Category Archives: sellers

Sign, sign, everywhere’s a sign…

Saturday, 23 May 2009 21:46

Written by Lane Bailey

0 Comments

Real estate listings need a sign. They all have one, right… or at least most… But there is one problem with the ubiquitous real estate sign… it is boring!

I don’t like “normal”

I like EXCEPTIONAL…

Real estate signs aren’t an exception. I have long been tired of the same ol’ signs… so I decided to do something about it.

I needed an EXCEPTIONAL sign.

So… I looked for a solution. A sign that would stand out. I wanted something that would give an interested buyer a reason to stop and actually take a look.

: 1033 Constitution Way Sign

: 590 Baltimore Ave Sign

I think this is a pretty good solution. The idea is to get a buyer out of the car… maybe even to take a picture of the sign.

Of course, as with all marketing, it will be tweaked as time goes by to be even more effective.

And as always, I’d love your feedback!

But Zillow says…

Saturday, 09 May 2009 23:55

Written by Lane Bailey

1 Comment

: Image by law_keven via Flickr

I know… most sellers at some point take a look at the ‘Zestimate’ that Zillow produces for their property. And there is almost always one of two reactions…

“Those people are on crack, my house is worth way more than that” (if the Zestimate is lower than expected)
“Wow, I didn’t know it was worth THAT much… Cool” (if the Zestimate comes in higher than expected)

The bottom line is that if it is low, it must be wrong, and if it is high, then it must be right. It is pretty rare for someone to see a low valuation and think it could be right, or see a high valuation and think it could be wrong…

But let me tell you a truism… the Zestimate is wrong. Blanket statement. It could be high. It could be low. It isn’t dead on.

Here are the current levels of accuracy for the Atlanta Statistical Area…

Within 5% of the true value, 25% of the time.
Within 10% of the true value, 45% of the time.
Within 20% of the true value, 66% of the time.
Median error, 11.6%.

This is lifted straight from Zillow’s accuracy. For the Atlanta MSA, you are within 5% once out of 4 times… So, are you telling people that the just gave them a $400,000 valuation, and they have a 25% chance of the house being worth $380k – $420k? And a 10% chance of it being worth either $$360k – $380k or $420k – $440k? Or that there is a 10.5% chance of it being worth either $320k – $360k or $440k – $480k? Or a 34% chance that it is worth less than $320k or more than $480k?

Maybe you will let them know that about half of the time your $400,000 valuation is worth $446,400 or $353,600… since the median error is 11.6%

The thing is that the Zestimate could rise or fall by a significant percentage and still be within the range of error..

So, the thing is that 75% of the time, Zestimates are off by more than 5%.

Now, I am not going to argue with Zillow’s national or regional data. It is likely to be much closer than the data for a specific property. The folks there argue (and I can’t refute them in any way) that Zestimates are as likely to be high as low and therefore cancel each other out and that for larger samples, they are quite accurate.

in fact, everyone that gives you an estimate of market value is doing exactly that… giving you an estimate of market value. Market value can’t be determined until there is a buyer… That was the previous post…

My home is worth what?

Friday, 08 May 2009 23:57

Written by Lane Bailey

2 Comments

: Image via Wikipedia

I can’t think of a question that I am asked more…

What is my home worth?

And there as many answers as there are times the question is asked. There are a lot of sources for the information…

Appraisers
Real Estate Agents
Automated Valuation Models

And the results come in many flavors…

Appraisal
Comparative Market Analysis (CMA)
Broker Price Opinion (BPO)
Zestimates

There is one thing that they all share in common. They are all opinions. And they are all flawed. That’s right… all flawed. They might hit the right value… but if they do, it purely a fortuitous accident.

Keep in mind, I work very hard on the accuracy of my CMAs. I go over the data and try to stake out the trends as well as the differences between the subject and the comparable properties.

I know agents that do BPOs, and appraisers. I have studied Zillow’s data that they use to get Zestimates. In each case, they produce the best estimate of value that they can with the data available.

But they are all missing something…

What each opinion is missing is the buyer. When it comes down to it, the person that is actually going to determine the market value of a property is going to be someone that may not have any training at all…

What is ironic is that the moment the closing is over and the sale is complete, the market value becomes a vaporous moving target again.

The market value is what a buyer is willing to pay and a seller is willing to sell for. We can study the neighborhood values, floor plan, amenities and square footage. We can crunch numbers and compare. We can make spreadsheets and track trends. But, a buyer gets to determine what the value is to them… and then see if the seller will go for it.

The point is…

It isn’t magic. It is science… and an inexact science at that… and a bit of art. And pricing is actually a strategy. The idea is to price it right to get it in front of the right potential buyers. And that is the difference between a real estate agent, a BPO, an appraiser and an automated valuation model. Only the real estate agent is working towards finding a willing buyer.

The other methods are important, and have a place… And all should be in the same neighborhood. Finally, make sure your real estate agent knows that pricing is a strategy, not a contest.

Cheap Sex and Real Estate…

Tuesday, 28 April 2009 23:52

Written by Lane Bailey

0 Comments

: Image via Wikipedia

I don’t know why, but I was reminded this morning about two very different people, one quote from both, and how cheap sex is like real estate success… for some.

Back when I first got into real erstate, a local “power agent” told me that the goal was to list as many properties as possible. She said that I needed systems in place to spend as little time as practical for each listing, and to avoid spending money like the plague. Seriously. She was all in favor of spending money, but not on marketing property. Her quote was, “It is a numbers game, the more you list, the more you sell.” She didn’t care if the houses were over-priced, in bad condition… whatever. It was just a numbers game.

And then there is a ‘friend’ of mine from my early college days. He had a pattern… and it worked on occasion. At a party or a bar or a gathering, he would casually ask girls if the wanted a one night stand. And every once in a while… he would find one that said, “yes.” He told me that it worked out to about one in 50 or 75… It is a numbers game, don’t waste time getting to know people… ask and move on,” he said. I think it goes without saying that the girls that responded with a “yes” weren’t the girls that the rest of us were looking for…

In both case, these very different people weren’t looking out for the needs of their ‘target’. They didn’t care about the other person. An agent that takes an over-priced listing without reservations and then refuses to market it isn’t helping anyone… and someone that will have a fling with anyone that agrees to it obviously isn’t exactly responsible.

But their attitude was the same. It’s a numbers game. The goals, needs and desires of the client/target aren’t important. Don’t invest in the relationship. Meet your personal and selfish needs and/or move on.

I lost touch with the ‘friend’ decades ago. The agent is still listing property in the area…

Sorry, but I don’t think that is a way to effectively conduct business or personal life.

Is this a bit racy? Absolutely, but I bet you get the point…

from GwinnettGarageGuy.com

Can I tell my sellers it is a good idea to offer seller financing?

Saturday, 25 April 2009 21:44

Written by Lane Bailey

0 Comments

: Image via Wikipedia

Looking at the legislative landscape, I see a new danger on the horizon. In addition to the existant dangers of financing a mortgage for a buyer such as their credit-worthiness and ability to repay, there is another risk which could soon be inserted into the pool…

Cram-Downs

If you aren’t already familiar with the term, take a moment to read the definition… From the perspective of a lender, it is a scary scenario. In effect, a bankruptcy judge could force down the balance of a loan based on their view of the value of the property.

Regardless of whether the seller is in the first or second position, they could face financial danger in this situation. While helping out the buyer and hoping to make a little extra money on the sale of their home, they could find their investment principal… in effect, having the base value of the loan reduced.

Congress is looking at allowing cram-downs in residential mortgages again. It is the second time this year that the subject has come up. Currently they are saying that the new rules would only apply to loans before January, 2009, and that there would be other safe-guards in place to protect the investments of the lenders. And remember, the lenders aren’t actually the banks and mortgage brokers. The lenders are investors… and that means that they range from school teachers (through their pensions) to corporate portfolios… and anyone else that has money in the MBS (Mortgage Backed Security) market.

For a look at how cram-down provisions affect mortgages, one only needs to look as far as the commercial mortgage market and compare it to residential. In effect, rates are higher, down payment requirements are higher, reserve amounts are higher and credit is tighter. Before the lenders are willing to part with their money, they need to be more sure that they will be paid back, because a judge could reduce the value of their investment if the borrower has a problem.

And getting a higher interest rate for the increased risk might not help… the same judge could reduce the interest rate prior to lowering the principal balance.

So, I am telling my sellers that they need to be MUCH more aware of the risks, and that those risks could increase if Congress gets too populist.

from GwinnettGarageGuy.com

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Category Archives: sellers

Sign, sign, everywhere’s a sign…

I don’t like “normal”

I like EXCEPTIONAL…

I needed an EXCEPTIONAL sign.

But Zillow says…

So, the thing is that 75% of the time, Zestimates are off by more than 5%.

My home is worth what?

What is my home worth?

But they are all missing something…

The point is…

Cheap Sex and Real Estate…

Can I tell my sellers it is a good idea to offer seller financing?

Custom Listings

Browse Listings

What's YOUR Home Worth?

Follow Me on Pinterest

Category Archives: sellers

Sign, sign, everywhere’s a sign…

I don’t like “normal”

I like EXCEPTIONAL…

I needed an EXCEPTIONAL sign.

Share this:

But Zillow says…

So, the thing is that 75% of the time, Zestimates are off by more than 5%.

Share this:

My home is worth what?

What is my home worth?

But they are all missing something…

The point is…

Share this:

Cheap Sex and Real Estate…

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Can I tell my sellers it is a good idea to offer seller financing?

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