Monday, April 9, 2007
"What is the SINGLE most important thing someone selling a house should when putting a property on the market, and why?" That is the question posed by Nancy Klinger, Editor of Solares Hill newspaper to various Realtors for possible inclusion in an upcoming column she is preparing.
My Response: Get an appraisal form a qualified professional appraiser and list your home at or below the appraised value. Then use the appraisal in your marketing to show that your list price is reasonable.
The Key West real estate market is volatile right now. Prices continue to drop daily because listing Realtors (or their customers) set asking prices that were too high. The inventory of unsold homes is at an all time high, and the selling season is coming to a screeching halt in a few weeks—in my opinion.
Some Realtors are famous for obtaining listings by charming sellers into believing they can sell their home in spite of the market downturn.
Once the house is exposed to the market and there are no buyers (or maybe not even any lookers) the agent then suggests that the asking price be lowered. And the property sits and sits and sits. The “For Sale” sign gathers dust.
My suggestion is based on years of professional experience in selling bank owned real estate. We had an appraisal on every single house or commercial property we owned. We did not just rely on the opinion of the Realtors we used to sell the property. That would be foolhardy no matter how knowledable the Realtor may be because he has a vested interest in getting the listing and achieving the sale. Banks need an independent opinion of value that is not clouded by the potential of individual gain.
Even appraisers are having a difficult time arriving at opinions of value today, because they use past sales as indicia of what the current value is. But in a market of declining values (and that is generally what we are experiencing in Key West), the appraiser’s job is especially difficult.
Banks are required to follow federal banking regulations on how they treat assets acquired through foreclosure. If the asset value cannot be justified by appraisal, the asset must be written down to a verifiable amount. The balance must be charged off. So the bank takes a financial hit. But it is this process that keeps the banks from trying to obtain a “wish price” for property owned through foreclosure.
I suggest that homeowners adopt the same approach in pricing their homes for sale. With the appraisal in hand, the listing Realtor should then list the house at the appraised price and use the appraisal in marketing the property.
When you go to SEARS to buy a TV you may see several brands with various options at different prices. You can choose the TV you want to buy based on price or other criteria. But you know the listed price is the price you must pay, because you cannot negotiate with SEARS on price.
My theory is that when a potential buyer knows that the asking price is based on an independent appraisal that the seller gains real marketing advantage. The buyer can’t discount the negative items affecting the property such as age, condition, location, etc. because the appraisal already took each item into consideration during the appraisal process. The price thus becomes “objective” rather than “subjective”. And I think that makes selling a home in a difficult market much easier.
A short case in point: Last year I got a listing next to a large school parking lot exit on a busy street in Key West. The house had sustained some flooding during Hurricane Wilma. And there were three similarly sized houses for sale across the street. The seller was the sister of the deceased former owner. She lives a thousand miles away. She had to get a home equity loan on her own home to continue making mortgage payments and pay other expenses on the Key West property. Another Realtor told her she could ask for substantially more than my approach. I showed her mathematically the cost of ownership on a monthly basis, and she saw how much holding out for a “wish price” could potentially cost her. She accepted my approach. I got the listing, and we closed the deal 53 days after listing at 98.91% of asking price.
By using the appraisal as part of my marketing strategy I was able to get the seller to accept listing the property at a realistic price. The seller was disobliged of questioning whether she could have sold for more money. And I was also able deflect potential buyers’ criticism by showing that all the property’s negative attributes were already taken into consideration in pricing the property.
This approach works. Banks use it all the time. It takes the drama out of selling your home. It treats the process as a business deal.
If you are thinking of listing your home or business for sale in Key West, think about contacting me. You may not know my name, but now you know my game. And it works. Call Gary Thomas 305-766-2642.
The information on this site is for discussion purposes only. Under no circumstances does this information constitute a recommendation to buy or sell securities, assets, real estate, or otherwise. Information has not been verified, is not guaranteed, and is subject to change.
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Gary Thomas in a Nutshell
- Gary Thomas
- Key West, Florida, United States
- I first read about Key West in a magazine called "After Dark" sometime in the mid 1970's. But it wasn't until March 1984 that I made my first visit to the island that would become my home. I had two weeks for a vacation and reserved a room at Colours Guesthouse (now Marrero's Guest House) for one week. I thought that if I didn't like Key West, I could always go back to Miami or Ft. Lauderdale for the rest of my trip. But after a couple of days in Key West, that was no longer a consideration. But when I wanted to extend my stay for the extra week I found there was no room at the inn. The guesthouse owner did find me a room at LaTeDa, the infamous guesthouse/restaurant. That's a story I'll write another day. But those two weeks in Key West gave me the realization that I had found Paradise. Key West has been my home since 1993 and my only regret is that it took me so long to get here. I am a full time Realtor at Preferred Properties CRI. Let me help you find your new home or business in Paradise. Living in Paradise is not a slogan, it's a way of life.