Real Life Stories On What Happens When Selling a Home
By: David Collins Realtor, ERA Beverly Hills, FL 34465 352-422-5297
Everyone wants less stress when selling their home and after you read this, I am sure these real live situations will show you how your decisions up front will lessen the challenges throughout the process.
As I looked at my pending sales this morning, I thought how scary is this in the fact that each one showed exactly different levels of time on the market, different levels of stress throughout the negotiations, different percentages of selling to listing price, and different levels of stress through the inspection negotiations. Some deals go smoother than others but as I looked at these sales, there is a strong correlation between time on the market along with ratio of list price to sales price on how smooth contract to closing goes. Let me explain by telling you each story and it will make a lot more sense when I am done.
Home #1 (We are keeping it generic to protect the innocent)
Roughly 30% of my sellers that I work with want to price their homes way above market price and have not much urgency. I am reluctant to do this because 3 months into the listing usually it becomes my fault that it is not selling until we lower the price to what buyers are willing to pay. Well, this one took a lot longer than 3 months. (290 days to pend.) We started at $239,900, went to $219,000 and we finally received an offer at $200,000. Now, you are probably saying to yourself, “Collins, you are a terrible realtor and why was the gap between offering and settlement price the size of the Grand Canyon?” I’m glad you asked…. As I mentioned above, the homeowner wanted to start out at a much higher price and I told her that I would take on the listing with the understanding that we would lower the listing price throughout the process if the market did not respond to it. With that being said, we had numerous showings from the day it was listed to the day it went pending. The marketing was working.
The good news that it finally went pending and because it went pending at a fair market value, the buyers know they have very little leverage when it came to asking for repair concessions. They did their inspections but didn’t come back to the seller because they knew that the seller could put it back on the market at 204,900 and get an offer very quickly.
My mentor, who sold nearly 90% of the homes he listed (60% is average), told me most sellers will ask him what he thought the home would sell for, he always answered, “What I think your home is worth has no merit whatsoever. The only thing that counts is what people are willing to pay for this kind of home, in this area, at this time.” This is the absolute truth. It doesn’t matter what you paid for your home or how much you need to net, it all boils down to what the market is willing to pay for it. You heard the adage, you can’t fool Mother Nature, it is the same here, you can’t fool the market.
In the meantime, I pended another home that was on the market for 176 days that was listed at $239,900. It pended for $235,000. Basically, the home had some unique features so it wasn’t for everyone and ultimately, the market appreciated to it and that is when we received this offer. Now, because the home has been on the market for a while, it is unique, and even though the market has risen to it, the leverage during the inspection period is definitely in the buyers corner which is frustrating to the seller. With that being said, my sellers understand this and have went through the challenges of the overreaching buyers during the inspection period because they received 98% of their selling price along with favorable terms for their move. Bottom line, my sellers got the price they were looking for but there has been a lot of stress going back and forth throughout the process.
Want more info on What Happens During the Inspection Period? Click Here.
As you can see, the first two deals have been difficult either on price or stress, but there are many more that go smoothly. PROMISE….. (70% of my sales pend in less than 25 days and sell for 96% of sales price.)
The next example I want to bring up is another unique home that the owners wanted to start the pricing at $289,000 which was brought down to $279,000 and ultimately pended at $269,000. Still a wider cap than wanted and it took 100 days for this home to pend but because the seller was realistic when an offer came in, the inspection period is going smoothly because the buyer knows that they are getting a great home for a fair price. In my experience, buyers have a 6th sense on if they are getting a fair price or not and if they feel they are paying a premium, they will use the inspection period to try and level the playing field.
Yes, I am sure you are starting to see a trend here but the next two stories are much better in pricing along with stress level.
Now for some good news stories…..
I have worked with this customer on selling another home and buying this home. Unfortunately she has to head back up north and needed to sell so we put her home on the market, as you guessed, at a premium. But her neighborhood is very desirable along with her price point so it was worth the shot. With that being said, I put the home on the MLS on Monday and had an accepted offer by Friday. The home was listed for $179,900 and the offer came in at $170,000 which was more than the recent comps in the neighborhood. The buyers definitely paid a premium for the home but the inspection period was pretty much uneventful even though the home needs a new roof. WHY is this? The reasons are numerous but the main reasons are that the home, even though there is some updating needed, it is immaculate and has a well-designed floor plan in a great neighborhood. The seller had leverage because she could put it back on the market and get the 170,000 asking price pretty quickly but I will mention that 170 was definitely the ceiling. If it wasn’t, she would have received many more offers at 170 and above even though the home was on the market for only 5 days. As mentioned, the inspection period was pretty uneventful except for the fact that the buyers wanted $500 dollars for repairs to the chimney. The reason I mention this is because my seller was a little reluctant to give the buyer the $500.00 credit because she felt that she came off her selling price a lot. In a mere 5 days she forgot that she wanted to list the home for a premium. The comparable prices in the neighborhood would price her home anywhere between $163,000 to $167,000. So because of this, there was a bit of stress on her end but after she figured out that she was getting the better end of the deal and gladly credited the buyer.
Again, as mentioned in all these situations, it comes down to leverage, if you have it in your corner, you can hold your ground, if you received a premium offer, it behooves of you to give a few dollars back to keep a great offer.
FYI- The above average strategy to price your home is as follows: select a listing price slightly less than the average of the currently-for-sale group and slightly more than the average of the recently-sold group. There is on average, a 5% to 6% spread between the average of recent sales and the average of currently-for-sale properties. This ideal listing price is half way between. Here’s how it works: by pricing slightly lower than the competition, more potential buyers will want to see your home and more agents will encourage their potential buyers to see your home. Because of the extra activity you will have a better chance of a full price offer that is slightly higher than the recent sales.
Lastly, the best news story of them all. I am working with a couple that wanted to sell their home and they were very realistic in the pricing of their home. They priced it 3% above what the recent comparable homes that sold in the neighborhood while staying below what the other homes that were on the market. You guessed it….. They received multiple offers in 3 days and settled on one that was a few dollars less than the highest offer ($1,000) but it was a cash offer closing in 30 days. Again, you guessed it, the inspections were flawless and my sellers have already closed on their home.
OK, I know exactly what you are thinking, “Collins is so Hollywood where the plot line always has drama but there is ultimately the happy ending.” Yes, I structured this white paper to show the more difficult situations first BUT I can show you, time after time, that the sellers that price their home a few percentage points between the recent comparable sales and what is available on the market, magic happens every single time. As an agent, when this strategy is used, I can aggressively market the home on the numerous home search websites along with the numerous social media sights, I can aggressively call the other local agents and market the home to them, I can aggressively negotiate for my seller to get the best price and terms for them, and I can aggressively navigate through the inspection period for my sellers.
Bottom line, the best agents can get you between 1% and 3% more versus an average agent and more importantly limit the stress from contract to close if the situation is set up correctly from the start. As you can see, most every home sells either by getting more realistic from the wish price to the market price, time on the market, or doing it correctly out of the gate. As mentioned, I have numerous examples of all different scenarios and I can tell you right now that doing it right out of the gate nets more money and more importantly is ten times less stressful.
Do you want to know what your home is worth? Would you like valuable information on how to sell your home for more money or what happens from Contract to Close? CLICK HERE and fill out the Form and I will send you all this information.
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