The First Seven Steps Your Realtor Must Take

August 7, 2012 By Leave a Comment

You’ve signed the listing agreement, now what?

Between the signing of the listing agreement and the second week your home is on the market, there is an enormous amount of work for the listing agent. Done right, completing these tasks lays a solid foundation for a successful marketing plan for your home.

Here are the first seven things a listing broker must do once a new listing is signed.

  1. Paperwork. There is lots of paperwork. Some paperwork is mandated by the Commonwealth, some of it is by the company. The agent has to have all of the paperwork complete and in order. I even fill out paperwork for the sign installation, but some agents in very small firms will install the sign. If your agent is not highly organized and complete, it may reflect on a sloppy company or other sloppy work.
  2. Preparing the home for sale. It is you duty to prepare the home to look it’s best. But it is your agent’s duty to be helpful. Your listing agent should spend time with you and either advice or referring you to a staging professional. It is vital you take your agent’s advice or hire a staging professional. The home you live in should not look like the home you sell.
  3. Photographs. The listing agent’s third order of business is to arrange to take photographs of the property. Preparing the home for sale and great photos is the groundwork for a successful marketing campaign. Photographs, and any other media such as floor plans and home tour, are the materials necessary to market the home online and to attract the right buyers.
  4. Calendar. You should know when the agent plans to hold open houses and establish a schedule for showings. Some people refuse to show homes on Saturdays or need a day or two notice. Your agent must know your limitations and work with them. You should know what happens when, including any promotions, mailings, office tours, broker open houses, etc.
  5. MLS. With photos in hand, the agent is ready to enter the home into Multiple Listing Service. If done right, this takes some time. A complete MLS entry is the goal, including room measurements, building and area information, public records data, description, related documents, etc. The MLS entry of your home must look perfect the first moment it is published. Once it’s “live”, it is send to anyone in the system looking for a home like yours. People tend to skip homes with incomplete information and bad pictures. The very first days of the listing are most important to your marketing plan!
  6. Online Promotion. MLS and some brokerage firms syndicate listings all over the web. Listings will feed into websites such as Homes.com, Zillow, Trulia, Realtor.com, etc. These syndication are the lifeblood of the online marketing campaign. When 88% of home buyers searched online for homes last year, this is a big piece of successfully marketing a property. Tech savvy agents who understand the importance of online marketing pay for their own syndication feeds which override any company or MLS feed. This gives the listing agent more control over what the audience sees and allows buyers to directly contact the listing agent, rather than the office.
  7. Direct Mail. A “just listed” card to a radius around your home should be sent the first week the home goes on market. Just listed cards peak neighbors’ interest and they spread the word about your home in their beloved neighborhood. This is also a perfect marketing opportunity for a neighbor considering a new home who want to stay in the area.

There is so much to do the first few weeks of a listing. After that, the work load is lessened until the offers come. Still, you should expect updates on activity and a regular marketing effort that continues through the life of the listing.

To receive a copy of my Home Selling Plan, click here.

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The #1 Deal Killer for Newton and Brookline Houses

July 2, 2012 By Leave a Comment

Last Spring market, which ended roughly a week ago, looked something like this: buyers want to buy, sellers unsure they want to sell, plenty multiple-offer situations and many deals falling apart mid-way to closing. This is the nature of a market with rising prices.

Homeowners, believing prices will rise, stay on the sidelines and don’t feel a need to sell their homes. On the flip side, there are not enough homes on the market to satisfy all the buyers, who are bidding up the prices of homes.

But many of the home sale transactions don’t make it to closing, or at least not without some disappointments and fighting. The dreaded appraisal is the culprit!

The appraisal is a third party evaluation of the home which the bank requires for a mortgage approval. An appraiser comes to the home and compares it to recent sales. In our market, the appraiser has a difficult job because there may not be enough recent sales of similar properties, and the price buyers are willing to pay is higher than it was just a few months ago.

Because of the formulas, regulations and rules the appraisers must follow; their evaluation is often coming short of the offer price, which the buyer and seller already agreed upon. What does this mean? Here’s an example:

Four offers are submitted on a house in Newton, and the best offer was accepted at $800,000. The buyer agrees to pay a 30% down payment, $240,000 and submits a mortgage application for a 70% loan, $560,000.

The appraiser uses the limited recent sales data for similar houses nearby, and comes up with an appraised value of $750,000. The mortgage company will still fund 70% of the appraised value, but now this number dropped to $525,000.

Once of several things may happen next:

  • The buyer may demand the price reduced to the appraised value. Why should he pay more than that?
  • The buyer can make up the difference in cash.
  • The buyer and seller can negotiate a price between the $800,000 and $750,000. The buyer will pay cash for anything over $750,000.
  • The buyer and seller may terminate the agreement, (if there is an appraisal contingency in the agreement, which I’ll discuss in another posting).

Whatever the decision, it is never a romantic time during a real estate transaction process. Both parties are usually upset – buyer fearing he is over paying and dreading the added cash expenditure and seller annoyed she is making less than expected. This is especially disappointing when there were several offers, four buyers is willing to pay more than the appraised value!

Five years ago appraisals were rarely a problem. But are and will continue to be an issue everywhere prices are going up, inventories are low, and buyers are ready, willing and able to buy.

Buyers and sellers must prepare themselves for the appraisal. I’ll discuss that in upcoming posts.

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Brookline Real Estate Update

June 28, 2012 By Leave a Comment

There has been a lot of talk about the shrinking supply of homes in the market. The shift in this critical market condition is nicely shown in the months of supply of Brookline’s single family houses chart. In May 2o11 there was over 10 months of supply - meaning, it would take 10 months to sell all the homes if no new ones came on market. Last May, this number was under 8 months.

Although average house prices in Brookline were down over 9%, the shrinking inventory is a sign of a healthier market. Months of supply tells us how many homes are on market and the level of demand. Lower months of supply is great news if you are planning to sell your home soon. More interested parties, less competition, maybe (MAYBE) higher asking price.

But this information means something else if your house is already on market. If you are currently trying to sell your house in Brookline, the good news is you have less competition and more potential buyers. The bad news is that while all the other homes are selling, yours is still on market. If you home has been on market much more than four months (average market time), it may be time to discuss alternative marketing options or a price adjustment with your listing agent.

 

 

 

 

 

 

 

Brookline single family homes have an average price of $1.3 million. Lower price ranges have sharper drops and much lower inventories. Brookline condos are down to 3.2 months of supply last month. More on that next week.

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The Newton and Brookline Market Downturn

April 27, 2012 By Leave a Comment

My friend was telling me how the market downturn was an opportunity to find a bigger home in Brookline. Unfortunately, she didn’t find the home she wanted. (She wasn’t my client).

Yes, the market took a turn. Everyone in the country knows about our real estate downturn. But in Brookline and Newton, this downturn disappointed many hopeful buyers.

While Massachusetts real estate numbers are showing us in a continued slump, Newton and Brookline have proved remarkably resilient. I’m looking at the Multiple Listing Service statistics for the years 2007-2011. In Brookline, the downturn single family house prices dipped from their 2007 peak of $1.43 million to the low of $1.32 million in 2009. In 2011 the average Brookline house price was back up to $1.41 million.

Condos, on the other hand, experienced a price hike. On average, a condo in Brookline cost $503,600 in 2007, and in 2011 the price was up to $562,100. This is approximately at 12% increase in condo prices and a leveled single family market.

In Newton, the numbers for a single family are different but point to a similar trend. In 2007, the average Newton house cost $936,100, dipped all the way to $842,100 in 2009 and in 2011 went back up to $908,900. The volume is still lower, 617 houses sold in 2007 versus 518 sold in 2011. But this Spring’s market has been extremely busy, and multiple offers are common. Sorry, buyers. Hooray sellers.

Digging a bit deeper, though, you find some interesting details. The hottest segment of the single family homes in the Newton market is those in price ranges lower than the average price. While the larger homes take longer to sell, and go through more price reductions and negotiations, the smaller homes are selling fairly quickly.

These numbers tell me this is a great time for a move-up. If you are both buying and selling in Brookline or Newton, don’t feel you missed the boat for an upgrade. At least request an updated market analysis on your home.

A market analysis is a free service most Brookline and Newton real estate agents provide. I recommend you get a couple of opinions. Zillow doesn’t count!!!

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How Landlords Save the World

January 18, 2012 By Leave a Comment

The title of this entry is over-the-top, I admit, but I am just here to stick up for the landlords out there who are trying to do some good. The word “landlord” in itself has some negativity associated with it, and the use of “lord” in this context is distasteful in our American sensibility. In media, landlords are portrayed as misers ready to make a buck on the poor and take advantage of families.

Please!

Let me tell you about the landlords, the real estate investors, I know.

First and foremost, there is a commitment to maintain the property and keeping the tenant happy and comfortable, even with the high occupancy rate and the increasing rents. I am not suggesting any altruism here, but it is cheaper to keep than replace tenants. It only makes sense that tenants stay for a long-run, and take care of the property, as it is their home. Fostering that environment is essential for positive tenant-landlord relations, which is the relationship you want in between any consumer and supplier.

A rental property is a huge financial commitment and a landlord idiot enough to not take care of it and ensure it’s livability is ill suited for the job.

Yes, there are many terrible landlords out there. The worse of them are the ones who neglect their properties, fail to keep up with safety codes, and don’t treat their tenants with the respect they deserve. Just like in any occupation, in any aspect of humanity, there are some bad apples.

For more on tenant-landlord rights in Massachusetts, go to http://www.mass.gov/ago/docs/consumer/landlordtenant073007.pdf

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Three Ways to Invest in Real Estate

January 11, 2012 By Leave a Comment

Investing in real estate can seem overwhelming and reserved for the very rich. In the current economic conditions and marketplace, it may even feel a bit too risky. But if you’ve ever thought real estate investing may be right for you, this is a great time to learn about your options and how it can be done by almost anyone.

Before we learn about our options, though, let me say that I believe real estate investing can be a long a cumbersome process if you are new to it. That is not a bad thing, and I think of a lengthy process as a series of checkpoints that will make me very sure of my decision at the end. But it does mean that you have to have a critical eye, some good research skills and an a greater-than-average supply of patience. If this sounds like you, then let’s review how you can get into the lucrative business of real estate investing.

Whatever your budget, real estate can be your investment vehicle.

1. All cash deal. If you have lots of cash, you may be able to find an investment property in your area and buy it without a mortgage. The advantage of this is that you will be a highly qualified buyer and you can probably secure a property for a bit of savings over a buyer who has to get a mortgage. Another advantage of a cash buyer is that her expenses are much lower, as there is no monthly mortgage payment. This enables her to be more flexible on the rent, giving her more options in choosing tenants.

The disadvantage of an all cash deal is that it is not taking advantage of very low mortgage rates. Borrowing is pretty cheap, and if all your cash is in one place, you can’t use it elsewhere. Leverage is a real estate investor’s friend.

2. Part cash, part mortgage. The down payment minimum is 20-30%, depending on various circumstances and your financial qualifications. My rule of thumb is that you should make money, or at least break even, with this kind of down payment. If you lose money on a monthly basis, the property is not worth the price, (at least not not for an investor). Your mortgage payments, any association fees and taxes should be covered by the rent.

The advantage here is that you’ll be taking advantage of the cheap borrowing costs, and you’ll own a property with an income without the whole cash outlay.

The disadvantage is, obviously, the cost of borrowing money and the higher cost due to your mortgage payment - same as the mortgage on your home.

3. Pool of investors with little cash. Gather a few friends and family, and pool your money together to buy one property. It can even be a small property at first, but at least get into the market. If ten friends get together with $15,000 each…you do the math. The advantage is that you are in the real estate market, getting a piece of the pie, however small. It is a start, or a great single investment you have. You can hire a real estate broker and an attorney to help maybe for a stake in the property instead of commission and fees.

The disadvantage is finding like-minded individuals and putting it all together in a legally binding agreement. To me, this is just a bit of leg-work, and not so much a disadvantage, but it does add to the complexity of the transaction.

Entering the real estate market as an investor is not simple at first, but once you are in, it gets easier and easier. If you’ve ever considered investing in real estate, this is a great time to get in. Just choose your strategy and do it!

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Top Three Reasons Why Property Investment Is King

January 4, 2012 By Leave a Comment

No one wants to hear this, but I’m saying it anyway. Real estate is the best long-term financial investment. Phew…that’s a relief.

With the real estate market in the dumps for several years now, it is not easy to get back into the pro-property mind-set. But, it is exactly at these times that you should be considering expanding your real estate portfolio.

One reason I know this is because while the real estate market is dragging in most of the country, it is dominated by the professional real estate investors. Don’t you want to learn a lesson or two from them?

The professional investor loves real estate above all other investments. There are three main reasons for this.

First, real estate investing can come in many forms, just like any other investments. There are small condos, multi-family buildings, commercial, residential, mixed use properties, different towns, neighborhoods, etc. For every budget, preference and style, there is an investment instrument.

Second, real estate has a certain tangible value that you just don’t see in other investments. Property investors love that there is an asset they can visit, fix and maintain. There is a satisfaction in knowing that you have some control and responsibility in the relative value of the property.

Third, although real estate is illiquid - meaning it takes relatively a lot of time and effort to sell it - it is a versatile investment. You can hold it, or resell it when the market turns your way. You can do extensive renovations and have a quick resell, or you can hold it with tenants for years to come. Whatever it is, you have options and you can make decisions based on the best scenarios for your needs and the market conditions.

All of this assumes that you have sufficient funds for a down payment and that your expenses on the property are covered. The major drawback in investment real estate are the unavoidable expenses in maintaining it and the difficulty of selling it if you need the cash.

But this said, it may be time to consider an investment property, especially in such a critical time in the market. Opportunities and possibilities are present, and real estate investing can be a perfect fit for long-term financial goals.

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How to Price Your Home Competitively So It Doesn’t Sit On Market Forever

June 13, 2011 By Leave a Comment

Zillow recently reported that 36% of homes nationwide sold in January did so at a loss. That makes for bad real estate times. But, alas, sometimes we have to move regardless of what the market is doing. Our lives change and we can’t stay in our homes for whatever reason.

Sellers are making some mistakes when putting homes on the market these days, which is understandable in a very risky and unfavorable market. But when we let our fear and hesitation get in the way, we make bad decisions.

Here are four tips you want to consider in pricing your home for sale:

First, when looking at the comparable properties, don’t limit yourself to what has recently sold. The best way to go about pricing competitively is to look at current prices of homes on market. If these homes are sitting on the market, price yourself lower to sell. Think of it from a buyers’ point of view. When they look and compare several homes one Sunday afternoon, yours should be the best of the lot in the same price range.

Second, be honest and realistic about your upgrades. Yes, you did your kitchen over with the latest bells and whistles, but that was in 1998. Seriously, we all think our homes are somehow better, (agents are the worse culprits when it comes to our homes), but other homes have advantages over yours, as you house has advantages over others. Make a list of everything that you have improved in the home and review with your agent what is worth a premium.

Remember also what kind of buyer will be buying your home. A young family may appreciate a new water tank, a single person looking to do some customization may not care. Who is likely to buy your home and what do they value most?

Third, in this market, you are going to have to forget what you paid as a basis for pricing your home. One number has nothing to do with the other. If you are losing money, make sure it is worth it to make the move you are trying to make. This is a calculation only you can do. Just don’t try to push your home into a market that won’t accept it. It is frustrating and exhausting. Know your limitations ahead of time.

Fourth, listen to your agent about pricing. Chances are that your agent has sold homes or at least seen some similar properties to yours. Your agent spends a lot of time on MLS and talking to fellow agents about home prices and home sale. It is probably one of the only thing your agent discusses with anyone.

If you don’t think your agent can price well or does not have your best interest, well, you need another agent. If you hired someone you trust, then work with him or her.

Good luck!

How long has your house been sitting on the market?

 

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This Miscalculation Cost My Buyers a Home

June 6, 2011 By Leave a Comment

“Our offer was rejected,” I told my buyer, Janie, on the phone one evening after she and her finance Chris put in an offer for a small ranch they loved in one of the area neighborhoods.

“Are you kidding me? What? Aren’t they coming back with a counter offer, something?” She was so upset, and I was in as much disbelief as she was that it was a done deal. We lost out on the house they wanted and that was that. There was nothing I could do to change it.

The crazy thing was this was not 2005 when buyers were writing deposit checks and over-the-asking-price offers at the open house. This was 2010, when prices were spiraling down and getting a loan was like pulling teeth. Properties’ days on market were triple that of two year earlier so how come our offer was rejected? What home seller in their right mind would say no to highly qualified buyers?

A home seller with two other offers, one of which was for the asking price from buyers no less qualified.

This was my fault, I gave my buyers some bad advice. When we discussed the price we should offer, it didn’t occur to me there would be two other offers, and that the seller would not try to negotiate a bit. The seller’s listing broker said other offers were coming, but from past experiences with this broker, I had reason to doubt it. Besides, everything was just sitting there…housing inventory was at a high. I was representing buyers in a buyer’s market, we had the upper hand.

Wrong. It may have been a buyer’s market, but regardless of the real estate market conditions, the seller is the one who sets the asking price of his or her home and sometimes they set it low enough to attract buyers to the table the first day on market. My miscalculation was to look at the whole market and be influenced by all the news and depressing office chatter around me rather than focus solely on this specific property and how well it was priced compared with other like properties.

Had I done this I would have acknowledged that this was a hot property and not been so cynical.

It is hard to believe that there are hot properties, but it is up to your agent and you to recognize when you see one. The problem is that in a down market all homes look overpriced and in an up market, everything is hot. We’ve gone from one extreme to the other. But to make good decisions, focus on the specific neighborhood in which you want to buy and ignore national and even statewide statistics. They are meaningless noise in your quest.

As for Janie and Chris, they didn’t fire and referred their friends to me. We found a great home they loved just as much.

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Love at First Sight…Not so Fast!

May 22, 2011 By Leave a Comment

We want to fall in love with the home we buy. Between the money it will cost and the years we’ll live there, and the overall investment of maintaining the home, how could we be anything but in love?

That is an ideal situation! Loving the home and having no doubt about it whatsoever. Home buying would be much easier if you walked into a house or condo and said, “this is it!” without hesitation.

But the reality is that it is not quite that simple. Many people fall in love with their homes, but it usually takes a little longer than the first site. Too many factors are involved in choosing the right home to make it such a fast decision. And as much as you may not want to consider it, there are many practical factors you must consider before making your offer to purchase.

First, it is easy to find a home you’ll love on the inside if you haven’t considered the location. You have your budget, and you can get more or less in a house or condo depending on a location. Different neighborhoods have different options and will meet different needs, and the location of a home is something you’ll never be able to change. The old real estate agent’s saying, “location, location, location,” being the three most important things to consider in home buying still ring true.

Don’t fall into the trap that you see something amazing in an area you won’t enjoy because the cost of the home is lower. If the neighborhood does not serve your needs, such as commuting and schools, walk away.

Second, don’t fall in love with the finishes on a home. It may have a gorgeous kitchen with the uba-tuba you love, but what about the rest of the house? You can always buy granite, but if the structure of the home is poor, or if the condo association is bankrupt, move on. Besides, sometimes finishes look great because they are new, but are not necessarily great quality. Be sure not to pay a premium for something that merely looks nice.

Third, when you look out the window, and see the beautiful green lawn, does your heart skip a beat? Do you fantasize about running around with a dog and barbecuing in the summer? Does the landscaping work fit into that fantasy? If so, great! If not, well, remember that a big yard requires labor and money. If you can’t maintain the land, then you’ll end up disliking it.

If you have fallen in love with a home, that’s wonderful! But you must review the pros and cons before your decision is final. No home is perfect and digging for the negatives will either confirm your good decision or help you avoid a bad one.

One more thing. If your real estate agent does not point out the negatives of a home, or things about it that he or she thinks you may not like, then it may be time to find someone new.

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