You will never get the same level of interest in your home as you will the first month your home listed for sale.  Heck, the levels of traffic you’ll get the first week your home is on the market are levels you’ll never see again – even after a price reduction.

That’s why “testing the market” at a high list price is a very bad idea.  You’re wasting all of that interest in your home, and those interested people aren’t ever coming back at those levels. 

You’re throwing away the flood of people that might want to purchase your home, in favor of a tiny trickle of interest later on when you become more realistic about your home’s value on the open market.

And then, once you start making price adjustments, buyers will always only want more of those out of you.  You’ll get offers closest to your list price the newer you are on the market.  The longer you sit, the more price reductions you make, the less you’ll actually net in the end.

Testing the market is a fool’s game – unless you’ve got time to spare and money to waste.

Well, I tried to, anyway.

The first house, the door, ah… broke when I opened it.  Suddenly, the door and the hinges – not so much connected anymore.  But these things happen.  I could still get the door closed and locked, so we took a peek around, locked it up, called the agent to let her know, and went on our merry way.

House two was unremarkable.  Well, other than the do-it-yourself acoustic ceiling made entirely of foam and the creepy dead bug filled basement.

House three was a thinker.  You have to get into the courtyard to get to the lockbox and to the front door.  But the directions said to open the gate to the courtyard… from the inside.  Because the courtyard gate was locked.  Once we got through that brainteaser, I opened the lockbox and there was no key inside.

Whoopsie.  Guess we’re not going into that one.  Quick call to the agent, and back in the car to house four.

House four was another riddle.  Four doors, all in one corner: two wooden doors, each with a metal screen door.  That’s 8 locks, for those of you counting at home: one for each doorknob and deadbolt.  This lockbox had a key inside, so that was nice.  Except it only unlocked one screen door, and not the wooden door behind it.  Guess we’re not getting into that house either.

It really isn’t that hard to be a good real estate agent.  Put a key in the lockbox.  Make sure it works.  Visit occasionally and make sure the place isn’t falling apart.  Etcetera.

People, pick your agent carefully.  Demand competence, some common sense.  At a minimum.

And it worked.  We got a great price on it, and it sold quickly.

But there’s only so much that my marketing can do.  If my seller had listed it at a higher price, I’m certain we’d still be sitting here, trolling for a buyer.

Great marketing can only do so much if the price is wrong.  I do believe I got my seller more money than some other agents would have because of my efforts.  I mean, I could be wrong, but I know I blew the pants off of the marketing on similar homes for sale in the area.

But if they hadn’t priced appropriately, all my efforts would have been for naught.

Buyers aren’t stupid.  They’re looking around, they’ve become educated in houses and values after touring lots of homes.  I can make them pique their interest in your home with my marketing, but without that proper pricing, we’re wasting everyone’s time and money.  And I promise you’re gonna get real tired of keeping your house clean as it sits day after day on the market…

Yeah.  It’s not all right in my book.

I don’t double-end deals – I won’t represent both the buyer AND seller on the same transaction.  The law allows me to do so, but – in my humble opinion – there’s no way to do so and provide what I believe is appropriate representation to both parties. 

When I represent only one party, they get all my fiduciary duties: confidentiality, accountability, reasonable skill and care, loyalty, obedience, and disclosure.  It’s the same duties that a lawyer has to his client – it creates an agency relationship.

When you represent both sides in the same transaction, things get murky.  I know confidential information about both people, but I can’t let the other parties know what I know.  In fact, the agency disclosure explicitly states:

There will be conflicts in the duties of loyalty, obedience, disclosure, and confidentiality. 

So why would a buyer or seller ever agree to less than full representation where conflicts of those agent’s duties are expected?

The general rule of thumb is that fixtures stay with the house when it sells and personal property is removed by the owner.  So with flat panel TVs, what’s a fixture and what’s personal property?

Another general rule of thumb – if it would cause damage to remove it, then it’s a fixture.

So, in my humble opinion, the TV itself is clearly personal property.  You can remove that from the wall mount system without causing any damage.  But what about the mount itself?  Removing that from the wall usually leaves at least 4 large holes in the wall.  Which I think is clearly damage, which would make that wall mount a fixture.

Now, not every wall mount fits every TV.  And some home buyers will place their TV set in a different place than the previous owners, or may not have a wall mount set at all.  Some buyers will want the wall hardware to stay, and some Sellers will be expecting all that hardware to go with them when they move.

Best bet is to always specify.  If you’re buying a home with a wall mount TV and you expect the mount to stay – say so in your offer.  If you expect it to go, specify that the holes be patched and painted.

Avoid surprises and address it as soon as possible.  And get that agreement in writing!

Anyway.  The question was thus: Who would you pick to sell your home, assuming you can’t sell it yourself?

It was a harder question to answer than I anticipated.  Who do I pick?  The person who sells the most homes – because they spend all day getting more clients instead of taking care of the ones they have?  The girl who makes her sellers feel good but may not negotiate all that well?  The woman who seems to have a lot of clients but then trashes them in the back office rooms when no one is looking?  The guy who has a lot of listings, but they take forever to sell because they’re always priced a little too high?

Who, in my market, would I pick to sell my own home?

And then, once I answered, I had to answer why I picked that person.  It was hard to pick.  Oh man, it was hard to pick.  I really really really wanted to sell it myself, according to my own standards of how things should be done.  In an ideal world, I really wanted to pick myself.  But that was against the rules of the game.

For me, in the end, it came down to two things: integrity and market knowledge. 

I picked the person who I knew wouldn’t be gossiping about me to coworkers or other clients.  The person who I thought would always be telling me their complete and honest opinion, even if it wasn’t exactly what I wanted to hear.  The person who would take the time to listen to me, to understand my goals and needs, and would tailor their approach accordingly.  The person who had demonstrated clear market knowledge, by pricing properties correctly.  Who I knew could discuss housing conditions in my area clearly and with confidence and substance and real market data to back up their answers.  The person who would tell me what to fix now and how to best prepare my home for sale.

Other than myself, of course.

It was an interesting exercise to determine what I believe makes a good agent.  What criteria would you use to pick an agent to sell your home?

I had two decent comparable sales to use – but I noticed one sold to a buyer who used FHA.  And that’s a huge flag that more research needs to be done in order to use that sale as an indicator of market values.

See, many FHA home buyers in Tucson ask for closing cost assistance, if not also down payment assistance.  And those are in the form of credits directly to the Buyer at close of escrow, which isn’t recorded as part of the sales price but comes directly off the Seller’s bottom line – the Seller actually walked away with less money than what the sales price would indicate.

It’s easier to understand with an example.

Let’s say you just sold your home for $200,000.  With a regular home buyer, you’d get a check for $200,000.  (We’re simplifying here for the example, and disregarding other sales costs and loan amounts.)

If you had an FHA buyer who needed 3% of the purchase price towards their closing costs, you’d get a check for $194,000.

If you had an FHA buyer who needed 3% towards closing costs and 3% towards their down payment, you get a check for $188,000.

The assistance just comes off the Seller’s bottom line.  And if a Seller is willing to take less in the form of closing cost and down payment assistance, then it’s the same as if they sold their home for that lower value.  Paying $12k in closing cost assistance is the same as taking $12k less for the house.

So if I’m using that house to find market value, and the seller took what equates to 6% less than what the sales price indicates, then clearly, that impacts market value.

The sales price isn’t always the whole story.  There are all kinds of credits that can happen on the back end of the transaction that aren’t necessarily reflected in the record of the sale in the Tucson MLS.  You always gotta do the research.

So I ran some numbers this morning.  Because that’s what I do.

So far, in 2009, the financing for closed home sales in Central Tucson break down like so:

• 263 cash transactions, with an average sale price of $144,401, which is 30% of the sales.
• 342 conventional loan transactions, with an average sale price of $223,091, which is 39% of the sales
• 246 FHA transactions, with an average sale price of $157,661, which is 28% of the sales

Compare that to 2007, where cash transactions were 13% of the market, conventional sales were a whopping 82% of the market, and FHA was a mere 2% of sales in Central Tucson.

And in 2005, FHA was just 1% of the Central Tucson market.  (Conventional was still 82% and cash was 14% of sales.)

Big shift?  Yes indeed.  The cash is back – but it’s quiet cash and those folks are picking up the bargains, many of them investment properties.  And FHA is bigger than ever.  If you’re trying to sell a home in Central, it might behoove you to make sure the house will meet FHA financing requirements.  Otherwise, you’re cutting out a large chunk of the home buyers out there today.

Except when I got there, the owner had torn down the wall between the two front bedrooms, making one long bedroom with a closet at one end.

That’s a problem, for several reasons.

First, now I can’t market it as a 3 bedroom home.  More people look for 3 bedroom homes in this area than will even peek at the 2 bedroom homes.  So instantly, we just made a huge cut in the number of potential buyers that would even know the home was for sale.

Second, most buyers are going to want to turn that back into 3 bedrooms.  And from experience, I know that buyers nearly always overestimate the amount of money it will take to complete a repair.  So while it might take $1000 to turn that back into two separate bedrooms, I know that in a buyer’s head, that number usually sits at 2-3x that estimate.  And even fewer buyers want to take on that work anyway.

Both of those things mean that we’ll get less than top dollar for the house.  And in a market where home sellers are already dealing with declining values, it is silly to just give away more money because that separating wall doesn’t exist.

The post references a Katherine Salant column.  Excerpts:

In the first two or three minutes you are in a model home, your sensory organs are feeding data into the emotional centers of your brain. As you glance at the living room, these emotional centers rapidly register the details.

Then, on the spot, the emotional networks vote up or down. The deal starts or ends with the firing of a few billion neurons.

If our nearly instantaneous visceral response is positive, our dopamine receptors go into overdrive, Lehrer said. They make us want that house, and they make us want it immediately.

Once your emotions have voiced their opinions, a different set of neurons in the frontal cortex, which control your brain’s "executive function," start to kick in. They generate seemingly logical reasons why a particular house is the one, Lehrer said. As you continue to think about this purchase, your list of good reasons gets longer: It has all the formal living and dining space that we need for resale! We’ll have a place to put great aunt Julia’s living room set, which we just inherited! We can have romantic dinners for two by the fireplace in the family room!

This is why I’ve always argued that the point of good home marketing is to get a potential home buyer inside the house.  When I represent home sellers here in Tucson, I want to show people enough information, pictures, and details that they’re curious to see more, that they’re drawn to see the house in person.  I want that visceral emotional reaction from those home buyers.

I don’t want someone looking online and rejecting a house because they looked at 50 pictures and decided they don’t like the oak cabinets or the guest bedrooms seem to small in the virtual tour – I don’t want potential home buyers dismissing a house out of hand because of some perceived flaw or omission, most of which could be changed or otherwise addressed.  I want people in the house, seeing it in person, getting that emotional reaction.  That’s successful home marketing.

All of which – if you’re looking to buy a home -  is why you should work with an agent who knows your wants and needs, who understands that you can get caught up in that visceral reaction, and can remind you to evaluate the house from a more objective view point.