Don't Trust the List Price of Homes

Are you looking at the list price when shopping for homes?  You shouldn’t.  I’m Sean Engmann, and as the market remains strong here in the Bay Area some listing prices can feel like a bait and switch.  For example, I came across a home that is listed for $11,000 less than it sold for 6 months ago even though two bathrooms were added, the kitchen was remodeled and the market appreciated by 10%.  I’ve also had clients make offers above list price after homes have sat on the market for several weeks, only to be told that the sellers weren’t interested for selling for any less than 15% above where they listed the home.   This type of pricing causes lots of buyers to waste their time looking at homes they’ll never be able to afford and can cause a considerable amount of discouragement.  What’s worse is that as this type of pricing becomes more prevalent, buyers begin to adjust their searches accordingly, leading to less interest in homes that are actually priced transparently.   While overbidding can be a function of a strong market, in the examples I mentioned the cause is deliberate, and it skews the statistics.  Why are homes deliberately priced so low?  In theory, the goal is to promote multiple offers and create a bidding war.  Realistically, though, if there is a shortage of homes and multiple parties interested around market value, it is likely there will still be overbidding, just fewer offers from parties who had no chance to buy the home to begin with.  So why are homes priced like this?  Well, there are two key benefits to the listing agent.  First, the listing agent gets to claim that they sold the home way above the list price, even if it was artificially low.  Second, and perhaps more importantly, the listing agent wants to attract unrepresented buyers at a lower price point with the hopes of representing them later on as buyers.   If you’re a buyer and you want to save time, you should engage a Realtor who understands the market early so you understand what the actual market value is before you get your heart set, and heart broken on a home priced artificially low.  If you’re a seller, this tactic might be a good way to sell your home quickly, but it may not be the best way to get the highest possible price for your home.  For more resources on finding the market value of a home or strategies for pricing your home, just click on the link.    

Buyers: 8 Key Traits to Win in Seller's Market Today

When people find out I’m a Realtor the first thing that a lot of them do is talk about how difficult the market is for buyers.  I’ve heard story after story about people who have friends who want to buy a home but don’t want to get beat down by the market.  I’m sure you know of people who have quit the market after losing, maybe it’s you.  I can assure you that people are beating this market and getting their dream home, I’ve worked with them.  It all starts with their mindset and there are eight key traits that make them successful.  Here are the 8 key traits that allow buyers to be successful in difficult markets.   They have a plan.  They know exactly what they’re looking for in a house and what they’re level of risk tolerance is.  They strike quickly and don’t wait for open houses. They’re decisive.  Competitive markets move in warp speed.  There often isn’t time to take a second look, to conduct thorough pre-market inspections or sleep on a decision. They’re well-prepared.  They’re cash buyers, or they have their financing locked down before looking at the home. They understand the market.  They know that list prices don’t mean anything and they understand the actual market value of the home. They structure good offers.  They understand the key needs of the seller and structure offers accordingly.  They don’t include contingencies in their offers without a great reason to do so. They demonstrate that they can perform.  They exude confidence from the start to finish of the transaction and include as much information as necessary to demonstrate to the sellers that they can perform. They know when not to write an offer.  They don’t waste time writing offers if they can’t be competitive or if they need a contingency that they know will not be accepted. They find the needle in the haystack.  They are able to locate a property off market or a home where the sellers are represented by a less informed agent.   As a bonus, I’ll add in a ninth.  They do what it takes to win and are committed to winning.  That means they’re not greedy and if they have a chance to get the deal done, they do what it takes to do it without hesitation.   Having a great Realtor helps.  A great Realtor can guide and advise buyers in the search, provide market expertise and potentially find that needle in a haystack for their buyers.  Having a great Realtor is essential to winning in a difficult market.   If you want more information on how to be successful as a buyer in seller's markets, go can get my free guide here.

Top 5 Things Sellers Do that Costs them Money

  The housing market in the Bay Area is as strong as ever but sellers are still leaving tons of money on the table.  I’m Sean Engmann, an MBA and certified Real Estate Negotiation Expert and I’m going to show you the top 5 things that sellers do to cost them money.    Number 1 is pricing the home incorrectly.  The goal of the price is to attract the most interest from the segment of buyers most likely to buy your home.  The pricing strategy depends on knowledge of the market value of the home and the context of the market.  Poorly pricing your home could lead to a lack of offers or a number of underwhelming offers, and can lead to price corrections, all of which hurt when interest is at the highest – right when the home hits the market.   The second thing is poor curb appeal.  First impressions matter, whether looking at photos online or visiting a home in person.  Given how relatively inexpensive it is to make a home look its best, it’s amazing to me how many homes on the market there are that look rundown, with dead or overgrown grass and fading and chipping paint.  People who assume that it’s a strong market so they don’t need to take care of these details are making a big mistake and losing out on lots of potential interest.   The third thing is not properly preparing the home for sale.  I still can’t believe how many homes go on the market with no inspections, no professional photos and a house full of clutter.  Not conducting inspections creates a red flag in the buyer’s mind and opens the door to contingencies which can give the buyer leverage to negotiate the price down.  Similar to curb appeal, buyers need to be able to picture themselves living in the space, which is impossible to do with the seller’s personal effects and clutter in the way, especially if the home isn’t clean.  And many buyers may not even get to the home if all they see online is unprofessional photography which shows the property in an unflattering light.  Staging is always recommended for getting the highest price, but even if it isn’t practical, a minimalist approach is better by removing personal items and clutter and getting the house professionally cleaned and photographed.   Number 4 is not properly marketing the home.  Putting the home on the MLS is not enough, the home needs to go on the market at the right time to attract the right attention and it needs to be promoted online, in print and in-person.  Properly marketing your home means making it available for viewing either by holding open houses or by appointment as often as possible, and making sure buyer questions and concerns are addressed promptly.  The more robust the marketing approach, the more potential buyers you’ll attract in the segment you’re targeting.   Number 5 is choosing the wrong agent to sell their home or not using an agent at all.  Owners who sell without an agent on average sell for 22% less than those who do.  Some sellers accept instant cash offers from iBuyers, which are great if you’re prioritizing convenience, but not so much if you want top dollar for your home.  Almost equally damaging is selling with an out of area agent who doesn’t know the market, the expectations of buyers and how to properly price, prep and market your home.   If you’re thinking about selling your home, please click on the link for more information about how to get top dollar for your home.