Marketing

Who is reading your Blog? Other agents?

February 25, 2007 by Spencer Barron

It’s quite tempting to want to write about everything that’s going on. I mean, isn’t that where the majority of good blog fodder comes from? But to be fair, I realized that if the agents that were on the other side of the table were anything like me, I would want to watch what I say. I mean, I wouldn’t want to be tipping my ‘hand’.

I’ll admit it. I love to research. I don’t like surprises. I want to know everything I could possibly find out about the agent I’m dealing with and his or her client. How much business do they do? Is the agent busy or just faking it? What’s their style, what’s their office like? Do they need the money? How long have they been in the business? Do they have any listings? What have they sold? What’s their target market, if any? What does the buyer currently own? Are they selling anything? Where does the buyer work?…oh it goes on and on. Anything on Google?

I love to encourage conversation. Even aimless banter. I like the agents to like me and feel comfortable and confident dealing with me. They should; I wouldn’t do anything shady, illegal or even underhanded. But that doesn’t mean I’m not working for my client. If my client wants a certain goal to be achieved, that’s my aim and I work very hard to gain any ground I can.

Everyone gives up little clues about their motivations, but they don’t always know they’re doing it. That’s why I don’t want my sellers having any sort of contact with the other agents or their clients. It’s also why I don’t want my buyers being too interested in the site of the homeowners. Any sort of contact is compromising my power to negotiate. An agent should be insulation from these situations.

I think of real estate business like a high stakes game of poker. I can’t see the cards but I can read the signals. There are sharks out there while others are just minnows. I’m not a shark but I play one on TV. Which one are you?

Filed Under: Business, Denver Real Estate, General Interest, Marketing, Personal, Real Estate Blogs

January Home Sales Up – Is the Denver Market in a mini-upswing?

February 9, 2007 by Spencer Barron

While I think many Realtors in Denver probably already knew this, it seems buyers are coming out of the woodwork.

Denver Metrolist is reporting good news for buyers and sellers alike. While days on market have gone up significantly from last year, 14% over last year to 117 days, so did ‘solds’. Sold listings for January were up almost 25% since this time last year. (statistics from Denver Metrolist for the month of January 2007) Good news for buyers? Well, prices were down a touch as well compared to last year at this time.

I like to think that activity in January is a harbinger of what the first half of the year will be like. It’s been a busy couple of weeks for me. I’d imagine that many agents around Denver are breathing a sigh of relief if the same thing is happening to them. It’s almost as if the market was artificially supressed by poor media coverage. I haven’t heard anything horribly bad in weeks.

I’m not saying that all is warm and fuzzy. January’s DSNews (Default Servicing magazine) reports that Colorado’s foreclosure rate is 2.7 times the national average. Look out Douglas and Weld, you have a new contender for top foreclosure county. Adams County now tops the list with 1 foreclosure for every 132 households. But the truth is, this is actually an improvement from where it’s been.

My Real Estate Market predictions:

It doesn’t take a rocket scientist to realize that the job market and commercial office markets are healthier than they’ve been in years. Real estate will always be based on what’s going on locally. In particular, the job market has more to do with how the real estate market will do next year than interest rates will ever have. More jobs will mean fewer defaults on loans. And higher incomes mean higher home values. If buyers can afford to buy a limited supply of quality homes in desirable areas, prices will go up, and vice versa. So if there are jobs in Denver, I’d imagine home prices will remain stable or even show modest growth. Look for areas like Sunnyside, Berkeley, Bonnie Brae, DU, Cherry Creek, Cherry Hills Village, Greenwood Village, Englewood and Washington Park to see continued growth (1-3% this year), while areas like Highlands Ranch, Green Valley Ranch (Denver), Park Hill (Denver), Northglenn, Thornton and Southwest Denver will show some declines as high inventory and foreclosures put pressure on sellers to drop prices (2-5%).

Technorati Tags: Denver, Real, Estate, Statistics, Foreclosures,

Filed Under: Denver, Denver Real Estate, Marketing, MLS, Realtor, statistics

The Top Ten Most Common Complaints about Homes for Sale – Useful Feedback

February 5, 2007 by Spencer Barron

Selling a home has gotten a lot tougher over the last two years. The Denver real estate market has really started to slow down. Buyers are gaining the upper hand in negotiations because there are many more homes to choose from. This means home sellers are going to have to pay attention to the feedback they get from their agents and from the public and make changes that will help them sell the home. I hear all sorts of things when I start calling for feedback. It’s amazing how useless most of it is. I mean, it’s rarely anything the seller and I haven’t realized but I push on waiting, building support for whatever course of action will eventually need to happen. I’ve come to characterize feedback in three types.

The first type of ‘feedback’ are things the homeowner already knows but the homeowner has refused to address. These are usually obvious and just a huge waste of time. These are things that should be addressed prior to sale. Either fix the problems or drop the price until the home you’re trying to sell is similar to the homes in the same price range, the homes your potential buyers are looking at. The huge waste of time comes in because these are things that are so obvious that I pointed them out as I walked through at the listing appointment. How many wasted opportunities to sell will you need before you take my advice and make changes?

1. Didn’t like the finishes. Paint colors, carpet, light fixtures, etc… This is pretty common and highly changeable. The problem is most sellers think that if the buyer doesn’t like it, they can change it. If you’re getting lots of showings and no offers, this could be the culprit. Usually it’s cheaper to make the changes than try to drop your price enough to get an offer. It’s the whole $2 will get you $10.

2. Home needs updating. If you haven’t remodeled recently and don’t have the latest and greatest finishes, you won’t compete anywhere near the same price of similar homes that do. Buyers usually don’t want to do any work. If your competition is nicer, don’t expect they’ll pick your home unless there is a significant price difference. Your only cheap options are staging the property well and making sure that it’s clean and bright for showings. Some paint usually goes a long way to help here too.

3. Home needs serious work – You can’t tell me the seller and the listing agent don’t already know this. Investors are your most likely buyer here and don’t expect to get more than 80% of what your home could be worth if it was fixed. Most savvy investors are looking for homes at about 70% of what they could sell it for fixed up.

4. Horrible smells – Many homeowners have an idea that their home smells but don’t know what to do about it. Others like to pretend they can’t smell anything. I know they know it smells though because they always ask. People whose homes don’t smell never ask visitors when they come in if they could smell the _____ (insert animal of your choice). People whose homes smell, usually do ask that silly question. Of what value is giving the feedback…”Yes, it’s horrible.” when the seller isn’t going to do anything about it. If it smells bad, don’t expect to get a fair price for your home. I’ve seen this knock $20,000 of the value of homes. Animal smells are the worst but food smells can be overpowering too. Suffer from hyposmia? Get professional help.

5. Home is overpriced – If you’re a seller, don’t expect helpful feedback from buyers when it comes to price. This is the most inaccurate feedback you will get. Most buyer’s agents will likely tell you it’s overpriced regardless of what the comparable sales are. Usually, the buyer’s agent has no idea about the home’s value; they only know if their clients liked it or not. Even if they liked it, they might say it’s overpriced. Who knows for sure? The only thing that is certain, the buyers didn’t want to pay the list price for the home. If all buyers that see your place would gladly pay your listing price, you’re probably listed too low. From an agent’s perspective, feedback on price is only useful for helping the seller feel comfortable about a price drop, unfortunate but often necessary. I , personally, don’t go by feedback; I start by looking at the competition and seeing how we compare. This dictates more than anything what your home should be listed at.

The second type of feedback we get are things that the home owner already knows about but can do very little to fix.

6. Poor location – Funny thing is everyone talks about location, location, location as being the most important factor in real estate. But to a seller, he can’t do anything about the location when it’s bad. You can expect that location alone will turn off many potential buyers even before they come in. Repeated canceled showings? They probably discovered the problem before they even went in. A seller can only try to divert attention to the property’s strong points while attempting to downplay the problems with the location. Backing up to a busy street? Play soft music inside and considering adding a water fountain outside. If you’ve got worse problems than road noise, you’re probably going to need to address it in the price of the home. These problems may include close proximity to factories, crack homes, shanty towns, tent cities, train stations, gang hangouts, prisons, public housing, or Rocky Flats; don’t act like your home is anything like the home that backs to a ‘green belt’ or fronts on Washington Park.

7. The home has a funky layout – Staging may help but If your home has a hodgepodge of additions over the last 80 years it’s going to effect the price.

8. Bad Neighbors – There’s very little you can do to get the neighbors to ‘get with the program’. I’ve seen homes where the neighbors had a junk yard in their back yard, rotted out cars and all. As you might guess, this is bad for the neighborhood. I once got a call from an agent that noticed there was an electric fence, the type used for horses, along the top of my client’s fence. The neighbor needed to keep the pit bulls from jumping the fence and getting into everyone else’s yard. Do the only thing you can do, file a complaint with the proper government agency and hope nobody finds out it was you.

Now for actual valuable feedback.

9. Doesn’t show well – This can mean anything really, but if you have dogs barking at the buyers as they walk through the home or they are stepping over underwear, I want to know. Homeowner doesn’t step out for the showing, laundry is everywhere and bread crumbs are all over the counters? I want to know how the seller is doing at keeping the place show-worthy. Trust me, these are things the seller doesn’t want to hear. They are at the root cause of why homes don’t sell even after they really are priced appropriately for what they are.
10. Home doesn’t show at all, the homeowner denied showing – As an agent, nothing is more frustrating than when you’re spending money to market a property and the homeowner turns down a showing.
In most cases, I know exactly why something isn’t selling. Feedback is an exercise to help educate the seller and build the seller’s confidence in what I’ve already said to them. I don’t try to get feedback so I’m better educated about the price or condition of the home. I’m an expert and if I need a second opinion, I’m not going to ask someone who has a motive to not tell me the truth. I get feedback to take to the seller and say ‘See, I’m not the only one that didn’t think blood red with a rag faux finish is a poor color choice for the bathrooms ceiling and walls.’

Technorati Tags: Denver, Real_Estate, Marketing, Feedback, Agents, Home_Repairs, Home_Value

Filed Under: Denver, Denver Real Estate, FSBO, Marketing, pricing, Realtor, value

Most Brokerage's business models don't benefit the Agent

February 1, 2007 by Spencer Barron

I’ve always been interested in sustainable business models and have noticed that there are very few in the real estate industry. Except for that of the brokerage. The business model of the brokerage is not the same as that of the agent. Brokerages make money from agents, agents make their money from transacting real estate.

Before I made the decision to pursue real estate full time, I had considered getting into the mortgage business. What I found was just about anyone would ‘hire’ you on as a mortgage broker. Why? Because they would provide almost no support for you but take half of what was made on a loan. They knew that in most cases, a mortgage broker would come on, refinance their friend and family then wash out of the business. So they attempt to capture a larger share of the market with a networking through expansion method.

I can’t help but think many large real estate brokerages are doing the same. For example, I recently talked to an agent in a large brokerage who said that they shared an office with less than 20 desks with over 300 agents. This office represents a small area of Denver, so I would assume that there is alot of overlap between the agents. Most businesses in sales don’t have that many agents for a small area. It wouldn’t be fair to the salespeople. They would limit the number of agents so their agents would be as busy as they would like to be while still achieving saturation. But the truth about real estate is that brokerages make a lot of money off the agents themselves through various fees. They also know that the new agent will immediately go after their friends and family who might not otherwise use their company. So on top of the fees, there is perhaps another $10,000 to $20,000 to be made simply by bringing on another agent who may even be paying you to be there. Of course, most agents won’t be successful but the brokerage doesn’t really care. Most brokerages provide general training and services to make it appear that they want an agent to succeed but the truth is their business model is at odds with that premise.

To establish yourself in real estate requires time. If you’ve been in the business long enough, you have made the contacts and have the client base to pull from to sustain yourself. If you’re new to the business, you need to build your business in the face of a vast and entrenched competition. But the brokerages tell you you shouldn’t drop your commissions. They then proceed to charge you enough or split the commission in such a way that you agree, “There’s no way I could work for less.” There is no way that these agents that have no momentum will ever gain a foothold against the entrenched agents who are actively marketing in a neighborhood. So the new agents are left to help their friends and family (assuming there are not more agents in the family) then slowly fade away, back into the careers they came from.

Technorati Tags: Denver, Real, Estate, Brokerage, Business_Models

Filed Under: Business, Denver, Denver Real Estate, Marketing, Realtor

What should be in a Comparative Market Analysis and how long will it be accurate?

January 24, 2007 by Spencer Barron

What should be in a comparative market analysis (CMA)? A CMA shouldn’t be just a list of solds or actives. It should reflect the current conditions of the market. I was recently asked how long I felt a CMA was accurate and personally, in this market, I don’t think I would want to blindly price a home off a CMA I completed even two months ago. In most cases, my paranoia leads me to double-check solds and similar active listings even an hour before driving over to take a listing. There is a huge disparity in home pricing mainly because brokers use a wide range of largely ineffective models to determine pricing.

What I would look for in a Comparative Market Analysis (CMA).

New Sold Comps – This one is obvious but probably one of the most overrated when it comes to pricing. I don’t think this is the most important factor in pricing, but it’s important because once buyers have found that they liked your home more than the competition, this is where they will look to see if you’re worth it. You don’t have to be priced less if you can justify it, but both the initial offer and the appraisal will be based on this. Because of this, and to make sure you will appeal to the buyers in the market, you need to be priced in the ballpark that your buyer is looking in. Be prepared with a list of sold comparable homes and a justification of the price based on the homes’ differences. Sold data will likely not show a significant change over a short time frame and usually one low or high sale isn’t enough to support pricing.
New Competition - How many similar homes are you competing against? What does it cost to buy the other home? How do you compare to what is currently for sale? Lots of competition? It can have a huge effect on time on market and how much you’ll get for your home. If another seller comes on the market and prices below your home it will reduce your ability to compete at a higher price. Unless, of course, your home is truly different in a substantial way, this is not very likely when your home was a new construction home in a subdivision full of homes just like yours. How you compare to other homes that your potential buyers will be looking at is the most important factor in determining price.
Changing Absorption rates - This is a measure of how long the current inventory would take to sell if no new homes were added to the mix. Demand varies seasonally and as the result of the weather (super obvious) and the school year, as well as economic pressures and even poor media coverage of the market. Supply also varies greatly, peaking in the summer in most cities. It’s a great indicator, especially when applied directly to the homes of similar type.
Change in Days on Market before a sale – It’s also much easier for most people to grasp when compared to other indicators, but it’s one of those pieces of information that gets abused. Unfortunately, just because something sells quickly doesn’t mean it was under-priced. It could have just been the best home that the buyer was able to get an offer accepted on when they were looking. (see #2) There are too many variables to use the fast sale of a recently-sold property to support the idea that your home should sell for more. I find that of the homes that sell quickly, they usually don’t sell to some new buyer that just wandered by. Most new listings sell quickly when they are priced right when compared to what’s available. Buyers usually look around before they’re ready to buy. The homes that sell quickly likely sold to someone who was looking for a while already and recognized that the home was priced appropriately.

What is most disturbing though is the vast majority of sellers already have a price in their head that they want. Of course, I’m usually willing to hear why the seller thinks his home is worth the pie-in-the-sky price. They are usually trying to compare their home to homes with extra bathrooms, a finished basement, or more square footage. Even worse, many work backwards from how much they want to walk away from the closing table with or what they owe to arrive at their number.

For me though, I believe that the CMA’s should give you a range of what pricing will be acceptable to the market. It should also indicate where offers are being accepted when compared to the list price and what concessions (if any) are common. For Denver, as a general rule, most Denver homes homes sell within 2-3% of their current list price and buyers get less than 1% in concessions. Most also sell within 10% of their original list price of the current listing period. That means most homes priced more than 10% higher than what comparable homes would sell for usually end up expiring without a sale. In case you missed it, most Denver Homes are overpriced on average of 20% when compared to the average list price of the solds.

In the end, it comes down to the feeling you get walking in the door. The same feeling the buyer will get. Look at the competition and know what price can be justified. That’s the only way you can nail down the real value.

Also see: How to sell your home quickly for top dollar.

Technorati Tags: Denver, Real, Estate, CMA, Selling_A_Home, Pricing

Filed Under: Denver, Denver Real Estate, Featured, FSBO, Marketing, Realtor, statistics

Money Magazine – Buyer's agents co-ops and how to get a better deal buying or selling a home.

January 17, 2007 by Spencer Barron

Money Magazine - Is your Realtor on your Side? How about that. I actually got quoted in Money Magazine. Albeit my statement appears a bit truncated, it is not incorrect. I’m quoted as saying “People offer higher commissions because it works”. I’ll stand by that. Offering a higher commission to a buyer’s agent does help sell your home. It doesn’t necessarily help you get a better price but it will get you slightly more traffic. I’ll explain, but first, this is what I’m talking about. The February 2007 Article entitled “Is your Realtor on your Side?” by Stephen Gandel discusses the value of having a buyer’s agent. More than that, it actually gets into the morality of the strategies some homeowners and builders are using to sell their homes.

Steve’s seems to be trying to get his fingers on the pulse of real estate but can’t seem to get past the waiting room. I spoke with Steve on the phone after he wrote an article in the December issue of Money Magazine, “Best Ideas for 2007″. I had disagreed with him on many of the assertions he had made regarding strategies buyers could use to get a better deal. To be fair, I agreed strongly with his suggestions for sellers. In our conversation, he admitted that he ‘doesn’t have access to the same information that agents have’. Thus he has to “rely on other people” in order to write these real estate articles. He’s essentially trying to analyze data from hundreds of markets and collate that into advice that could be applicable nationwide. He’s not an expert in the sense of personal experience but rather is forced to rely on so-called experts from across the country to give him accurate information regarding the stories he researches in order to make the valuable conclusions. I’m honored that I can fall into that category. Unfortunately, I disagree with some of the advice in the latest article. It seems the article plays more to what buyers would want to believe rather than the truth about what will help get you a better deal. But then again, who knows what agents across the country tell him. This is how it works in Denver and what I disagreed with…

(If your not sure what commissions are and how they work, check the end of this post)

Why would offering more money to a buyers agent work? Because brokers want to make a living and will be more likely to show your place in among others of the same type. This is often true in the case in newer condos or builder-owned homes where there is often a lot of competition. If you have ten other condos in your building that are essentially the same home at the same price, and then there are lots of other condos in other buildings, most agents want to narrow down what building their client wants before showing them everything that is available in one building. There are literally hundreds of condos that are similar. Do you want to go view all of them or would you like someone to help narrow it down? Most people would like some help here. Well, if I have to pick which one to show first, and they appear all the same, why wouldn’t I pick the one that pays me better, especially if they’re are all priced the same? That’s just good business.

Unfortunately for sellers, this doesn’t seem to bring them a higher price, it just gets you more showings and helps to sell your home faster. From all the home sales I analyzed to prepare my information for Steve, I noticed that of the homes that had higher commissions sold slightly faster than homes that didn’t. It’s not obvious when looking at homes offering co-ops slightly higher than the average because often that money is being offered to get brokers to overlook the obvious problems with the home and bring someone by. While it might not have been as clear in the ‘slightly more’ group that higher commissions bring faster sales, it definately becomes clear in the ‘slightly less’ group. When you offer less than the average commission, there is a marked difference in time on market.

I took a look at this and noticed that time on market goes up immediately when offering even slightly less than the average co-op. Days on market increased by 12% when agents offered less than the average co-op. This can affect the sale price since a long time on the market is viewed poorly. …

Free Direct Mail Marketing for Realtors

January 15, 2007 by Spencer Barron

HGTVLowescover I recently started taking advantage of Lowe’s realtor benefits program. They send direct mail 10% off coupons to your clients. They recently added a DVD option from HGTV’s “Designed to Sell” for clients that will be selling soon. They have a number of different options and let you personalize the products somewhat. It’s a great way to stay in front of your clients and provide some additional savings to your clients. Anytime you can save a little money on marketing and add a benefit to your clients seems like a good idea to me.

Technorati Tags: Realtor, Marketing, Lowes, Benefits

Filed Under: Denver Real Estate, Marketing, Realtor

Where to spend my marketing budget?

December 29, 2006 by Spencer Barron

Internet advertising is such a waste of money. Definitely overpriced compared to the returns I get from other types of advertising. Not so much my own websites- they have their use, it’s the Internet lead sources that will no longer be receiving checks from me. Lead sources like Justlisted.com, Realestate.com, HomeGain, and the myriad of other companies who are pawning off information that they collected at one of their many landing pages. According to the 2006 National Association of Realtors Profile of Home Buyers and Sellers (pdf), three quarters of home buyers use the Internet in their home search. With this premise in mind, you would think an agent should place a large portion of his/her marketing budget into the Internet. That’s where the buyers are, right? Yes and no. They are there, but they really don’t want to be bothered.

People love the anonymity of the Internet. They don’t want to be sold. They just want something that you’ve got. They hate to leave their information, so they will not, if they can avoid it.

‘They’re not that into you’

Unfortunately for agents, real estate is rarely an impulse purchase….

Filed Under: Business, Denver Real Estate, Internet, Marketing, Technology

How to not get screwed in Real Estate.

December 4, 2006 by Spencer Barron

Long term success in real estate is built on trust and referrals. With this in mind, it’s a shame that some fly-by-night agents are abusing their position at the expense of an industry’s reputation. A recent article in REALTOR™ Magazine discussed the problem of loan fraud.
I know there are many naysayers that are highly critical of the National Association of Realtors and would expect the article to be more of a ‘how to’ than a critical condemnation of the practice. The truth is Realtors as an organization have high standards designed to protect the public and the reputations of Realtors. If you truly believe you benefit yourself by working without one, I highly encourage you to take on the process of buying or selling a home yourself. If you get sick of the experience, try it with a Realtor and you’ll begin to appreciate the whole idea of specializing in a practice. That being said, I was once a naysayer too.
Realtors have a Code of Ethics. If they violate the code or the law, they can be fined, have their license stripped from them, and be publicly humiliated. (All decisions and judgements are published in a newsletter.) One lapse of judgement and they may be barred from working in real estate all together.

One of the best things people can do to protect themselves in real estate transactions is to keep in mind the following:…

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