Fritz Pfister

Home sellers in the Springfield Illinois housing market are now in the toughest selling market since the mid 1990’s. Home sales continue to run at the third best rate on record, which unfortunately is not enough to put a dent in the inventory of homes for sale. Now comes winter, the historically slowest selling season of the year.

To put into perspective the challenge home sellers face consider the following. As this blog is written there are 1936 homes listed for sale with local Realtors, and hundreds more for sale by builder, and by owner. Closed home sales fell over 17% in September, and are down over 15% in October with only three business days remaining in the month. Through October 26, the 210 closed home sales were replaced by 439 new listings. Should this trend continue through the end of the year local home sales will fall below 4000 for the first time in four years, and 2008 will begin with a record number of homes for sale.

In November and December of 2006, 498 home sales were closed while 708 new listings were added to the inventory. With the rate of sales down double digits, local Realtors will probably close between 400 and 450 home sales the final two months of 2007. That means only 15 to 18% of homes listed will sell and close, with 82% to 85% of home sellers forced to wait until 2008.

It doesn’t get any better in the first quarter of the year, historically the slowest selling quarter. During the first quarter of 2007, 816 home sales closed while 1547 new listings were added to the inventory of 1521 home listings to begin the year. The five year average for closed home sales the first quarter with local Realtors is 795.

You probably get the picture, it’s going to be tough to get a home sold between now and the end of March 2008. What can home owners do to get sold? How do you compete in a buyer’s market?

The first step is to acknowledge the big ‘three’. One; the current conditions within the housing market are out of your control. Two; that real estate agents/brokerages are not interchangeable. Three; what you do control, the pricing and condition of your home, and agent/brokerage selection.

Here’s the good news, who cares if only one in four homes sell the next five months, if one of them is yours? Follow the advice proposed here and you can get sold.

Don’t worry about what you can’t control, the market conditions, such as the number of homes for sale. You can’t change that. Can you control the local economy? The number of jobs being created? The number of people transferring into our market? The interest rates? The criteria for buyers to obtain a loan? No, and neither can any other home seller.

An opportunity to create a successful sale of your home begins with agent and brokerage selection. Do you believe, as the majority of consumers believe, that if you hire one agent, that is just as good as hiring any other agent? There are significant differences between agents and real estate companies. Over 70% of agents in Illinois have three years or less experience in the business. Those agents have never experienced current market conditions. The average number of listings sold per agent in our market the past several years is about six a year. The top agents produce over 30 closed home listings a year.

There is a difference and that difference can prove to be extremely costly if you make a mistake in agent and company selection. Why? Time is the enemy of the home seller. The longer a home is on the market the less valuable it becomes, and adds even more time to get sold. My advice is to interview two to three agents that have a record of 30 or more sales annually representing home sellers, have at least ten years full time experience, and are affiliated with a top producing brokerage where the agent is surrounded by other successful agents. Eighty percent of the sales in the coming months will come as the result of agent networking, and referrals. Company affiliation is critical to networking and referrals.

Here are some things to look out for when hiring an agent. They promise to advertise your home in the local paper. This is a listing tool, not a selling tool. Print advertising represents about 3% of all sales. That includes newspaper, and homes magazine advertising. The agent promises to hold open houses. Open house is a wonderful tool for agents to meet buyers at your home, and then sell them another home. Open house accounts for 1% of sales of homes held open, another 6% of sales because the agent sold a different home to a buyer they met at your open house.

Here’s critical advice, never tell an agent what you think your home is worth, or even what you want. As important as that may be to you, it has nothing to do with what the market will pay for your home. You will prejudice the independent analysis of value on your home. In a buyer’s market pricing is second only to agent selection in importance to getting sold. Choose the wrong agent, no sale. Choose the wrong price, no sale. Hire the agent that tells you the highest price, only the lucky sell. Do you wish to be lucky with your sale, or reasonably certain?

Hire the agent that tells you the lowest fee usually leads to no sale. Why? It is perfectly appropriate to negotiate the price of products like homes, and cars, however not the price of services. The services you receive at half price are never the same as full price. To cut services in a buyers market, when you must sell your home, will adversely impact the amount of exposure your home receives. The fewer buyers there are for a product, the harder it is to sell and the less valuable it becomes. For example a company splashed onto the Springfield scene this summer with publicity telling home sellers how they could save half or more of the commission and receive full service. That was several months ago. At last check, this company had reported 3 closed home sales to the local MLS. Only one listing, and two buyer sales.

You control the asking price, and the condition of your home. Hire a proven professional and you will receive the proper advice regarding both. It would take several hundred paragraphs to explain pricing, and preparation (condition). To make it easy, just know this market fact, buyers write offers first on the homes they perceive to be the best value for the condition, location, and amenities of the home.

The advice on pricing that is critical is this, no one is right all the time, neither you or your agent. Therefore have a pricing plan in place before you go to the market. Begin at a price you believe is fair in comparison to competing homes. Choose a time two to no longer than four weeks on the market, and if you have no offers adjust the price, 5 to 10%. Between the sixth and eighth week on the market, if no offers, adjust again. Never allow your agent to advertise price reduced. This is not marketing, it is desperation selling, will invite low offers and will unfairly stigmatize your home. Don’t hire an agent that advertises price reduced.

The best advice on condition is to remember you only have one chance to make a first impression. In a buyer’s market, weak demand and over supply, your opportunities to make a first impression may be few and far between. Never go to the market until the home has been inspected, curing any unknown defects, and you have the home in the best possible showing condition. Homes are meant to be lived in, except when they are for sale. Homes for sale must be show places in a buyer’s market.

The bottom line is that the real estate professional you choose will determine your level of success, and you have absolute control over whom you hire. Ultimately you can get sold. At what price, and how long it will take, will be determined by your selection of agent and real estate brokerage.