The New "Comps"

Here's an email I recieved today from a troubled seller and my answers to his questions.

Dear Dennis,

I came across your website while doing real estate research on the web and enjoyed the information you shared regarding pricing and marketing. Unfortunately, I am on the east coast (Virginia) and you are on the west, so I don’t suppose we will be doing any business. I would however like to pick your brain for a second.

You mentioned some techniques you utilized to create an “auction” environment for properties you have listed. I would be interested to know what these ideas are – if you have a moment to briefly share them. Then I can perhaps pass them along to the agent who has my listing.

I have a home listed – and have gone ahead and bought another one too – so I’m about to be the proud owner of not one, but count ‘em, two houses. Happy, happy, joy, joy.

In case you’re really bored and want to read about the specifics of my home selling situation, I’ve copied below a posting a placed on a real estate agent online forum – asking for suggestions from the agents who post on that message board.

Thanks for any suggestions.

Best Regards,

Rob


Greetings. Forgive my intrusion into the agents section of the forum, but I wanted to have this request read and commented upon. And this is the happening joint. Although the questions relate directly to my own home/listing, I would imagine that the questions posed and the situation I am facing will be seen more and more as this real estate slowdown runs its course. So perhaps the answers given will help some of you as well.

First, my agent team is really good and I have worked with them several other times. No real complaints. It is just that I am looking for ideas and suggestions that I might make to them about how to shake things up a bit and think outside the box so as to get my house sold. Sometimes I think there is the tendency to follow a routine and fall into a house marketing rut: "We do A, then we do B, then we do C" etc., with A, B, and C being the regular old stuff. My house has been on the market for about 6 weeks. Not a long, long time I recognize, but the traffic has been very slow. 3 showings, a bit of a yawn in terms of agent previews, no offers.

A few details:
1. The location is very good - best section of town.
2. It is a townhouse condo, not a single family home - which I recognize will eliminate some buyers.
3. It is a unique floor plan - which will rule out some buyers but hopefully intrique others. A multi-level condo - 3 1/2 stories, with (believe it or not) 8 different levels (lots of half-story levels, lofts, etc.) Lots of steps (bad for some but they are part of the open/charming layout - 17 foot ceilings, rooms overlooking rooms, and so forth.) 4 BR,4.5 BA, 2300 sq. ft. No garage - which will throw some people off - but instead we have the 4th bedroom and bath.
4. Condition: excellent. We did a big makeover with granite, stainless, Italian terracotta tile, wide plank floors, designer accent paint, new fixtures, carpet, etc. etc.
5. One other location detail - it is within walking distance of a hospital, medical center, lots of doctors offices, an upcoming medical school, etc. So - should be great for medical people.
6. Price - a touch on the "ambitious/aggressive" side, but not way out of line. Priced at the higher end of what should be considered the market range.
7. The market here: a little sluggish, but not awful. A bit more inventory than normal, listings taking longer to sell, prices fairly steady.
8. We're selling for health reasons. We planned to be here for the next 20-30 years, but we now need a 1-level.My agent team has done the normal round of advertisements: newspaper, real estate magazines, TV homes show. At my gentle insistence (I'm such a pain) they did an open house (18 showed - 10 were neighbors)and an agent lunch (25 came, I provided an iPod and a $50 restaurant certificate as door prizes and my agent team paid for the lunch.)

The agent feedback sheet comments from the lunch were generally very positive (who knows if people really say what they mean I guess though) with positives noting the condition, room, multiple master suites, decorating, cleanness, interesting layout. Negatives were noted as stairs and no garage. As to pricing, most thought the price was in line, some commented that it was a little on the high side (It's at $319,950 btw)and answer to the "best price to sell in 30 days" question seemed to mostly be in the $299,950 to $309,950 range.

And still .... no showings to speak of. My quandary is trying to assess whether it's price, a-specialty-property-just-waiting-for-the-right-buyer, the lukewarm market, the nuclear reactor I keep in the basement, or a voodoo curse that someone put on the place.

The home is one of those "surprise" properties. A row of similar (from the outside) condos - all nice enough - with ours being the "wow" one. I have been of the opinion that if you get enough people inside it is inevitable that someone will fall in love. (People seriously do almost always say "wow" when they visit.)

So in a nutshell, my question to you fine folks is this: How do you generate some "buzz" and get people in? I think it's a numbers game - it will take "X" number of showings before the right buyer sees it. But how to get them in? Do you have any advertising ideas for my agents - catchy, unique, eye-catching ideas? Thoughts on target marketing? Shall I hire a stripper to stand outside the house? Resort to kidnapping anyone I see looking at other houses and force them to see mine?

Sometimes the knee-jerk reaction is "lower the price" and that might well be the answer. But prior to taking the "easy way out" I wanted to ask for suggestions and creativity from you folks. And if price is the answer, would you suggest simply lowering it, or offering some more creative cash-at-closing type incentives: $X dollars toward closing, pay the property owners association dues for year, pay real estate taxes for a year, pay $X toward the down payment (if their loan allows), offer to personally mow their lawn and clean their garage (Ha! Fooled 'em. It doesn't have a lawn or a garage!)

Thanks in advance for any thoughts, suggestions, wisdom, noggin-thumping, or raspberries.
Rob

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Hi Rob,
Yes, you are correct in that you are not alone in your plight. Even us marketing wizards sometimes are scratching our heads when trying to sell our own properties in this buyer's market.

You can create an auction effect by having several people in the house at once oohing and aahing over it. One way to accomplish this is to do 1/2 hour open houses which jams everyone in the place at the same time.

Another way (and this takes guts) is to lower the price below where you expect it to sell. Say something like "we will respond to all offers on such and such a date", say a week after you lowered the price. What will probably happen is that you have multiple offers. Then you multiple counter them all with your hoped-for price and see who wants it enough to meet your price. When people know that others want the place too, they will pay more than they otherwise would. So lowering the price in this way is not taking the "easy way out" as you described it, but a thought-out marketing strategy. We just sold a house that was very unique and had a limited market (as it sounds like yours is) using this very strategy.

NAR says it takes 20 showings on average to generate an offer. Based on your numbers so far, it will take 40 weeks for you to get an offer, if the market remains stable. If the market falls during that time, you may never get an offer.

In this market, you should not be on the "ambitious/aggressive" side, even by a little. You cannot use comparable sales to decide your price, because those sales were in the past. You must look at current homes on the market that are competition for you, and you must be priced below them. These days "comps" means "competing properties" not "comparable sold properties". And in my experience, gimmicks such as paying HOA dues do not work.

Hope this helps,
--
Dennis Kaiser, ABR,CRS,SRES
Real Estate and Investments
RE/MAX Associates, 6994 El Camino Real, Carlsbad, CA 92009
(760) 730-1310 or (800) 469-6391(760) 683-3500 FAX
Email - dkaiser@realestatelibrary.com
Website - http://www.realestatelibrary.com
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Blog - http://www.realestatelibrary.com/blog