I was having a discussion with a new friend yesterday about what it takes to be a successful real estate agent in the Tallahassee real estate market. With the market down over 50% from the high, you can imagine that real estate brokerage is a tough business in which to make a living these days.
The really tough thing about this market is that there are so many people who have their homes for sale in Tallahassee who will not be selling their home this year. In our real estate newsletter, I estimates that less than 40% of the homes that are placed for sale this year will actually make it to the settlement table. Why?
Home Buyers Must See Value Before A Home Will Sell
The most important thing that you must understand is that today's home buyer has a lot of options. Your wonderful home has a lot of competition, and like many other commodities that are inventory-laden, price will be a great determinant in the sale of the home.
Buyers Expect A Home In Great Condition
Again, with competition so fierce, buyers have expectations that are much higher today than they were just a few years ago. What do home buyers expect?
- A clean, like-new house
- Appliances and Roof in great condition
- No fixer-upper issues unless you are priced accordingly
- Fresh Paint, inside and out
- Fresh Flooring
- Attractive, mature landscaping
- That "New House Smell"
Home Buyers Care About Their Own Needs
To often, we I talk to a homeowner about what they expect to receive from the sale of their home, they start sentences with "I need to get ... " or "I paid $X, so I expect ...." A prudent homeowner will look at the eventual sale of their home from the vantage point of today's buyer, and I can tell you that there are quite a few things that you will consider that do not affect the value of your home:
- What you paid for the house
- Your remodeling costs
- The amount of cash you need to buy your new house
- What you want for your house
- What I say your house is worth
- What other real estate agents say your house is worth
- What an appraiser says your house is worth
- What the tax assessor said your house was worth
Advice For Home Sellers Must Mirror The Current Market Cycle
Times change. Market cycles change. The advice on how to price your home to sell has changed! If you are thinking "if I have to drop my price that low, I'll just keep my house and not sell it!," then you are the perfect candidate for taking your home off the market (or not putting it on the market). The number of motivated home buyers in the Tallahassee real estate market is lower today than any level in the 1990s or 2000s and will not be enticed back into the market until values are much more attractive.
But you can help. If you are one of the 60+% of hopeful homesellers who will fail to sell your home this year, go ahead and take it off the market now. Why go through 6 months of marketing and not end up with a sale? Plus, you will help reduce inventory, thus making less competition for the homeowners who must sell. They will have less competition and this will help bolster values in the Tallahassee Housing Market. Ultimately, when you choose to remove your home from the market, you are protecting your own home value.
Initial Market Position Will Determine Success Or Failure In A Home Sale
If you do not have the luxury of waiting to sell your home until the market stabilizes, then you must know that your initial decision on market positioning is paramount in your maximizing the money that you receive from the sale. Screw up this decision and it might cost you tens or hundreds of thousands of dollars.
Knowing Today's Home Buyer Cycle Critical In Initial Market Positioning
The home buyer cycle is the three-part process where a buyer
- Considers buying a new home
- Gets prepared to make a decision
- Is fully prepared to make a buying decision
If we look at the real estate graph below, we see time measured horizontally in days, and the percentage of the buyer pool measured vertically.
As we can see, the first four days of the market cycle allows us to present your home to 100% of the buyer pool.After the first week we will begin to see the traffic taper off. These buyers do not have that same sense of urgency the first wave of buyers had. They are not as excited, and these buyers are asking the question, "I wonder what this property is worth."
By the time we enter the third week of marketing, the showings will have dropped off dramatically. These are buyers just entering the market and not ready to make decisions - they are not educated, nor experienced in the process. They have just started their home search adventure.
It is important to understand that the buyers visiting your home in the first days on market were not attracted to your home by an advertisement. In fact it is highly possible that no ad will have appeared during the first week of exposure. These are the buyers who answered ads 60-90 days ago in order to be today's seasoned purchaser. The buyers we see coming in after three weeks are buyers new to market and not typically prepared to buy for another 60-90 days!
Does this help explain why Initial Market Positioning is so critical?
What To Insist From Your Listing Realtor
Do not put your home on the market without first demanding that your Realtor provide you with analytical evidence that your home can sell for what you are asking. If the price you set is higher than those currently on the market, then welcome to the 60+% club. All you will be doing is acting as "additional inventory" to the rest of the market.
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Joe Manausa, MBA is a 26 year veteran of real estate brokerage in Tallahassee, Florida and has owned and managed his own company since 1992. He is a daily blogger with content that focuses on real estate analytics and providing his clients with a tactical advantage in today's challenging market.