Real Estate Investing

David Knox, the most excellent real estate trainer whose presentations are as funny as they are informative, riveting, and fascinating, has coined the name of a new syndrome: PDS. 

These sellers tend to resist the reality that they must lower the listing price of their home, unwilling to accept that the days of the boom market are gone, said Knox, who spoke at the REALTORS® Conference & Expo in Orlando last week.

PDS - or Price Denial Syndrome - is a common problem these days among sellers.  Knox told Realtor.com magazine that sufferers often blame the real estate agent for suggesting a lower price for the home.  In addition, they also find ways to justify a higher price. 

I recall going to a listing appointment once for an average home.  A single man had hired someone to decorate, plus he added a privacy fence in his backyard which was next to a very busy road.  The problem was that his so-called decorator put up wallpaper - very unappealing to most buyers these days.  To make the problem even worse, the wallpaper was put on wrong, the stripes were placed horizontally rather than vertically.  It looked silly, but he was so proud of it that I didn’t criticize. 

To my knowledge, he still lives there three years later because, thankfully, he wasn’t really interested in listing… he just wanted to find out what his house was worth if he decided to sell.  I think he was disappointed that the decorating and the privacy fence didn’t add $25,000 to the value. 

Unfortunately, this idea that your home is worth more than it actually is commonplace.  When you’re ready to sell, your buyer doesn’t care that you need the extra money.  With a hundred other homes to choose from, they’ll just move on to the next house.  If they see your price constantly being downgraded, they’ll think something is wrong with the house or it’s in a bad neighborhood. 

Sellers *must* get the price right the first time and it’s up to the Realtors to be truthful right at the beginning.  It’s very difficult to tell people “No, you can’t try a higher price for two weeks.”  As Knox joked,

Buyer activity is highest when it’s just listed so don’t turn off the serious buyers at the beginning. “Tell them that you can raise the price after the first two weeks.” 

Go read more of his thoughts here.

On this dreary, rainy day, I invite you to curl up in a blanket listen to this true story about why you should be careful when you select your Realtor.  Late in the summer, I went to a listing presentation for a woman I sort of knew - the neighbor of one of my friends.  The homeowner had scheduled appointments with four different agents.  Interestingly, only two of us showed up (can you believe two *didn’t* show up in this limping market?!)  In any case, my interview went very well, or so I thought.

Two days later I saw another agent had listed the home.  It was priced exactly where I told them it needed to be in order to sell quickly (but without giving it away).  The staging I suggested was done.  They listened to everything I said, yet still used the other agent.  I asked the seller for feedback so I’d know what to improve for my next listing appointment. They had absolutely no criticism of me, but said they just “clicked” more with the other agent.

Two months later, I got a phone call from the seller’s neighbor (my friend) asking for MY advice.  Apparently the other agent was nothing short of a disaster.  They closed, but just barely and at a great personal cost to the seller and the seller was in her kitchen crying uncontrollably looking for help*.  So let’s have a short pop quiz** on the situation they faced:

1.  When you’re selling your house for the first time, you interview the agent and ask:

A.  How long have you been a Realtor?
B.  How many listings have you sold?
C.  If you’re new, do you have an experienced agent helping you?
D.  All of the above.

2.  When you’re selling your house, you interview the agent and ask:

A.  Do you provide flyers for an information box in my front yard?
B.  Do you return phone calls?
C.  Do you return email?
D.  All of the above.

3.  When you’re selling your house, you interview the agent and ask:

A.  Do you know what a HUD or settlement statement is?
B.  Do you have referrals from past clients?
C.  Do you have referrals from other agents?
D.  All of the above.

4.  When you get an offer, you should:

A.  Go over the contract carefully - not just the highlights of how much and when - because you’re legally bound to it once you sign.
B.  Ask the agent what your rights are if it doesn’t close when specified.
C.  Ask that you retain possession of the home for at least two days after closing (possession with delivery of deed, funding, and two days) so that you don’t pack everything in a truck that is parked in your driveway for 14 days … forcing you to both pay $1500 extra for truck rental and sleep on the floor because your beds are loaded.
D.  All of the above.

Clearly the sale didn’t go well.  I should have felt vindicated for losing the listing when my friend told me the seller admitted they should’ve chosen me, but I didn’t.  I just felt sad for these first-time home sellers and hope that next time they move, they’ll learn from their horrible experience.

*I suggested they contact the agent’s broker if they had a serious concern.

**If you answered D. All of the above, then you get an “A” on the quiz.

Photo by RBerteig from FlickrCommons.

Denver real estate agent Krystal Craft wrote an excellent post directed to homeowners about making it easy to show your home.  You’d think the points she makes are no-brainers, but every single one of them has been a problem for me as well.  Some excerpts,

• Ask to review the MLS Listing sheet as soon as it is available. Check your agent’s work. That means don’t just look for mistakes but look for what is missing. We love to know lot sizes and whether or not you have a basement, fireplace or other desirable goodies. Your agent most likely will appreciate your added suggestions, I know my buyers will also.
• Brochures in the box are very helpful, particularly when we find a neighborhood we love and we want to know if we can afford your home. Yes, I can call or use my iPhone to access MetroList, but jumping out of the car is not only quicker it gives us some exercise!

I’ve heard many agents argue about those brochure boxes only feeding the hunger of nosey neighbors wanting to snoop.  However, I find them to be extremely helpful in situations like Krystal describes.  If I’m driving in a neighborhood showing property and we happen to see one that for some reason was missed on the MLS search, then I want more information about it!  Krystal says “yes we can call the agent” but the problem I’ve found is that a good 80 percent of the time, the agent won’t answer.  I hear voice mail promising a return call - a call that never materializes.  And, of course, the person answering the phone won’t give simple information like the price because they are usually receptionists not licensed by the state to sell real estate.  If they answer, it could be trouble for them and for their office.  *take a breath*  So agents and sellers, please DO put out brochure boxes.

Another obvious but often forgotten tip is to CLEAN YOUR HOUSE.  I can understand a cobweb in a corner and never point them out to a buyer, but they bother me.  It’s the houses that are really filthy that are the worst though.  I don’t like stepping over piles of dirty clothes or seeing dishes in the sink with bugs scurrying away.  I don’t want to walk in your yard if the grass is ankle (or knee) high.  I definitely don’t want to see a dead kitten in the neglected pool (yes, another true story from another agent).

Pay attention, sellers.  You absolutely can not afford to let any detail no matter how small slip.  Be on your toes to catch the little things you missed in your daily cleaning routine.  (Yes I said DAILY!).  Get busy.

Photo by klynslis at Flickr.