What`s the best way to sell a home?

What’s the best
way to sell a
home?
VIEWPOINT.CA
C HAPTER 1
What’s the
best way to
sell a home?
by Bill McMullin, CEO, REALTOR®
ViewPoint.ca & ViewPoint Realty
ViewPoint has served more than 2.7 million visitors
who have have viewed more than 75 million pages of
property and listing information. As a brokerage,
we’ve helped thousands of buyers and sellers answering questions, advertising listings, showing homes,
writing offers and closing transactions.
If you’ve ever bought a home, it’s unlikely someone
‘sold’ it to you. Real estate, unlike most products, isn’t a
commodity or impulse purchase - it’s a deliberate,
planned purchase where buyers make considered decisions over a period of weeks, months and sometimes
years. While there are many factors that influence the
home purchase decision, the three “P’s” - property,
place and price are paramount. If it’s the right property,
in the right place at the right price for the buyer; they’ll
buy it. It really is that simple. But before a buyer can
even consider a property, they need to be aware that it’s
for sale. Prior to the Internet, sellers or their agents had a
big challenge to reach all active buyers. In fact, in practical terms, it was impossible. That said, some agents had
better marketing and advertising systems than others,
but things have changed - dramatically.
The Internet has leveled the playing field. Buyers are finding houses on their own by shopping online and driving
through their preferred neighborhoods. The traditional
real estate lawn sign is still one of the best tools to draw
a buyer. Advertising in the newspaper, flyers, TV or open
houses are little more than self-promotion tactics for
agents. These expensive tactics might make a seller feel
better but they have lottery-like odds of drawing the
eventual buyer for your property. If you have ever pur-
chased a property, think about how you first became
aware that it was for sale.
Can one agent ‘sell’ your home faster or for more
money than another?
Many agents and real estate companies would like you
to believe that they can ‘sell’ your home faster and get
more money for it than other agents by using some special marketing strategy. There isn’t a sliver of evidence in
the data to support this suggestion. Keep in mind that
you are only concerned about how much you net from
your sale after fees.
Agents do provide valuable guidance and assistance to
those selling a home, but a ‘big name’ agent can’t sell
your home faster or get more money for it than a less
well
known agent. Well known agents are well known because they have more listings, so, naturally they have
more sales. Listing agents don’t have any special power
over buyers. In fact, more often than not, the listing
agent and buyer never meet, as buyers are usually represented by their own agent.
If you’re considering selling your home, you’re probably
wondering:
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• How much can I get for my home?
• How long will it take to sell my home?
• Is it a good time to sell?
• Do I need or want an agent?
• How do minimize the real estate fees?
Let’s answer these questions in the following chapters.
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C HAPTER 2
How much can I
get for my home
and how long will
it take to sell?
Nobody can predict the eventual sale price of a home or
how long it will take to sell.
Analysis of tens-of-thousands of listing records in the MLS®
system clearly shows that sellers and their agents aren’t
very good at setting list prices. For example, in the last two
years in Nova Scotia there were more than 40,000 listings,
less than 20,000 sales and more than 15,000 price reductions. What that says is that 20,000 listings expired unsold,
were cancelled or re-listed with another brokerage (we’ll talk
about that later).
After price reductions and fees, sellers are netting, on average, about 93% of their original list price.
These 20,000 failed listings represent a massive cost burden on the real estate industry, and ultimately the consumer.
As most sellers opt for a contingency arrangement with their
agent (paying a fee only if it sells), the unlucky agents that
get these defective listings also carry the costs, albeit temporarily. Ultimately, the commission fees paid by the successful
sellers are covering the costs of the listings that don’t sell.
This is a key reason why real estate fees are so high. Understandably, if you pay nothing up front and only pay if it sells,
the agent is going to expect to be paid a premium for carrying the risk, much like lawyers do when they accept cases
under a contingency fee arrangement. Contingency fees are
substantially higher than hourly rates because they must account for the risk of getting paid nothing. The difference be-
tween an agent ‘selling’ your house and a lawyer arguing
your case is that the listing agent, by comparison, has little
influence over the outcome, whereas your lawyer pleading
to a jury and or judge at trial significantly influences your
fate.
The overpricing problem starts with sellers who have unrealistic price aspirations and to make matters worse, agents
often endorse their expectations in an attempt to get the listing (which normally works) only to discover that buyers
don’t share their view. As a listing agreement is legally binding for the listing period, agents will accept overpriced listings. Even though these listings sit on the market, they can
be used by agents as a self-promotion vehicle to generate
leads, so all is not lost, even if the listing eventually expires
unsold.
For sellers who are determined to sell and believe that the
price isn’t the problem, they will switch agents in frustration,
believing that their agent wasn’t doing enough to ‘sell’ or
market the property. Often, sellers will relist the property
with a ‘big name’ agent on the belief that a well-known
agent is better able to ‘sell’ the property. Usually, after some
additional time on the market, the ‘big name’ agent will advise the seller to reduce the price, the house sells, the ‘big
name’ agent gets the windfall and the original agent gets
nothing other than the expense of their futile effort to ‘sell’
an overpriced property. As for how long a property will take
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to sell, you’ll hear lots of averages for “days-on-market” for
a particular area, price range and property type. Caution.
Your home, nor any home, is average. Your property, circumstances and timing combine to make your listing truly
unique. Only the numbers are average.
The reality is that there a very few buyers in the market at
any particular time, for a specific type property, at a particular price, in a particular neighborhood. Occasionally, however, listings because of their price, location and market timing will get multiple offers. Again, this is the exception, not
the rule.
$225,000 and $275,000. The average days on market was
67, so there’s only one sale about every 5 days, and that is
for all homes in that price range. Of course, buyers are very
discriminating in their search, looking for a certain type of
property in a particular area that meets their needs, so that
means there are very very few active buyers looking for an
‘average’ property at any moment in time.
Even if your property is fairly priced it may take longer than
normal or ‘average’ for a buyer to emerge as there may not
be a buyer at your price for your type of property in the market during the period of your listing. Reducing the price may
spur a lurking buyer off the sidelines, however, this is by no
means guaranteed. Each percentage decrease in the price
should (at least theoretically) increase the pool of available
buyers by a corresponding amount. To bring speculators/
investors into play, the price would have to be low enough
that they see a reasonable expectation of profit were they to
buy the property and ‘flip’ it. To further exemplify the scarcity
and actual buyers, let’s look at the “Dartmouth - Colby - District 16” area in the past 12 months. From April 1, 2011 to
March 31, 2012 there were 138 sales of single family
homes. Of the 138 sales, the majority, 72, sold for between
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C HAPTER 3
Is it a good time
to sell?
Answering this with accuracy is as difficult as predicting the
sale price. Trying to time the market in real estate is pretty
much impossible because there are so many factors in play
at any point in time. While the market can be defined as a
‘buyers’ or ‘sellers’ market using statistics, the fact is that
the buyer for your property is operating in their own individual environment. Buyers are not programmed by statistics,
rather, driven by emotion which is often irrational and unpredictable, especially when it comes to real estate.
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C HAPTER 4
Do I want or
need an agent?
Selling a home is a very well defined, structured and regulated process. A growing number of people are successfully
selling their homes with little or no assistance of agents and
saving thousands of dollars. If you are comfortable with the
idea of showing your home to buyers you can save yourself
a lot of money and time. If you hire an agent under a traditional ‘full service’ arrangement, you won’t have to meet buyers and show your property, but you will have to vacate your
property, possibly often, for showings.
Nova Scotia’s real estate regulator, the Nova Scotia Real Estate Commission, relate to agent practices.
Regardless of your disposition toward real estate fees and
showing the property yourself, the one thing you want from
an agent is the advertising exposure they can bring via listing on MLS® and ViewPoint. Full exposure is critical to
achieving a successful sale at the optimal price.
Beyond advertising exposure, an agent can assist with paperwork, showing your property and assistance with negotiations. Unfortunately, our own real estate association has
been running a ‘FUD’ (fear, uncertainty and doubt) advertising campaign on television, suggesting that representing
yourself in a purchase or sale is a very risky proposition. The
Canadian Real Estate Association did not present any data
that supports their assertion because there is no data. Real
estate transactions not involving agents are no more likely to
result in litigation than those where real estate agents are involved. Ironically, the majority of complaints received by
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C HAPTER 5
How do I
minimize my real
estate fees?
Real estate fees are real money but most sellers continue to
opt for traditional pay-on-close arrangements where they
give 5% of the value of their property to a real estate agent.
For the average home, that small percentage translates to a
fee of more $12,000 to ‘sell’ the property. Since the fee is
paid to the agent by the seller’s lawyer on closing day, the
magnitude and impact of the cost is often ignored. If fees
were paid in cash by sellers on closing day, it’s likely that sellers would be more diligent about fees the next time they list
a property.
Remember, buyers will beat a path to your door if it’s priced
right and advertised broadly.
ViewPoint offers sellers a range of listing services including
traditional full-service for as little as 3% and our popular Exposure+ advertising-only service for $950.
For more information and straight talk call (902) 4823100.
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ViewPoint.ca
© ViewPoint Realty Services Inc.
© 2012 ViewPoint Realty Services Inc. All rights reserved. This website is owned and operated by ViewPoint Realty. The trademarks MLS®, Multiple Listing Service®, and
the associated logos are owned by The Canadian Real Estate Association (CREA) and identify the quality of services provided by real estate professionals who are members
of CREA. Used under license. *MLS® listings refers to listings entered in the Nova Scotia Association of REALTORS® and Annapolis Valley Real Estate Board MLS® Systems. This product includes data which is the property of the Province of Nova Scotia. Copyright of the data and all intellectual property rights in the data shall at all times
remain the property of the Province of Nova Scotia. All rights reserved.
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