tend to think it is true.

This is not a crisis, but a natural market correction. A common mistake that the media and the public make is that foreclosure numbers are the result of falling house prices. There may be a correlation, but ask any scientist and they will tell you that correlation does not equal causation.

Instead, home prices fall when the supply of homes outweighs the demand for homes. Supply and demand is the heart of economics and the basis of house pricing. There was a huge demand for houses for five years in a row. Demand led to higher prices. We simply built too many houses. Now there is a surplus of homes and people don’t see the need to invest since people started to default on their mortgages.

People have a tendency to believe that if a foreclosure sign pops up in a neighborhood, the value of the surrounding houses lose their value. Once these foreclosure numbers are reported by the media, consumer confidence plummets and all of a sudden there is a media fabricated “crisis” that actually leads to reduced consumer spending.

The point is—don’t let the media scare you out of making the smartest investment move you can make. This is the best time to buy since house prices are so low and you can get a foreclosed property at a cut rate value. You are not going to be tricked into signing a mortgage agreement that will put you into poverty. Those days are over. If you can afford it, get in on the action. After the lenders and Wall Street got into trouble for giving out loans that should have never been given, they are going to make sure that you are capable of repaying them before they approve you.

Some simple tips that will help you after you buy and avoid financial stress:

• Avoid high purchases. Live within your means and limit the use of you credit cards and leisurely spending.
• If you happen to fall into debt, talk to a mortgage counselor or another financial professional before you apply for another type of loan (i.e, car or credit card). Once you become a homeowner, you will be bombarded with credit offers. Choose wisely.
• If you consider refinancing, don’t just look at your loan payments—look at the life of your loan. Think before refinancing with another 30-year mortgage, even if it lowers your payments. Do you want to tack another 30 years worth of payments or would a 15-year loan best meet your needs.
• Buy a property that is close to public transit and shopping centers so that you can cut down on gas mileage.
• Buy energy efficient bulbs and turn off the AC during cool summer nights in order to save on energy costs. Wash bigger loads of laundry to conserve water and reduce utility bills.

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