A Brief Word of Warning on Social Media and Your Home Sale

If you're in the middle of buying or selling a home, you might want to take a look at what happened when local Knoxville blogger, The Modern Gal googled the soon to be new owner of her home:

I found out she and I went to the same college and were on the same Facebook and lucky for me! she didn't have her Facebook page set to private as everyone should. So I found out all I needed to know: she's a year younger than me, we have a couple mutual friends, she's a sorority girl, a marketing director of some company I've never heard of, but most importantly she was "In the process of buying a new house, which is really exciting. Yay..now people will actually have room to come stay with me and visit!"

Bingo.

I found all this after I had made my counteroffer, which she eventually accepted, so it was of no use to me in that department, but it did help me not freak out about the rest of the closing process.

Luckily, in this case, nothing bad came from the buyer's excited Facebook postings. But it is a good reminder that as you're blogging/updating/posting/tweeting the details of your ongoing real estate transaction, the other side might very well be there reading right along.

Half a Chance

My company, like probably every other real estate company, keeps track of listings taken vs. listings sold. Today I had a chance to review our averages for the last few years and the trend is startling. Check this out:

Percentage of Listings Sold By Year

2005 - 80%
2006 - 70%
2007 - 50%

These numbers are rough and rounded off, but there's a definite trend there, no? I would hazard a guess that the percentages for most other area companies are roughly the same (even though I'm sure a lot of companies don't want to admit to it). If this trend holds up for 2008 (and keep in mind this is totally hypothetical and purely unscientific), that means that at least 50% of the homes we have listed this summer simply won't sell. That's tough.

But that also means that - hypothetically - 50% will sell. So, who will make the cut? The extremely motivated: the folks who are willing and able to get their homes in pristine condition and who are also willing and able - you knew this was coming - to lower their listing price. Because the fact is that there are buyers out there, lots of them, they're just not that motivated. A few years ago, low interest rates and the prospect of getting rich fast motivated them. Today their biggest motivation is price, namely the lowest price they can get. This doesn't mean you have to give your home away, but it does mean that your home must be competitively priced. Now is not the time to get rich. Now is the time to cut your losses and move on if you have to move.

If you do have to sell, get a good agent who will market your home like crazy. Make sure it's getting lots of internet exposure and multiple photos on Realtor.com. And then listen to your agent. If they are doing their marketing and the home is still not showing, that price may have to come down and/or the condition of your home may need to be improved.

If you're not that motivated to sell, and you really want to get more money when you sell your home, now may not be the time to put your home on the market. I know that's hard to hear - heck, it's hard for me to say, considering I'd love to list and sell your home this summer - but it's the truth.

The good news is that homes are still selling. They really are, I promise. And just like everything else in life, this market shall pass - it just may not pass as quickly as a lot of us would like.

Price Conquers All

If Knoxville sellers won't listen to us Realtors, maybe they'll listen to Glen Reynolds:

"A STREET IN MY NEIGHBORHOOD HAS HAD FOUR HOUSES FOR SALE for a long time. Last week they all sold. Hardly evidence of a trend by itself, but there is this report: "Sales of existing homes in the U.S. unexpectedly rose in February for the first time in seven months, easing concern credit restrictions and falling prices would hurt demand." Most of the houses in my neighborhood dropped their price. My sense overall is that homeowners are much too slow to drop their prices in a bad market -- people can accept that a stock might be worth less than last year, or worth less than when you bought it, but they seem to have a hard time mustering the same acceptance where a house is concerned. But drop the price, and it's more likely to sell. And that's what people will have to do, I think. Perhaps they're catching on."

Yes, perhaps they're acknowledging one of the only universal truths in real estate:

Price conquers all!

Stigmatized Properties: Full Disclosure

Most homeowners in our area know they have to fill out a Property Condition Disclosure form when they are selling their home. And most people know that they are supposed to disclose any adverse facts about the home's physical structure, such as a past water leak or a problem with the foundation.

But occassionally agents and homeowners are faced with selling stigmatized properties - properties that have emotionally distressing histories. Stigmatized properties include homes where a violent crime has occurred or where a previous occupant was infected with HIV. So what do you have to disclose in these situations? According to Tenn. Code Ann. 66-5-207, real estate agents and homeowners do not have to voluntarily disclose

1. Whether anyone who has ever lived in the home was infected by the HIV virus or "other disease which has been determined by medical evidence tobe highly unlikely to be transmitted through the occupancy of a dwellingplace."


2. If a felony occurred on a the property.


3. If a suicide occurred on the property.


4. If a homicide occurred on the property.

According to the code, these are all things that would not affect the dwelling's physical structure, and therefore are not "property conditions" per se.

Even though homeowners do not have to disclose violent crimes in their property disclosures, their agents are required to honestly answer any questions potential buyers may have about such crimes having occurred in the home. If you want to know if a violent crime has occurred in a home that is for sale, try asking the listing agent directly. If you ask directly, and the agent has knowledge of such a crime, he or she is required to tell you.

The same is not true if you ask about HIV or AIDS. According to Realtor magazine:

"As part of its fair housing rules, the U.S. Department of Housing and Urban Development has said it's illegal for real estate professionals to make unsolicited disclosures that a current or former occupant of a home has AIDS, and advises practitioners not to respond to direct questions on this topic from buyers."

Oh, and rumor has it that we also do not have to disclose whether or not a home is haunted. Boo!

Not Staying Long? Cut Out High End Renovations

Renovators, say hello to Hardy board and goodbye to granite countertops.

According to a new article over on CNNMoney. com, here's what not to do in today's market:

• Buy a home you know you're not going to live in very long.
• Spend oodles of money on high-end updates and renovations.
• Expect to get that money back plus a profit one or two years after you purchase the home.

Yes, a few short years ago you could do all of those things and not only recoup your money, but probably make a profit to boot:

"During the housing boom, updating a kitchen with high end materials like cherry wood cabinets and a Viking stove was a sure bet to boost a home's value. Homeowners often recovered about 80% of the cost when the house was later sold."

That was yesterday.

If you are going to remodel in today's market, and know you won't be staying in your home more than a few years, it might be wise to scale back the scope of your interior projects as well as the type of materials you use.

"...with so much more inventory on the market for buyers to choose from, they [buyers] just aren't as impressed with the bells and whistles. Now most upscale renovations are returning less than 70% of their cost, according to a recent survey from the National Association of Realtors (NAR) and Remodeling magazine."

However, exterior renovations still seem to be paying off:

"...returns for high-end exterior renovations are still holding up, according to the NAR report, with better pay-offs than interior work.
For example, sprucing up a home's look with expensive fiber-cement siding, which looks like wood but is more durable, returns 88% on investment, more than any other renovation NAR evaluated."

Say good-bye to granite countertops - CNNMoney.com

Negotiating in a Buyer's Market

Lowball offers are the new black. Every time I go to the office, I hear another story about someone's client who insisted on submitting an obscenely low offer on a home, because said client has heard about how horrible the real estate market is. This drives most of us crazy because 9 times out of 10, two things are going to happen in this scenario:

1. Seller counters back at near listing price, offended by the lowball offer.


2. Seller rejects offer outright, offended by the lowball offer.

And a lot of times the buyer winds up losing the house either because a) someone else submits a reasonable offer, or b) because negotiations break down due to seller's aforementioned offense at low ball offer. Either way, nobody winds up happy.

As I've said here before, just because every business pundit on every news channel in the country is saying the real estate sky is falling, that does not mean that it's falling over Knoxville. Yes, we're in a buyer's market and buyers here can definitely get away with asking for more concessions now than they could a few years ago - a great thing for all you buyers out there. But with few exceptions, you're not going to get that $250,000 home for $200,000. Really, you're not. Sellers in some parts of the country may be desperate to sell, but most sellers here aren't. They're just really anxious to sell and there's a big difference between those two.

Most home sellers out there right now aren't looking to get rich. They're just looking to sell their home for more than they paid for it, and definitely for more than they owe on it.

But it's human nature to haggle. If people don't negotiate, they don't feel like they got the best deal they could.

While lowball offers are definitely warranted in some situations (I'll be covering that topic in a future post), most of the time it's that good old fashioned negotiating that gets you a good deal. Not a steal, but nothing to sneeze at either.

Like I said, it's a buyer's market out there. That means there are more houses for sale than buyers. Increased inventory means:

• More choices for buyers.

Instead of there only being one house for sale in your price range in a chosen area, there might be three or four or even five. This means you are much more likely to find exactly what you want, rather than having to comprise on certain things because there's only one house available in the neighborhood.

• Longer days on market for most listings.

This takes away the need to rush into an offer. Time was when a client would find a house they loved, decide to sleep on it, and wake up and the house was sold. Bummer. While this can always happen, the odds are a lot lower now, which gives, you the buyer, a little more time to make your decision to pull the trigger.

• More negotiating flexibility.

Two years ago there was very little of this. Many times sellers were getting multiple offers on homes, so the sales price would actually be higher than list price. Having a little wiggle room, like 2-3% of list price, is pretty nice.

• Buyers can ask for more concessions.

This was also somthing that wasn't nearly as likely to fly a few years ago. Need some closing costs? Ask for them. Want repairs made on the house? You might get that too. Home warranty? Certainly can't hurt to ask.

Sometimes you can negotiate all of these things into your offers. Sometimes you'll only get one or two. The trick is to be smart, not greedy. Think about what you really need (closing costs) or want (lower price) and go for it. But before you do, go find yourself a good buyer's agent? Please?p>