“It’s Too, Too . . . .”

After almost 13 years selling real estate, I’ve probably been on the receiving end, conservatively, of perhaps 10,000 showing feedback forms (and probably generated an equal number as a Buyer’s agent).

So, what do they say?

Usually, not much.

However, on the relatively rare occasions when the agent includes a comment, here’s a partial compendium of what they say:

“It’s too . . .

–Big
–Small
–Expensive
–Not expensive enough (they can afford more home)
–Open
–Not open enough
–Pink/White/Yellow/Blue/Brown (pick a color)
–Soon (the Buyer just started looking)
–Dated
–Updated (the Buyer wants to do their own remodeling)
–Vertical (they don’t like stairs)
–Horizontal (they don’t like ramblers)
–Close (to the elementary school/busy street/ugly neighbor, etc.)
–Far (from shopping, schools, etc.)
–Contemporary
–Traditional
–Plain
–Loud
–Dark
–Noisy
–Quiet (Buyers from Manhattan)

Suffice to say, this list could be quite a bit longer.

Which is why my listing clients know one of my favorite lines (and hear it often): ‘the only feedback that really counts is a good offer from a well-qualified Buyer.’

Finding “The One”

So, what do I tell my Buyer clients?

That I seldom see — or sell — a home that’s a “10” on a scale of 1-10 (and if it’s a bona fide “10” — you probably can’t afford it!).

But I’ve sold lots of “7’s” and “8’s” that, over time, my clients have turned into “10’s” . . . for them.

And that, for most Buyers, it’s simply the case that there are usually at least a couple homes that conceivably would be very good choices — vs. “the (elusive) one.”

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“Licensed Electrician to Install Plate Cover”

by Ross Kaplan on April 14, 2015

What Not (NOT!) to Put in an Inspection Addendum

It’s never smart for home buyers to overreach on Inspection issues, but a strong (and strengthening) Seller’s market is an especially bad time to do so.

Why?

magnifyingBecause any daylight between what the Buyer requests and what the Seller is willing to do gives the Seller an “out” (technically, the impasse causes the Purchase Agreement to be automatically cancelled, with both parties then supposed to immediately sign the appropriate paperwork).

Proper Scope; Material vs. (Very) Immaterial Defects

Instead, the proper scope of the Buyer’s inspection is, material defects that were discovered in the course of the Buyer’s inspection.

Or as I like to explain it:  if the Buyer and Seller can’t reach agreement on how to resolve the issue(s) and the deal goes away as a result, does the Seller subsequently have to change (amend) their Disclosure and tell future would-be Buyers?

If the answer’s “no,” the Buyer can forget about getting the Seller to fix it (or adjust the price for it).

I’ve yet to see a Seller Disclosure mention missing electric plate covers (which cost about $1(?), and take 30 seconds to install even by a klutz like me — never mind a “licensed electrician”).

P.S.:  For Buyers who just don’t think it’s right to “inherit” assorted handyman issues, I’d encourage them to:  a) lump together everything on a list; b) price it (e.g, 4 hours x $50 an hour for a handyman = $200); then c) psychologically add that $200 (or $400, or whatever) to the purchase price.

Unless the house costs less than $10k . . the amount is not going to be material.

See also, “How to Blow a Seller’s Good Will — and a $150 Closing Gift.”

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Last But Definitely Not Least Important Step

The way I would do the check is like this:

             |   7549  ^
    subtract | - 3958  | add
             | ------  |
             v   3581  |

I just add upward, as if it were

                 3581
               + 3958
               ------
                 7549?

“If you have something to sell and want to find out what it’s worth . . . try to buy more.”

–Ross Kaplan’s first law of determining market value.

W-a-a-a-y back when, I remember my elementary school teacher exhorting me and my classmates to “check our arithmetic” when we did subtraction exercises.

How do you do that?

By adding the two numbers back together to see if they equal the starting number (in technical-ese, the difference plus the subtrahend should equal the minuend).

Starting at the End

What’s the equivalent in appraising residential real estate?

After identifying the three best Comp’s (“Comparable Sold Property”) and running adjustments on them to get a suggested selling range . . . test that range on competing, “Active” listings.  See, Proper (and Improper) Purposes of Realtor Previews.

In other words, look at the market through Buyers’ eyes (admittedly, easier for agents than less-than-objective homeowners*).

In fact, that strategy works for anything someone might want to sell.

Direct Competitors

If Buyers can get a nicer house for less than the CMA’s suggested price range, the about-to-be Seller and their listing agent need to re-think things.

However, if the CMA is right, the suggested list price should position the home, well, against, competing homes.

As I like to tell would-be Sellers, when two, nearby similar homes are for sale, there are only two possible outcomes (at least in the short run):  Home A’s asking price helps sell Home B, or, Home B’s asking price helps sell Home A.

*Years ago, out of sheer frustration, I invited a recalcitrant Seller to view nearby “For Sale” homes with me to explain why — after several months of market time — his was failing to sell (or even attract showings).

Two hours later, after viewing three “For Sale” homes that put his to shame, the would-be Seller got out of my car and announced, “I had no idea my house was so desirable.  I want to raise the price $25k!”

I talked him out of doing that, but wasn’t able to persuade him to reduce his price.

Neither were the next two Realtors.

Eighteen months later, the home finally sold for $150k ($30%) lower than his original ask.

I didn’t get a commission out of the deal, but I did get this blog post:  see, “Realtor Prayer Revisited.”

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housing_stats

Housing Market Micro-Statistics

[Editor’s Note: The views expressed here are solely those of Ross Kaplan, and do not represent Edina Realty, Berkshire Hathaway, or any other entity referenced.]

Yeah, yeah, I know all about the S&P/Case-Shiller index, the National Association of Realtors’ Pending Home Sales Index, the Minneapolis Area Association of Realtors’ monthly sales statistics — and a host of other housing statistics you’ve likely never heard of.

But, my favorite is what I call, “the front desk index.”

Busy, Busy

How do you find that out?

data miningIf you’re an Edina Realty – City Lakes agent, by walking up to the front desk and asking how busy it’s been.

According to Edina Realty’s Mary Sukov, by noon yesterday there were already 50+ showing requests; that compares with about two dozen on an average Saturday morning.

Last Friday, Edina Realty – City Lakes’ front desk logged 104 showing requests — an office record!

Leading vs. Lagging Housing Indicators

While anecdotal, current showing activity is HUGELY indicative of market conditions, especially if your snapshot spans a reasonably long time period (like patterns over a few weeks).

Unlike so-called lagging housing statistics such as pending sales, which tell you how much business has been done recently, showing activity is a purely leading indicator.*

In my experience (going back over a decade), something like 10% of all showings ultimately lead to an offer.

For 2nd showings, that number jumps to about 33%.

Obviously, not every offer leads to a consummated sale, but about two-thirds of the time — at least in Minnesota — it does:  if crystal ballnot from the first offeror, from someone waiting in the wings.

(Note:  those statistics only apply to showings by Realtors — specifically, Buyer’s agents — representing well-qualified Buyers.  Activity at weekend open houses is much less predictive of  future market sales.  In some situations, I imagine it may even be inversely correlated, as when the economy is rocky and would-be Buyers are content to merely look instead. )

Data Mining — Housing Market Edition

Combine good, real-time data on showing activity for any given housing market, and a good (empirically-based) ratio for showings-to-deals . . . and suddenly you have the ingredients for a very intelligent projection of local housing sales, one quarter (three months) out.

Take that, Professor Shiller!

(And don’t bother trying to find that data on Zillow or Trulia; if you can’t even get historical data right, good luck with forward-looking projections.)

P.S.: Thanks to Mary — and Edina’s other front desk staff, Mary Nygaard and Laura Linser — for professionally and graciously fielding all those showing requests.

*Another way to think about housing statistics is as “upstream” and “downstream.”

Closed sales are the latter, showing activity is the former.

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Staging Secret #17

April 10, 2015

“Pillow Top?”  Actually, More Like “Pillow Bottom” I wouldn’t rip up perfectly good carpet to do it, but . . . assuming the Seller is already planning on replacing especially worn or dirty carpeting, I would recommend splurging on a plush (read, thick) carpet pad to go with. Added cost:  a couple hundred bucks, max. […]

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“When One (Lending) Door Closes, Another Opens”

April 10, 2015

Portfolio vs. Securitized Mortgages OK, so that’s not exactly how the Alexander Graham Bell quote (headline above) goes. But, it applies — sometimes — to mortgages. Specifically, there are numerous situations where what’s called a conforming, “conventional” loan — intended to be re-sold (securitized) on the secondary market — isn’t feasible, but a “portfolio” loan held by the […]

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Fixer Upper’s and Fixer Upper-er’s (Huh?!?)

April 9, 2015

A Realtor’s Definition of a “7” (or a “3” or a “9”) vs. a Consumer’s [Editor’s Note: The views expressed here are solely those of Ross Kaplan, and do not represent Edina Realty, Berkshire Hathaway, or any other entity referenced.] Good Buyers’ agents don’t just qualify their clients financially, they also vet the Buyer’s selection criteria. Exhibit […]

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How Much is Twitter Worth?

April 9, 2015

“Learn More About Your Followers” = Spend Ad Dollars on Twitter To figure out how much Twitter is worth, you need to know how many “Twitterers” (“Tweeters?” “Twits?”) will bite on the company’s email invitation to learn “more about their followers” and “what resonates with their followers to drive better engagements” (whatever that means — both phrases are excerpts from […]

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