Out of curiosity I did a little research on price reductions and found that 62% of all homes sold in St. Paul in 2017 had a price reduction before they sold. On average they sold 27 days after the price reduction.
Sellers are on average getting their asking price or more but when I look at original asking price Vs. final asking price the spread is a bit bigger.
Knowing when to reduce the price can be tough for home owners. If the home is getting a lot of showings but no offers price adjustment may be needed. Starting to0 high is common as many believe that it gives them more room to negotiate or that they will end up with more money for the home.
Homes that sold without needs price reductions were on the market for an average of 22 cumulative days whereas homes that had price reductions were on the market for 117 cumulative days.
The info is from the National Association of Realtors and it shows that there is a pretty significant increase in the number of homes that are purchased by foreign buyers. Apparently warmer climates are more popular than colder climates. Even New Jersey is warmer than Minnesota.
I see advertisements for “free CMA”. What is a CMA and how much does it usually cost? sometimes is a “comparative market analysis” and sometimes it the letters stand for “competitive market analysis”. A market analysis is how real estate agents determine how much a house will sell for. The CMA compares homes that are similar to the subject home and are in the same area and have sold in the last year.
Most real estate agents will do a CMA to determine how much a property might sell for so that it can be priced right.
To date I have never found a real estate agent who charges home owners for a CMA, yet many advertise that they will provide a free CMA. Agents and real estate companies sometimes charge banks for a BPO, which is a “broker price opinion”, which is pretty much the same as a CMA but it isn’t free.
The free CMA should not be confused with the appraisal which is done by and appraiser and costs a few hundred dollars. They use the same methodology that is used for the CMA but the appraisal is more detailed. The “zestimate” on Zillow is more similar to a CMA but not as accurate because the zestimate is an “auto valuation” done with software using data which may or may not be accurate. The CMA is more accurate than the zestimate.
Is a free CMA a goof value? I guess it depends upon who is doing it.
We are getting a lot of mail these days from people who want to buy the house. I think the combination of having a household with someone (not me) who is over 65 and no mortgage triggered the tsunami of offers from people who want to buy our house for cash, now without asking for any repairs.
As a real estate agent/broker I know that the people who want to buy my house can buy it and flip it or rent it out. I also know I can get a lot more money for it if I do some repairs. In fact if I were to sell I think I would open a line of credit against the house and use it to pay for repairs and upgrades, several months or even a year before putting it on the market.
It is also true that no matter what I tell you or what my kind claim, selling a house is rarely easy and hassle free. It isn’t the houses fault. People are unpredictable and even difficult at times and moving is always stressful. Putting some effort into selling a house and having some patience pays off. People who can plan ahead tend to do a little better than those who suddenly decide to sell.
I know from experience that I can get a lot more for my house if it is in good repair. The smallest repairs can be intimidating to first time home buyers who sometimes do not own a screw driver. Buyers can over estimate the cost of a repair and as a result they will offer less or they won’t make an offer at all.
Yes you can survive a multiple offer situation and be the winner. Be realistic about the value of the home you are making an offer on and understand that sometimes in multiple offer situations the highest offers are below the asking price or maybe at or slightly over. Also know that if it doesn’t work out a better house will come along.
Occasionally I work with buyers who are concerned about the amount of work I have to do to write an offer. That is my job and I am always happy to write an offer even if it seems to be a long shot, so bring it on.
Serious buyers will need to put their best foot forward and make their first offer their best offer in a multiple offer situation because they may not get the chance to negotiate. Often buyers imagine scenarios where they offer X amount and sellers counter at X amount and they end up getting the house for the amount they had in mind. In todays market the seller is calling the shots.
The best offer isn’t always the offer of the most money. Financing is important too. Buyers who are putting more than 5% down may have an advantage. More cash in the mix means that there is a greater chance that the loan will close.
Closing dates matter. Buyer who are inflexible will have less negotiating power. The best strategy is to ask your agent to find out what the sellers have in mind for a closing date. Sellers who need to move into a home that they have an offer on may have to pass on an offer that is 110% of the asking price with a closing in 90 days or maybe the offer is perfect for them.
Flexibility on possession date and time can be important. I have seen situations where sellers need to move out of one home and into another on the same day that they are closing on both the sale of their home and the purchase of another. Not an ideal situation but it happens. Buyers who can allow the seller a little more time to move out can have an advantage in a multiple offer situation that doesn’t cost them a dime.
The amount of the offer is important. I have never seen a lowball offer win in a multiple offer situation. If the home just came on the market today the seller may not be ready to consider a less than full price offer. Buyers sometimes offer less because that is how much they can afford. That strategy mostly isn’t going to work.
When the perfect home comes on the market it may be sold by the weekend, be ready to make an offer now. Have a pre-approval letter ready. See the home as soon as you can and make an offer or let your agent know you want to make an offer as soon as possible. Sometimes sellers will wait a few hours or even a day for an offer even though they have others if they know the offer is coming and the reason for the delay.
Assuming that the sellers have a lot of money that they can contribute to closing costs is a mistake. Sellers who owe a lot of money on a home may not have the resources to pay the buyers closing costs. An offer that does not require a seller contribution may be more attractive to a seller even though it is for less money.
Do not and I repeat DO NOT skip the inspection – do make your offer inspection contingent. Some buyers are making offers that are not inspection contingent in hopes that the seller will consider it a better offer. Sellers with half a brain should know that the inspection protects them too. Please have a complete home inspection before purchasing a home.
Work with an agent who is prepared and who can quickly write an offer and one with a lot of experience in multiple offer situations.
Last weekend I got a couple of inquires on homes that are shown as being for sale on Zillow. When I looked into our MLS in both cases the homes had offers on them. The data that is in Zillow is fed from the MLS but until May 1, 2017 agents can by pass the data feed and manually input the listing. There are a few reasons for doing this and to many of us, Zillow is just for fun.
There are homes that are for sale by owners in Zillow that are not really for sale. I talk to the sellers and they tell me they are just kind of trying it out. Rather than putting the listing in the “make me move” category which is for “trying it out”, they go ahead and put it in as for sale by owner.
Most of the homes that are for sale in the area are accurately represented on Zillow. Real estate agents who do not like Zillow avoid looking at the site. I like to take a peak once a week or so. The agents with their faces by the homes for sale are paying for a zip code. In most cases they are not listing the home for sale and sometimes they know almost nothing about it.
Real estate companies and agent teams are getting bigger and bigger and it is all about “lead capture”.