Understanding Comparable Homes Values

When you are interviewing Realtors to market your home, you’ll be introduced right away to a priceless document – the comparative market analysis (CMA.) This is one of the areas in which the real estate industry really earns its keep – by showing you in black and white what your competition is. You and your agent will use the CMA, among other tools, to determine where your home will stand in comparison to others which are on the market, and those which have recently sold to determine the highest possible asking price. Your buyer will use it to find ways to reduce his or her offer. CMA’s are about facts, which can be qualified and quantified. The CMA is typically designed to give us quick capsules of information such as number of bedrooms and baths, approximate square footage, size of major rooms, amenities such as fireplaces and pools, age of the home, property taxes, listing agent contact information and more.

CMA’s can include homes that are currently for sale and those which have recently sold. They can go back in time as long as a year or a month or week ago. CMA’s can cover areas as narrow as one or two streets surrounding your home, or as broad as an entire subdivision.

What is not included in the CMA are those factors that affect perception, and that is the key difference between why one home with identical features will ultimately command a higher price that its twin. Perception alters reality, and this is a crucial consideration in understanding the buying and selling process and the value of the CMA. Much of a home’s value will ultimately be determined by the emotional impact it has on buyers. These emotions are based on subjective elements such as drive-up appeal, interior décor, colors, views from the windows, light, darkness, room flow and hundreds of other factors.

At the end of the each home’s information on the CMA report there will be a brief statement provided by the listing agent. This statement is usually a combination of fact and subjective opinion, and will generally cover selling restrictions or selling points. It could be anything from "kitchen and master bedroom completely remodeled in 1998" to Charming! Must see!" (Keep in mind that Realtors are salespeople, self-employed and have individual styles of marketing and that some will be better at writing than others).

For privacy reasons the CMA that is offered for public consumption does not list every piece of information that has been obtained by the seller’s agent. It will give the what, when, where, but it won’t give the who (the seller’s identity) and the why (why the home is being put up for sale.) The reasons are two fold, to protect the seller’s privacy and to keep from inadvertently giving the buyer an advantage in a distress situation. The CMA is clearly a selling tool, but like any tool, it doesn’t work very well by itself. It takes a skilled person to be able to use it. For this reason, the CMA will always need to be interpreted by a professional. or with complete objectivity by the seller or buyer.

Remember that the CMA is also a buying tool; it is taken just as seriously by the buyer and his or her agent. As you and your agent are going to use the CMA to ask the highest possible price for your home, the buyer is going to use it to find reasons to either choose or eliminate your home, and to arrive at the lowest price possible.

Add Housewarming Appeal

Your Home's Interior

Experience shows that creating a housewarming feeling inside your home increases its desirability. View your home with a critical eye. Clean, complete minor repairs, and add finishing touches.

Doors and Windows

• Consider adding a fresh coat of paint to your front door.
• Polish brass fixtures and be sure door locks work properly.
• Oil hinges to both doors and windows.
• Keep stairways tidy and secure handrails.
• Repair or replace bent or damaged screens and window glass.
• Cut back outdoor plants that restrict natural light.
• Keep windows clean and tidy with draperies firmly affixed and in proper working order.

Floors and Carpets

• Repair or replace missing or damaged tile, hardwood, vinyl and baseboards.
• Steam-clean or shampoo carpets.
• Secure loose carpeting and replace damaged areas.
• Be conscious of odors caused by dampness, high-traffic areas or pets.

Closets and Storage Areas

• Ample storage space increases the desirability of the home.
• Keep closets tidy.
• Discard any unnecessary items and consider storing those you do not use frequently.

Bedrooms and Living Areas

• Keep living areas clean and inviting.
• Arrange furniture to allow a spacious atmosphere.
• Make beds, arrange couch cushions, dust shelves, vacuum carpets and touch-up walls with paint or spackling as necessary.
• Wallpaper should be clean and adhere smoothly to the walls.
• Finishing touches such as flowers or candles add to the home's housewarming appeal.

Kitchens and Bathrooms

• Clear counters, drawers and cabinets of unnecessary items.
• Clean soap dishes, mirrors, faucets and appliances (inside and out).
• Store cleaning supplies and hang freshly washed towels.
• Be conscious of odors caused by dampness, hampers, garbage and various foods.

Counters and Cabinets

• Store infrequently used counter-top items to allow a spacious look in the kitchen and bathroom.
• Keep drawers and cabinets tidy and organized.

Mistakes Some Sellers Make

Selling a home is something you either want to do or are forced to do, and naturally, you want to make the most money you can from the transaction. Whether you have been transferred and have to sell immediately or you're retired and have all the time in the world to test the market, you should do the most you can to bring the best price possible for your efforts.

The easiest way to do that is to avoid the most common mistakes that most sellers make.

Choosing a Realtor based on how high she/he is willing to list the home.

After showing you a comparative market analysis, examining your home, viewing your competition in the neighborhood, and giving you an honest opinion of what the home should fetch in today's market, your Realtor should also have a good idea how quickly you’re home will sell, but many sellers have their own ideas. They want top dollar whether the home warrants it or not. To get the listing, the Realtor may sense this and play to your ego. Why? Because the Realtor can't lose - even if she/he doesn't sell your home. As long as his/her sign is in your yard, the agent will receive free advertising. She/He can get calls as people drive by your home and see the sign. When the listing is about to expire she/he will ask for a price reduction and extension, then the property will probably sell.

The problem with that reasoning is that if you are forced to reduce the price at the wrong time, you will likely end up with less than if you have priced it correctly in the first place. Why? One thing buyers’ check when they shop homes is how long it has been on the market. If it has been too long, they think bargain. The odds are good that you will be offered significantly lower than the Realtor would have priced your home in the first place.

Choosing agents who advertise only in the local market

Many agents are still fighting progress tooth and nail, and they still aren't ready for the Internet or any other kind of national, let alone international marketing campaign. Home sales do occur at the local level, but an extremely important element today it an effective Internet site complemented by newspapers, direct mail marketing techniques and an extensive contact list.  If your agent doesn't have a marketing plan that includes national exposure, she/he is relying too much on other agents to sell your home. Without a comprehensive marketing plan, you are paying a multi-thousand dollar commission for a one-hour interview, a sign in the yard, and a listing with the MLS. If you are lucky, you'll get an ad and a generic feature sheet.

Shouldn't you be getting more for your money than that?

Overpricing the home

It is human nature to regard what belongs to us with the eyes of love. Aren't our children more beautiful? Aren't our mates more desirable? Our homes are no different. Beauty is in the eye of the beholder, and that is why almost all sellers are tempted to overprice their homes. A high price is prestigious; it shows everyone how important you are. A high price will also eliminate the most motivated buyers. Most buyers today are pre-qualified and they know what price ranges to look in. If your home is overpriced, they will compare it to other homes in the price range that offer more, and pass on yours.

Putting too much value on personal improvements

Everybody customizes a home when they move in. You like wallpaper, another likes neutral colors and open floor plans. People have different tastes and priorities. The swimming pool you put in for $30,000 is terrific, but the next buyer may view it as a financial drain, especially if it is over 10 years old. You see, improvements age, and when they age, they have to be repaired not to mention the maintenance nightmares.

Real estate expert David Knox asks his sellers who are tempted to overprice improvements, "If you had known you were moving, would you still have made this improvement?" Usually the answer is no. The buyer will most likely agree - with a fair offer for the home. It's best to look upon improvements as something you did to please yourself, but don't expect all updates to add value to the home.

Mistaking activity for interest

When people are interested, they make offers. If they aren't making offers, something is holding them back. A good agent should routinely ask for feedback whenever your home is shown, but a lot of agents don't follow through with this courtesy. Feedback is crucial to understanding why you aren't getting offers on the home. The lack of response is usually due to two things - the home is in poor condition and/or it is overpriced. An important note: A good follow up program is more likely to generate multiple offers!

Failing to prepare the home for sale before it goes on the market Preparing the home for sale can include everything from spring cleaning, to repainting, to clearing out clutter, to making repairs, and so on. It's hard work! Many people leave their exteriors and interiors as is, but if you haven't updated in years and the home looks outdated, your home will not compare as well as others who have taken the time and gone to the expense to freshen the home. Keep in mind that you are competing not only with homes in the neighborhood but with new homes as well.

Today's buyer wants what the new homes have. If they can't get it, they will settle for a mature home with fresh paint and everything in working order. Your home must "feel new."

Failing to heed the advice of experts

When a good agent represents you, she/he is trained and has experience in the marketplace. Many sellers like to remain in control by telling the agent what to do. If you tell an agent you insist on having an open house, you are already demonstrating your lack of knowledge of what sells homes. Very few homes sell through open houses - but your agent will be happy to have one for you and pick up some new clients. The same holds true for negotiating. If you are the kind who draws a line in the sand, there is no point in your being represented at all. Your agent won't be able to help you. However, if you are willing to listen and weigh what the agent is telling you, you will know from the forward progress of the transaction that you got sound advice.

Preparing Your Home For Sale

First impressions are lasting. We don’t get a second chance to make a good impression.

Most buyers seek out homes that are well maintained and clean. Regardless of price, it has been my consistent observation that clean houses always sell faster and fetch the better price. Below are a few tips that may help you sell faster and achieve the best possible sale price.

Exterior

The first thing that a prospective buyer is going to see is the front of your home:

• Keep the lawn trimmed and edged.
• Prune trees and shrubs.
• Clean and weed any flowerbeds.
• Keep the porch/decks swept.
• Clear ice and snow from walks and decks.
• Keep doors and windows clean.
• Make sure doorbell is in working order.
• Touch up any door and window trims that require freshening.

Interior

Make your home an inviting place to enter:

• Keep the entrance clear and free of clutter.
• Replace all burned out light bulbs and have all lights on for showings.
• Keep home free of strong cooking, smoking and/or pet odors.
• Linoleum and tile floors should always be clean.
• Carpets should be clean, steam clean if necessary.
• Remove garbage on a regular basis.
• Repair any defects such as dripping taps, sticky doors, paint touch-ups, squeaking floors, etc.
• Ensure there is no clutter, clean and clear out basement, garage, storage/utility room, closets and cupboards.
• Keep all appliances clean, don’t forget the furnace and hot water tank.
• Sinks, mirrors and tubs should sparkle.
• Keep the entire house tidy.

Increase Your Home's Curbside Appeal

Your Home's Exterior

Your home's exterior is the first thing a potential buyer sees, when visiting your home. The following tips will help you increase your home's curbside appeal and create a strong first impression to potential homebuyers.

Fence

• Replace missing slats, stakes and posts.
• Repair broken hinges and paint or stain the fence if necessary.

Yard

• Mow, trim and fertilize the lawn.
• Weed flower beds and replace dead plants and trees.

Driveway, Garage, Carport

• Clean up grease or oil spots on concrete surfaces.
• Make sure the garage door opens freely and the automatic door opener is working.
• Provide an unobstructed view of your home from the street by not parking cars, boats or other vehicles in the driveway.

Front Entry

• Polish door handles and doorknockers.
• Replace worn or broken items, such as an unsightly mailbox or rusty doorbell.
• Be sure porch lights are working and add welcoming features such as a new door mat and flowering plants.

Siding and Trim

• Consider painting the highlight features of your home, such as trim work, shutters, gutters, downspouts and railings.
• If necessary, add a fresh coat of exterior paint to the exterior siding.

Roof

• Remove debris such as tree branches and leaves.
• Straighten the TV antenna.
• Make any necessary repairs to worn shingles or cracked surfaces.

Patio, Deck

• Flowering plants and outdoor furniture add appeal.
• Remove any unnecessary items such as gardening equipment.
• Tidy any visible items, such as an outdoor grill or barbecue.

Showing Your Home

The following is a list of tips to help you have a successful showing. Remember you may never get a second chance to impress this potential buyer. Also remember, sometimes it may be inconvenient for you to have your house shown, but you may never get another opportunity for that particular person to look again.

• Turn on all lights for showings.
• Have the drapes and window shades open during daytime showings.
• Ensure there is no clutter, pick up any newspapers or magazines that may be lying around.
• Beds should always be made and dirty clothes picked up.
• Any dirty dishes should be cleaned up.
• Make sure bathrooms are clean and sparkling.
• Put on soft music.
• If you have pets, try to put them out of the way during the showing.

When your home is being shown, it is always best for you to leave, but sometimes this may not be possible. If you must be there during a showing please remember the following:

• Do not accompany the realtor.
• Do not stay in the heart of the living area. (ie. Family room, living room, kitchen, etc.)
• Keep children and pets out of the way.
• Do not force conversation with potential buyers.
• Do not discuss price or other personal details with the buyers or their realtor.
• Never have the TV on loud enough to be a distraction.

Remember, even though you may not be able to leave, you can still be out of the way, (take a walk, visit a neighbour, work in the garage or backyard, etc.) The presence of the owners can be intimidating to a potential buyer, you want them to feel comfortable in looking around your home.

Appealing to the Buyers Senses

Tips for Showing Your Home

Once you've prepared your home for sale, keep a checklist of items to help you showcase your property to potential homebuyers. Remember that your home will be judged not only on its outward appearance, but also on the feelings it evokes in those who view the property.

Sight

• Use light to showcase your home.
• Open draperies in the daytime and turn on lights (day and night) to accentuate a cheerful atmosphere.
• If you have a fireplace, burn a Duraflame log or ignite gas.
• Remove any potentially offensive posters or signs.

Sound

• Consider playing soft background music while people tour your home.
• If there is exterior noise, such as traffic or nearby construction, work with your sales associate to schedule showings around noisy times of day.

Smell

• Grinding fresh lemon in a garbage disposal or boiling cinnamon sticks can add a clean, fresh scent.
• Candles, pot pourri and flowers look nice and smell pleasant.
• Lingering scents of strong-smelling foods, smoke or pets may be aired out prior to showing the home.

Touch

• Your home should appear livable.
• Potential homebuyers may like to sit in a living area and visit with their sales associate.

Common Sense

• To ensure your safety, remember to remove keys, jewelry and other valuables from the home during showings.
• Be sure to share necessary information with your sales associate and potential homebuyers.
• Gather manuals and warranties on appliances in the home.
• Make a list of items to be excluded from the sale of the home and whenever possible, remove them from the property. (For example, an outdoor hot tub may look as though it is part of the home, but you plan to take it with you when you move.)

Some Harsh Facts of Life for Sellers

It is a fact that the expectations of homeowners looking to sell their properties are not always met. Sellers sometimes have an inflated view of their own property. This is a natural reaction reflecting the pride of ownership most people have in their home. Unfortunately it can lead to overlooking the home's flaws, and overvaluing its features. Expecting the buyer to fall in love with the same amenities that you did may not pan out. An objective look at some factors defining the market can help a seller deal with this.

The following are real estate truisms that apply universally. Each of the following facts of life represent a reality which sellers must generally face. Recognizing and understanding these early will pave your way to a smoother and more effective selling process.

Your house cannot sell for a penny more than the best offer obtainable from the best buyer available in the current market.

Recent sales of similar properties have historical value, but the best buyer we are looking for is to be found in the present market place, not in the past record books. Our job is to find that buyer and obtain his or her highest possible offer. No house in history has ever sold for more than the best offer obtainable from the best buyer available in the current market.

The only way to find the true value of a house is to thoroughly test the market and aggressively challenge the competition.

Appraisals and expert opinions can be helpful in establishing a listing price for your home, but it's ultimate selling price will be determined by the prospective buyers whom we are able to contact. Buyers will compare your home with other offerings in their price range and make judgements. It is critical that your home be competitive in price and appeal with the other options that these prospective buyers will be considering.

Testing a bigger market and a better market with greater skill yields a better price.

The larger the market you can reach the higher the quality of that market, the better the price you will realize. It stands to reason, for example, that sellers working alone can expose their home only to the small segment of the market that can be reached by a single sign and limited advertising. It is also important to note that, in spite of the multiple signs and substantial sums of money spent on advertising, these two sources typically account for only 20% of the actual buyers attracted to a typical real estate office. The other 80% of the market are represented by the efforts of cooperating agents and the marketing activities of real estate companies and associates. It is also well established that the buyers most ready, willing and able to act are almost invariably availing themselves of the services of real estate professionals. Finally, the best buyer, unless a skilled professional is handling him or her, can often come and go without making a commitment.

An appropriate listing price will immediately and consistently attract attention and generate activity.

The process of testing the market need not be a lengthy one, regardless of marketing conditions. As we said before, buyers do comparison-shopping and act accordingly. When a property is first exposed to the market, both buyers and agents make instant evaluations of the offering and, if it compares favorably with what they have already seen, it will not only attract their attention, but stimulate them to inquire for details and arrange appointments to inspect. Your listing price must be realistic enough to immediately attract this attention from buyers and agents. If it does not do so, while competitive properties are attracting attention and generating activity, you have a clear indication that the listing price is not meeting the acid test of the marketplace, regardless of economic conditions or other external considerations.

A home that is priced realistically and marketed effectively will always sell.

There’s an old saying that the three most important words in real estate are "location, location, location." Like a lot of old sayings, it is simply untrue. No matter how poor the location might be, there is a price at which it will sell, and the price will be determined by testing the market. The three most important words in real estate, therefore, are Price, Price and Price – followed by marketing. Unless the price and terms are competitive, the chances of a home selling are slim to none; and even realistic pricing should be supported by the thorough testing of the market and aggressive challenging of the competition that can best be preformed by skilled professionals. When realistic pricing is combined with effective marketing, there is a buyer for everything and, given these conditions, any home can be sold in any market.  Homes that languish unsold on the market for months or even years are ignoring these "facts of real estate life, " often causing unnecessary inconvenience and financial damage to their owners and agents.

The market is not always kind, but it is never wrong, and those who believe otherwise pay a heavy price for ignoring these facts of life.