Information for Sellers

About Selling /

Topics covered: Overview / Listing Brokers / Commission / Supply and Demand / Negotiations / Ads and Promotion / Tip of the Week

/ Overview

It is amazing how little information there is about selling a home on the Internet. A visit to just about any search engine will yield plenty of information about real estate, but most of it is geared firmly toward buyers.

Selling, however, is far from an afterthought. Putting your home on the market is a big step. It is also a rather intimate process. After all, you are choosing to sell the very thing currently sheltering you and your family. Add to that all the memories and time you may have under that roof, and it becomes clear. Real estate is not just some commodity. It is home.

Information to follow is posted to give you insight into the listing and selling process.

/ Listing Brokers

A smooth sale at an attractive price starts with a good listing broker. I certainly hope you will consider me, Joel as you agent. My qualifications are listed here. I employ the methods covered below.

In my opinion, being a good listing broker is not about the latest gadgets, gimmicks or slick presentations. Rather it comes from two very important sources.

First, a good listing broker must have the confidence that only a good knowledge of the market and experience can provide.

Second, a good listing broker must have a very clear understanding of both supply and demand as well as the negotiation process.

/ Commission

But, before proceeding, there is an elephant in the room—commission. Commissions are one of the bigger considerations when selling a home. They represent a significant expense. Therefore, a prudent seller should evaluate commission expense carefully.

Commissions which are too high eat significantly into equity. Commissions that are too low often result in bad service and tense relationship between seller and broker. (Remember, houses are illiquid. That means they are expensive and cumbersome to sell. A Realtor® who is not getting paid a living wage will not have the money or resources to promote the property, or to negotiate a favorable offer.)

If you have any questions about commissions I will be happy to answer them—without obligation. This is important to me. Feel free to contact me, Joel.

I can promise you, you will not get a sales pitch or pressure to visit your home to give a listing presentation or an “I'll have to see it first” response.

Quoting a commission rate should not be that involved. It is true as your prospective listing broker I have not yet seen your house. But unless your home is highly customized or is in a state of the great disrepair, a competitive commission rate should fit.

/ Supply and Demand

Remember those supply and demand lessons from your general business or economics classes in school? Well, real estate is no exception.

When it comes to selling a home, it is all about supply and demand. When it doubt, repeat: “It's about supply and demand, everything else is just noise.” Good listing brokers have a deep understanding of supply and demand. (Click here for more about supply and demand.)

Interestingly, a majority of Realtors® say very little about supply and demand. Rather, they speak about a listing's price. A home's relationship to supply and demand is its price. High priced homes tilt more toward supply. Lower priced homes tilt more toward demand (think sell faster). (Click here for more about price.)

What is your home worth? That varies. There are plenty of websites out there which will help place a value on your property. Though useful, a computer can never replace a person. It takes an experienced eye with a knowledge of the local market to see the real value, and thus price, of a home. The goal is to set the home's price as high as buyers will tolerate.

/ Negotiations

Any real estate transaction is a series of negotiations. For many, the term negotiation means working out terms acceptable to the seller when an offer comes in. Let's call that primary negotiation.

In reality, negotiations continue long past that. How so? There are many third parties—including lenders, underwriters, appraisers, inspectors, insures, credit reporting agencies, etc—who have a say (and even vested interest) in the transaction. With that many “fingers in the pie”, problems will happen. Sometimes it seems there are two or three points in every transaction when things look like they are going to fall apart.

The fact is, the seller and the listing agent may have little control over those third parties and the problems arising from their involvement. What does a good real estate professional do? You guessed it. Negotiate a solution. Get past the problem with all parties happy and the transaction in tact. That's the goal. Let's call that secondary negotiation. So, it is not just a matter of finding a buyer. It is a matter of keeping that buyer too. The right listing agent knows how to do both—in favorable economic times, and in no-so-favorable economics times.

/ Ads and Promotion

“Ads don't sell a home, agents do”. That's a common saying in the real estate business. It's pretty accurate. Ads and promotion can generate awareness about a property. But, they can't carry a transaction across the finish line. The process is just too complicated.

But, advertising does have its place. That is why you want a Realtor® who will give your home the most exposure possible. What promotion works best?

Here are a few ranked by impact:

The local Multiple Listing Service (MLS)

Why it works: The MLS will have the greatest promotional impact of any promotion method. When it comes to marketing a home, it is not just a matter of getting it in front of as many eyes as possible, but it is a matter of getting it front of the right eyes. The MLS does that. It creates an awareness among agents working with multiple buyers. They need to find a home for their clients. The MLS helps them do it.

A yard sign.

Why it works: As high tech as people get, most buyers know one or two neighborhoods in which they can picture themselves living. They may regularly drive through those neighborhoods looking for newly listed homes. And nothing points to a newly listed home better than a nice, visible yard sign.

The Internet

Why it works: Buyers like information. They like to search the market thoroughly. They like photos. They like video. They like learning about the process. The Internet offers all of that. Most buyers start their search on the Internet and return to it as they need information.

Newspaper and Real Estate Magazine Advertising

Why it works: While the newspaper and real estate magazines are not the “go-to” sources they once were, they still hold a lot of influence. It is easy to pick up a few free magazines or get today's paper and go out driving in search of a home. While laptops are getting smaller and faster everyday, flipping pages to look at homes will always carry some appeal. This form of advertising still has its place.

/ Tip Of The Week

To get inside information on selling your home and the housing market, stop by our tip of the week.

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About Showings /

Topics covered: Overview / Landscaping / The Front Door / Cleanliness / Staging / Colors / Closets / Feedback

/ Overview

Obviously, showing is very important during a home's listing period. Really, how can a home sell if prospective buyers can't see it? Understandably, then, the way a home shows is directly correlated to the offer sellers will get. Homes that show poorly get poor offers. Home that show well get good offers.

How do sellers insure the home will show well? There is no one magic bullet. Rather, a combination of efforts lead to successful showings and ultimately to acceptable offers. Some of those methods are considered below.

/ Landscaping

Landscaping makes a big difference. It has the power to set a home apart. Most homes have very little landscaping. Buyers look at a lot of homes. It is easier to recall “the one with the great yard.” After all, it is a property—both the home and land it occupies—which is on the market. Not just a house.

Landscaping puts buyers in a secure frame of mind, so to speak. If buyers feel confident about what they can see, they are often put at ease about things they cannot see.

Well maintained landscaping usually means a well maintained home. Buyers know this. Even if they can't put it into words, it is something they feel.

However, reasonableness is needed. Running out and hurriedly spending thousands on landscaping won't often bring in a higher offer. (Remember, buyers often talk to neighbors. They will learn if a yard changed from neglect to English garden overnight.) But a few well-spent dollars to spruce up a front and/or back yard can have an impact.

/ The Front Door

Similar to landscaping, the front door often “sets the tone” for a property. It allows the buyers to feel good as soon as they enter. Hopefully, that good feeling will carry through the whole showing. Buyers need to be able to picture themselves living right here—in this home. A front door that is long on curb appeal contributes to that.

How do you get a great front door? It is not too hard or expensive. A coat of paint and some repairs, if needed, will go far. A few plants, a crisp house number, and shiny hardware will also add to the appeal.

/ Cleanliness

House cleaning, though far from an exciting subject is very important. All the showing tips, landscaping, the front door, staging, colors, and feedback, won't be too effective if the home is dirty.

A good rule for listings is “keep it clean”. Not just “that'll do for now” clean, but four-star hotel clean. Hospital clean. We humans can tolerate our own dirt much better than someone else's dirt.

/ Staging

There are entire television programs on cable networks dedicated to staging. Staging won't work miracles but it certainly helps. One of staging's strong points is that it forces a seller to think about the appearance of the home, the size and placement of furniture, and so on. It also serves to make the home look attractive and lived-in. That vacant house echo goes away, or at least is reduced somewhat.

The bottom line? Staging helps. But, it is not a cure-all. Money poured into staging won't always come back in the form of a better offer. So, it is very important to keep staging cost as low as possible. Be reasonable about it.

/ Colors

When it comes to colors, keep it neutral. Neutral equals helpful. Why?

Buyers need to picture their furniture and their decor in a home. Loud paint colors hinder that process. One of the most favorable signs a buyer can exhibit is trying to mentally “fit” their belongings in a prospective house. It shows they want the home and are taking the necessary steps to make it work.

Crazy paint colors can give them a headache (and an obstacle) while they are trying to do this. (Keep in mind most buyers are conservative by nature during the home shopping process. They will generally shy away from odd paint colors or loud wallpaper prints.)

So, should a seller repaint? That depends on the cost, convenience and the time factor. But it may not hurt.

/ Closets

A home's closets can actually “change size”. How? By their contents. Even a huge closet can look tiny if it is overstuffed. So, before showing a home it is better to move as much as possible to some type of off-site storage. That way if the home is cozy (think small), it will show better, with a little extra elbow room. If the home is big, it will show as it should and actually look big.

Clutter is always the enemy when a home is being shown. It stresses buyers out and disguises the true strengths of a home. Avoid clutter.

/ Feedback

Feedback is vital. Why? It gives a seller and listing broker a window into the minds of buyers and their agents. Is the home too dark? If it keeps coming up in all the feedback the buyers probably think so. Then, steps must be taken to lighten the home. Is the price too high? Again, if it keeps coming up in all the feedback the buyers probably think so. The price must be adjusted. These are only examples, but it illustrates the power of feedback.

Why don't more agents collect feedback? People are busy. Brokers are busy. It is hard to get feedback with one phone call or one email. It may take a couple of attempts, or more. But it is worth the effort. Feedback is one of the best tools a seller has .

It is important that the listing broker collect it and that sellers respond to it.

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About Offers /

Topics covered: Overview / Pre-Approval / Concessions and Debt Service / Inspections / Underwriting / Paperwork

/ Overview

Accurate pricing and successful showings will lead to an offer. Typically, it will come on a Tennessee contract. ( Here is a sample.) There are a couple of very important things to consider, when reviewing an offer. First, don't get too hung up on the price. It is only human nature to focus on the dollar figure an offer will contain. However, there are other considerations. What are the buyers asking for? Do they want closing costs paid? Do they want to move in before closing? Do they want you to virtually tear down the home and rebuild it? A few questions like this and it is easy to see that there is more to an offer than just the offer price.

Next is another very important factor to consider: your first offer is often the best one you will get. Now, naturally, there are going to be some exceptions to this rule, but for the most part it proves to be the case.

/ Pre-Approval

According to a Tennessee contract, buyers to not have to be pre-approved to make an offer on a house. Take a look a line 79 on this sample contract. The only thing a buyer needs to do is agree to go to a lender within five (5) days.

This is usually not a problem, since a home can be marketed during the buyers application process. Thus, if the buyer is turned down for their loan, no time is lost.

/ Concessions and Debt Service

There are two expenses of selling which must be considered. These are 1) concessions for the buyer—just a fancy way of saying things the seller is going to pay for so that buyer doesn't have to come up with so much money and 2) current debt service—which is just a fancy way of saying your monthly payment. Let's cover each.

Concessions: These can be summed up in two words closing costs. Many buyers need help with closing costs. Buyers never have enough money. Will you pay closing costs? That depends on you. It opens your home up to more buyers. But it also reduces your proceeds. Concessions must be weighed against the bottom line and debt service, the second factor.

Debt service: How much is your monthly payment? It can't be ignored. It is as much a part of negotiations as the offer price. For instance, say your monthly payment is $1,500, and you get an offer for full price but asking you to pay $3,000 in closing costs. What should you do? Only you as the seller can answer that. But something to strongly consider is time. If you reject the offer, and then it takes three months to get another, you have spent $4,500 on payments to keep from paying $3,000. Now you are in the hole $1,500, assuming the next offer is full price with no requests for concessions. That is walking over dollars to get to dimes. Debt service must always be figured in.

/ Inspections

Rarely do buyers have the skills to inspect a home on their own. Usually they will need to rely on professional help. This often means a home inspector.

The hiring of a professional inspector is a good sign. It means buyers are serious about the home, since they are spending money on it.

The flip side of the coin, however, is the inspector will find something wrong with the home. It's their job. Likely, it will be a list of minor items in need of attention. Often these can be fixed without great cost or inconvenience.

On occasion, buyers will take exception to certain aspects of the inspection. This is usually because their agent hasn't managed their expectations. Some buyers think that buying a home is like buying a car. It should be as if it rolled right off the assembly line shiny and new, with a ironclad warranty. That, though, is not reality.

A good rule of thumb is: a home should be in good condition for its age and location. Any home is going to require maintenance. Homeowners receive tax breaks in acknowledgment of this fact. The buyer needs to know this.

How should the inspection results be handled once repairs are requested? If the buyers are entirely too demanding, it may be better to let them move on to another property. In any case, once repairs are requested, it is always a good idea to consider the costs of such repairs. From there, a seller can either agree to do the repairs, or to send a counter proposal of acceptable repairs until both parties agree. Think of this as a mini-contract within a contract.

/ Underwriting

Underwriting is the process of getting a loan to the point of closing, so a seller can be given a check for the home on behalf of the buyers (minus the payoff).

But, underwriting takes a lot longer than it used to. So it can be frustrating. Underwriters control the purse strings. So, there is little anyone can do to hurry them. It is just a matter of waiting until the process is completed. Experience often allows a good Realtor® to prepare sellers for a appropriate wait.

At the very least, a general familiarity with various mortgage loans currently available on the part of a listing broker is helpful.

/ Paperwork

In addition to the listing agreement, which establishes an agency relationship as described here and gives the listing broker rights to market the property, sellers must complete a property disclosure. (Or disclosure exemption if the seller has not lived in the home within the last three years.) If the home was built before 1978 sellers must also complete a lead based paint disclosure. Homes with septic systems will have an additional form to fill out. Homes with wells also require extra paperwork.

Though not overly complicated, a website is not a very good forum for discussing disclosures. Each home is different. If you have any questions about various disclosures and their effect on marketing your property, please contact me, Joel. I will be happy to cover the subject in more detail—without a sales pitch.

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About Expired Listings /

Topics covered: Overview / Why Homes Don't Sell / DOM / Competition / Price Adjustments / Marketing Push

/ Overview

A listing agreement is usually for six months to a year. Homes which fail to sell in that amount of time expire. The listing agreement runs out. Okay, so why do some homes fail to sell?

/ Why Homes Don't Sell

There are two primary reasons why homes don't show and subsequently sell—price and location. It almost always comes back to price and location.

/ DOM

DOM is an acronym which will show up a few times on this website, particularly in the stats sections. It stands for “Days on the Market” or “Days on Market”. It is an important number. Why? Think of listed homes like fruit or bread. After a while they “go bad” or get “stale”. In the industry the term is “shopworn”. Shopworn homes are a bad thing in that they have missed buyer demand. They have been passed over. When a listing is fresh and new, there are many buyers out there hungry to see it. The longer it stays on the market without a buyer the more stale it gets. Soon it is being outdone by every new listing one the market.

One affiliate broker I know will not even show her buyers homes which have been on the market too long. She just deletes them from the MLS before printing or emailing for her clients.

What is more, the "list to sold price" of a shopworn home is not very good. What does this mean? It means buyers think there must be something wrong with the home if it has not sold by now. Therefore, they are much more likely to “lowball” the price. In other words, they make a very low offer.

The goal of listing is not to show the home. It is to sell the home. So, if a home is not selling, action must be taken. Price, competition, and recent feedback must be reviewed to determine what is wrong and what can be done to correct the situation.

/ Competition

To arrive at a price, a listing broker (or prospective listing broker) will “comp” the home. This means they check recent comparable sales in the immediate area.

Then, for example, if those comparable sales (called “comps” for short) show average sale prices of $200,000, then the home should likely be priced at $200,000. On the other hand, if comps show average sale prices of $150,000 then the home should likely be priced at $150,000. Those are only round “example numbers”, but it conveys the basic process.

A good listing broker, however, won't stop there. Once a price is determined, it is always a very wise idea to check the competition—back to good old supply and demand. Are similar homes priced above the listing? Good. Are similar homes priced below the listing? Bad.

After a careful review of the comps and competition a the best probable price is set, and the home goes on the market, hopefully with a prompt sale to follow.

/ Price Adjustments

Once again, homes don't show and subsequently sell for two major reasons—price and location. A home usually can't be physically moved. But, the price can be adjusted. And, nothing increases demand like lowering the price on a property. To get the full import of that, please click here.

One note of caution before going any further—rrice adjustments should be done conservatively. Never too quickly. Some seasonal or economic factors may temporarily suppress demand. Once a home's price is reduced, it can't be ticked back up so easily. So, while price is important, you don't want a listing broker to hammer it down too early or too often. That's money left on the table.

So, when should price adjustments be made?

Hopefully, never. If a home is priced right to begin with, no change to price will be needed.

But, many, many listings require a price change. When? Of course, the homeowner makes the final call. However, a good rule of thumb is, after 30 days on the market (DOM). If nothing has happened by then, drop the price a bit. That will tilt the home more toward demand, and away from supply.

The average DOM for most residential properties in our area is about 120 days. Often at least one price adjustment may have been done in that time frame.

And finally, a little trivia. Realtors® like to use the term “price adjustments” when talking to sellers because it is easier on a seller's ears. When they talk to each other, the term is “lower the price”. Same concept. Different delivery. How's that for inside information?

/ Marketing Push

When a listing expires it is posted in the Multiple Listing Service (MLS) for all brokers and affiliate brokers to see. Many affiliate brokers use this as a marketing method. They send mail, and may even contact sellers in person. They make a marketing push to get your listing. Why? Sellers of expired listings are good prospects. They are often mad at their former listing agent—sometimes with good reason.

Other prospective listing brokers may play this up. They will often list reasons a home doesn't sell. And right there, it will say something about the broker a seller chooses, having an impact on the whether a home sells or not. Does it? Well think about it. When the listing expired many Realtors® saw it in the MLS. They woudld have seen it before it expired too. Probably several times. Why didn't they bring their buyers? Why didn't their buyers buy?

Back to the familiar pair—price and location. So while a listing broker can do much to promote a home, those impersonal market forces of supply and demand decide if a home will sell or not. This is not usually what sellers want to hear. But it is the truth. And when Realtors® take off their marketing hats, they acknowledge the importance of price and location.

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About FSBO /

Should I go for sale by owner? Any prudent seller will likely ask themselves that question. Going for sale by owner (FSBO) has both advantages and disadvantages. Click here for an objective, in-depth consideration of the subject.

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About The Principle Group and theprinciplegroup.net /

theprinciplegroup.net is where I present The Principle Group, Inc—a Chattanooga, TN real estate broker. It is also where I introduce myself, Joel Prince, the managing broker. It is designed for one purpose. To give those interested in buying, selling, or investing in real estate the information they need presented in a clean, straightforward format. You will find no flashing banners, blinking buttons or forms to get you to sign up for seminars.

Buyers, sellers and investors need one thing. They need accurate and useful information. Without frills. Without distraction. My goal is for theprinciplegroup.net to provide such information in it's purest form.

Most buyers, sellers, and investors focus on searching the market. Search has its place. This site offers search. But what do you do when you find your home—if you are a buyer? Or scope out your competition—if you are a seller? Or find good inventory—if you are an investor? Search is just the beginning. There are many other important steps after that. Getting a good deal, whether you are buying or selling, takes knowing the facts. This site is here to provide these facts.

When you feel the time has come to move beyond the search and research process, please contact me. You won't get a sales pitch or pressure to buy or sell a home. Rather you will get pointed answers to you questions and concerns and an agent you can talk to. In today's ever changing market that is more than just an advantage, it is a necessity And if yu decide to use my services, then great!.

It is my hope that quality information will be added to this site on a regular basis. If there are any stats or subjects you would like to see posted, please contact me.

Thank you for your visit.

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About Joel /

Topics covered: Personal / Professional

/ Personal

My name is Joel Prince. I am the founder and managing broker of the The Principle Group, Inc. and administrator of theprinciplgroup.net. I live in the Hixson, Tennessee area. I am married with a young daughter (just over 2) and a boy on the way. I love real estate. Feel free to learn more about real esate, and about me, at my blog joelprince.net

/ Professional

I am a Realtor®. I have been practicing real estate in the Chattanooga, Tennessee area for about a decade now. My qualifications are listed here. Along the way I have learned a lot about what works and what doesn't, when it comes to buying, selling, and investing in real estate. I am proud to have helped many buyers, sellers, and investors meet their goals of property acquisition and sales.

My professional aim is to give clients as much information as possible—without sales pressure. Making a good business decision is difficult enough without someone standing over your shoulder trying hard to “nudge” you to sign on the dotted line.

It is infinitely better to give reliable, accurate answers to a client's many questions. You need good information, and you need to get it without a pitch. That's what I do best, provide good information without a pushy sales pitch. That way, you can make the choice that is right for you and your family.

And the bonus to you an me? We will have a good relationship and hopefully you will recommend me to others. It's a win - win.

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