Planning Ahead is Key to Success for Selling a Home
November 25th, 2007Abe Lincoln said; if I had eight hours to chop down a tree, I’d spend seven hours sharpening my axe. He also said; you usually go the same direction of the horse you’re riding.
There is a difference between home sellers. There are only two types of home sellers, those that sell, and those that don’t. Those that don’t are folks that don’t plan ahead and simply let the market take them where it may. Those that understand the challenge homeowners face in today’s housing market, those that do sell, are those who plan ahead.
The proof of the challenge faced by homeowners can be found in the market’s performance in 2007. The Capital Area Association of Realtors(CAAR) member brokers report to the MLS that closed home sales are down by 245 or 6.2% through November 23. That means fewer buyers in the market. The number of homes for sale have run at historically high levels throughout the year. There have been over 6000 new listings taken this year by CAAR members which were added to the 1521 entering the year. Forty eight percent have sold and closed. There it is, in black and white, the odds of selling in 2007 is less than 50/50.
Several other telling statistics should have homeowners attention. Although the number of closed home sales is down, the number of sale contracts is up. Year to date 407 more sale contracts failed to close than in 2006. That translates into not only are there fewer buyers, and more home sellers, once under contract, it is even more difficult to close the transaction. I would say that presents a serious challenge if you must sell.
The next statistic that jumps at you is the record number of expired listings. Those are listing contracts that ran their prescribed time period without selling and leaving the market. The over 1000 withdrawn listings is also a record. Together expired and withdrawn listings total 3077, and we’re not in December yet.
Two other statistical areas that should be of concern to home sellers are the days on market to contract, and the percentage of sale price to list price ratio.
A natural consequence of fewer buyers and more sellers in the market, is that it takes longer to sell. The method used by the MLS, and the manner it which it is reported, can be confusing to the consumer. There are two ways the days on the market are reported; DOM- days on market, and CDOM- cumulative days on market. Days on market represent only the days during that particular listing contract that it took to obtain a sale contract. Cumulative days on the market counts the days the home may have been for sale during a previous listing contract or contracts. An unaware agent may show you a “market activity report” which only contains days on market at 74. However the knowledgeable agent also shares the “homes sold report” that shows cumulative days on the market of 108. What the consumer should understand is these are days on the market for only the listings that sold and closed. This does not factor in actively available, pending, expired, or withdrawn listings.
The ratio of sale price to list price is extremely important when selecting an agent. In 2006 the ratio was 96.59% of list price, which means on average a seller negotiated 3.4% from their asking price. That is down a third of a percent in 2007 to 96.24% as sellers have become more negotiable in order to secure a contract. This ratio can be very beneficial to a homeowner interviewing agents. If an agent has a below average ratio to list price that is usually indicative of poor pricing advice, or weak marketing services. This ratio is also important when negotiating fees with brokers.
Here’s an example. A seller hires a broker that agreed to a commission 1.5% below another broker interviewed. Lower fees restrict the brokers financial ability to effectively market the home, taking longer to sell, and resulting in a lower sale price. If the homeowner would have asked to see a “market activity report” on both agents/brokers being interviewed it would have been obvious what results were being produced. The agent that agreed to the lower fee had a sale price ratio of 95.6%, averaged over 80 days on the market, and had fewer than 15 closed home listings for the year. The agent that charged 1.5% more averaged over 98% of the listing price, less than 50 days on the market, and had produced dozens more closed home listings. If nothing else the homeowner could have seen the 1.5% more in fee would have been warranted because the agent averaged 2.4% more in sale price to list price, sold more homes, and sold faster than those of the agent hired. It is an oxymoron, like jumbo shrimp, the lower the fee the more it costs you.
There are only three reasons why a home sells; 1. price 2. condition, and 3. marketing. Location, location, location is for buyers. Home sellers already have a location, which will play a primary function in pricing. There are only three reasons why a home doesn’t sell; 1. price 2. condition and 3. marketing. A mistake in any one of these three areas usually means no sale.
You will notice item 3 is marketing. It should be agent/broker selection unless you attempt to sell by owner. The numbers aren’t in for by owner sales this year, however we do know that in 2004 at the height of the sellers market, 25% of homes sold were by owner. By 2006 only 12% of sales were by owner according to the National Association of Realtors economic studies. The market changed so dramatically that the number of for sale by owners successfully selling was down by half.
Condition is critical in a buyer’s market. You only have one chance to make a first impression. Buyers will make their first offer on the home they believe is in the best condition, along with the best price. The better the condition the higher the offer.
This business of selling a home is much more complicated than the consumer believes. That makes perfect sense because most people don’t sell frequently. They count on their memories of past sales of their homes. Regrettably they will be selling in a completely different market that requires a different selling approach, and under a new set of rules.
That is the reason I will be hosting a free no obligation home seller seminar on January 10 in Springfield Illinois at The Crowne Plaza Hotel. The entire selling process will be covered. An immense amount of vital information is packed into this three hour seminar.
I will be revealing my secrets to our markets most productive selling system. Proven most effective with over 40% more closed home listings than any agent or team this decade. Even in the buyer’s market of 2007 my systems have produced 69 closed home listings through November 23, most among the top ten agents in closed dollar volume. In fact this is the seventh year in the past eight, that these systems have led the top ten in the number of closed home listings. Proof the information you will receive is spot on when selling a home.
If you are serious about selling your home in 2008, you can plan ahead, sharpen your axe, by attending this seminar. Over 1200 people have attended these seminars as they prepared to enter the housing market to either buy or sell a home. My team is proud to have closed 1022 home sales representing sellers and buyers since 2000 in our local housing market. That’s over 30% more than anyone during that time frame. It would be an honor to serve you, and to have you register for our free seminars. Call 217-391-1811 or e-mail fritz@springfieldhome.com. Reservations are not mandatory, however those with reservations receive priority for seating and printed materials. Realtors, agents, and brokers are welcome with the general public receiving priority.
