Has the Luxury Home Market Bounced Back?

The latest news is all awash with stories of a rising real estate market.  The National Association of Realtors estimates that in November 2012, single family homes sold at a 5.04 million annual rate, up 14.5% over November 2011!  But has this filtered into the luxury home market as well? 




1125 H St, Eureka, CA 95501

The answer, of course, is that “it depends.”  A quick glance at 3 of the luxury home markets in which I work shows that different areas are responding in different ways.  In San Mateo County, California, the overall increase in the number of homes sold in 2012 over 2011 was 8%.  Did the upper end of the market move at the same speed?  For the most part, yes!  Homes at the $1M mark made up 18.69% of the total in 2011; and 20.20% of the market in 2012, a statistically negligible difference.  Similarly, homes in the $2M, $3M, and $4M+ ranges kept pace in terms of volume with the overall market.  In San Mateo County, luxury homes benefited from the same bounce seen in the overall local market!

 

In nearby Marin County, California, the overall market volume rose 13%, from 2612 homes sold in 2011 to 3014 homes sold so far in 2012.  Homes in the $1M, $2M, and $3M price ranges kept pace with that increase, roughly maintaining the same level of market share in 2012 that they had in 2011.  But at $4M and over, the number of home sales as a percentage of the overall market went up 30%, from a total of .84% of the market to 1.09%.  In the uber-luxury segment of Marin County, there was a noticeable bump in volume compared to the overall market.

 

But in Humboldt County, California, a more rural, Northern California market, the story was quite the opposite.  While the overall market volume increased 10% in 2012 over 2011, the luxury market, which starts considerably lower than in the previous counties, went down across the board.  At $400K and above the number of homes sold compared to overall dropped 27.6%; at $500K and up, the drop was 41.9%; at 750K and up the drop was a whopping 67.5%. 

As Twain said, there’s liars, there’s damn liars, and there’s statistics!  Overall the real estate market is recovering, but luxury markets across the country are still highly localized.  The bottom line is that each potential home seller or home buyer needs to check in with his local luxury Realtor to get the scoop on his area before committing to a real estate move.

Custom Websites Give Confidence to Home Sellers

Mrs. A_ had known her real estate agent since the agent was a little girl playing with Mrs. A_’s kids at school.  But at the request of Mrs. A_,  the Realtor had listed the large luxury home on acreage about $100K above the fair market value, and it was languishing on the market.

 When the listing expired, I sent Mrs. A_ a letter explaining my Big Wow Marketing plan, and she invited me out for a visit.  She really wanted to sell her home, and she saw that I was a “go-getter,” but she had to have top dollar.  I saw that she also needed to detach emotionally from the home.  Her late husband and sons had built it for her retirement years, and much of her financial security was tied up in its value.

 I prepared my Competitive Market Analysis, and determined that the home was probably worth around $600K, perhaps a bit below that, but that I could justify a price of around $630,000.  She had listed it originally at $699K, and had come down to as low as $660K before the previous listing agreement expired.  She was not happy with my $600K price, but agreed that she would try to sell it for $630K, but “not a penny less!”

 As we prepared our Big Wow Marketing package, I started a whisper campaign with the other real estate agents in our office, and the day it went on the market, another Realtor in my office brought a prospective home buyer to look at the home.  Soon thereafter we had an offer for $575K.  Mrs. A_ wanted to see how many other offers we might get, so we waited for a month and our first 6 showings or so before she decided to counter our original offer at $625,000. The buyers wanted the home, but didn’t want to over pay, so they decided to let us sit on the market for another month and a couple of more showings before they countered us at $600K.  Mrs. A_ was really convinced that her home was worth more than that, so we had a couple of other showings over the next month. 

 We had a sit-down visit, and I reminded her of some facts.  We had been on the market for 3 months.  We had about a dozen showings.  We had only 1 offer.  She concluded that, given the tremendous efforts we had made to market the property, and the number of showings we had, that this was likely the best offer we were going to receive.  So she countered one last time at $605K!  The buyers accepted – mercifully – and we closed escrow!

 Did my Big Wow Marketing package get her more than asking price?  No, but it did give the home seller the confidence she needed that the very good price that we did get was indeed the best offer we were likely to get.  And after all, what is peace of mind worth?

How to Sell a Listing for an Extra 5.5%!

I made my sellers an extra 5.5% on their sales price!

Several other agents had told my clients that they couldn’t sell their home for more than $500,000!  I thought we could!  My CMA (Competitive Market Analysis) indicated that we could sell for somewhere between $500,000 & $540,000, so we listed it at $539,000 and went to work.

My team prepared our standard Big WoW Marketing Package (www.6243Rohnerville.com) and put the home on the market.  Within 2 weeks we had four showings and 2 offers. 

The first offer, from buyers in Portland & Santa Cruz, came in below $500,000.  When I presented the offer to my sellers, they wanted to know everything they could about the buyers’ interest level, and when I showed them our custom website hits by city, with Santa Cruz and Portland at #1 & #2, they realized that our buyers were very interested in their property.  We knew we had a 2^nd offer coming, so we prepared a counter offer at $535,000 and waited. 

When our 2^nd offer came in the next day under $500,000 as well, we decided to continue with our counter offer to buyer #1, and let them know that we had received a 2^nd offer.  When our first buyers heard that there was another offer on the table, they couldn’t sign our counter offer fast enough!  We opened escrow, and after our inspection period and some negotiations for repairs, we closed escrow at $527,500!

After the initial photos and the placing of a home in the MLS, most agents rely on the price reduction as their main tool to sell a home.  Hence, most agents thought this particular home would sell for under $500,000.  By engaging the buyers’ hearts and minds with our Big WoW Marketing Package, we were able to coax an additional $27,500 out of their pocket!  That’s an additional 5.5% of the expected value of the home!

So if you truly want top dollar when you sell your home, Big Wow Marketing is the ticket!  Obviously, I can’t guarantee you a specific sales price, but I can guarantee you the best marketing available in the real estate industry today!  And it won’t cost you a penny extra!

I Made My Sellers an Extra 6.7%!

I made my sellers an extra 6.7% on their sales price!

My client had been listed before at $1M with a different agent. He was shocked when I told him his property was worth $750,000. He really wanted to sell, and he loved my Big WoW Marketing package, with it's custom website, but he said he couldn’t go below $850,000. I told him I would market his property at $849,000, and we’d give it our best shot. If it didn’t sell, at least he knew that he was getting the best marketing possible, and we could either reduce the price or try again at a later date.

After 9 months at $849,000, the perfect buyers appeared from Los Angeles. They commented on each of their visits to the property how beautiful the website (www.15500DyervilleLoop.com) looked and how it showed off the property. So when they brought a cash offer at $700,000, we knew they were really interested.



I presented the offer, and my Seller decided to counter at $800,000. The buyers countered us at $750,000. I told my Seller that this was probably the best deal we would be able to get, and that I couldn’t even guarantee that it would appraise for more than this, should the next buyer need a loan of some kind. $800,000 was as low as he would go, though. I made the best case I could to the Buyers’ agent, and hoped for the best.



In the meantime, the website traffic for the home took off! Our weekly average went up over 300%. I can just imagine the Buyers asking themselves, “$800,000! Is this place worth it? What do they see in it? Let’s go look at that web site one more time!” And every time they did, the views and selling features wormed their way into the buyers’ hearts and minds.



Bottom line - they accepted our $800,000 counter offer and we closed escrow. My Big WoW Marketing made my Seller an extra $50,000, or 6.7%, in his pocket. And it didn’t cost him a penny extra!

If the only tool you have is a hammer, you tend to treat everything like a nail. If the only tool a Realtor has is a price reduction, the property seller is the one who gets beat on. Custom websites - with a 3-D custom floor plan, Virtual Tours with Hotlinks, and the unlimited ability to show off a property to a buyer- are changing the way we market properties. Embrace them, and put more money in your sellers' pockets. They will return the favor!

Do Custom Websites for Listings Work?

My sellers had already moved to Arizona when they called me in response to an expired listing letter. They had their home listed with another agent, it didn’t sell, and they weren’t happy with the agent’s efforts to sell their home. I explained my Big WoW Marketing package to them (see a sample at http://www.2972oldarcataroad.com/) and they listed their house with me, albeit at more than I told them it was worth. I suggested $325,000; they wanted to list it at $359,000.

A potential buyer called me soon thereafter. He was visiting from out of the area, and he had seen my directional sign on the main road, and had followed it to the property, where he pulled a flyer out of the flyer box. Intrigued by the photos and 3D floor plan, he called me to see the inside of the home. I called my assistant in that area, and she immediately met the buyer and his family and showed the home to them. They went home, and the next week called me to write up an offer.

They offered what I described to my sellers as “top dollar,” $335,000, and we put it in escrow. During our inspection period, the buyer found several key issues of which the sellers were not aware, including

• A failed septic tank.
• Significant pest issues.
• A failing roof.

Had we simply deducted the cost of these repairs from the purchase price, we would have been well below $300,000. Instead we re-entered the negotiating process. The buyer really wanted the property, and the seller was adamant about getting what they considered a fair price. Through much dialogue, we were able to arrive at a purchase price of $317,500, a price that was acceptable to both the buyer and the seller.

Toward the end of the escrow, I emailed my buyer regarding some final details, and asked if the Big WoW Marketing package we produced had helped him through the process. This is what he said:

Jeff,

… In regards to your website, it was very helpful and was instrumental in us making this decision. Its human nature to question a large purchase as time goes by and you can’t see what your contemplating buying…the fact that I could daily go to the site, share pictures with friends and keep the excitement going was probably the main reason we went through with the deal. I doubt we would have done the deal without the site.

Thanks again for all your help….look forward to meeting you at some point in the future.

John

Had we lost that buyer, we would have had to sell for under $300,000; instead we were able to sell for $315,500. That’s in increase of over 5%! The fact that Big WoW marketing engaged the buyer’s heart and mind on a daily basis from 250 miles away meant an extra $15,500 in the sellers’ pockets.

There's no question that custom websites for listings take more up-front effort and investment on my part. But not only does the increased sales price mean a bigger pay check for me and my sellers, the increased client satisfaction means more listings and more paychecks than I could accomplish without offering this Big Wow Marketing package.

3 Key Elements to Selling Your Home

Selling your home, when you boil it down, is really about 3 things: the Property, the Promotion, and the Price.


The Property is the one thing over which you, the Seller, have control. It is your house. You have complete control over the color, the carpet, the landscaping, the décor, the features…simply put, it’s your house. As a Realtor, I’m happy to walk through your home with you and make suggestions that will make it more desirable, but ultimately your home is…well, your home. You have control over the condition, appearance and features in your home.

The Promotion, or marketing, is the one thing over which I, the Realtor, have control. This is what you pay a Realtor for – to get the facts and features of your home out into the marketplace so that qualified buyers can see it and decide to take the next step and come see the home in person. For a $250,000 home, you’ll pay a Realtor somewhere in the neighborhood of $15,000. That’s a lot of money! And the main reason you’re paying him this huge amount is to market your home so that you can get the best sales price possible. What is his marketing plan? Get it in writing, and get it guaranteed! Get samples of his work from previous listings. If he is unable or unwilling to offer these, move on. You’re not getting your money’s worth.


The last element of the sale of your home is the Price. Neither you as the Seller, nor I as the Realtor, have any control over the sales price of your home. You can determine the price at which your home will NOT sell, simply by saying, “No, I will not accept that offer.” I will advise you on the price where your home is likely to sell, based on recent comparable homes sold and current market conditions. But neither you nor I can fix a certain sales price. If we could, you and I would agree to sell your home for $1,000,000, and we’d just go do it. But if the market will not support a price, then we won’t be able to sell it at that price.

So what determines the sales price of your home? The Market determines sales prices for homes. The market is the pool of buyers and sellers currently active in the home market place, and fair market price is the price at which 2 potential buyers are willing to argue over your home. Two buyers are important; if we have only one buyer, he is arguing over the price with you, the Seller, and he’s arguing down. If you have two buyers, they are arguing with each other, and they are arguing the price up! That’s what you want! Many times I’ve seen a Seller list his home higher than fair market value, get very few showings, and one low-ball offer. Then he ends up selling his home for less than he had to because he only had one interested buyer. Conversely, I’ve often seen a seller list his home at an aggressive price in line with the fair market value, and receive two or more offers, and ultimately sell his home for more than he was asking.

So, don’t pick an agent based upon the sales price he says he can get for your home. There are agents out there who will “Buy a Listing.” That is, they will suggest a value of the home way above fair market value to entice a Seller to list the home with them, and then they’ll spend the next 6 months trying to work the Seller down to a realistic sales price. You should hire an agent primarily on the marketing he will do to Promote your home, and secondarily on his counsel in preparing and Pricing the Property for sale.

Marketing Your Home on the Internet

Upwards of 90% of homebuyers today use the internet as a primary tool in their real estate search, but a clear understanding of how real estate on the internet works can maximize the effectiveness of your homes' internet advertising.

The two primary portals for buyers onto the real estate internet are the local Realtor MLS’s (multiple listing services) and real estate property search websites like Realtor.com, the most popular real estate web site in the world. Both of these types of tools are indispensable in marketing your home. The first step in an aggressive internet marketing campaign is to maximize the use of these tools by putting as many attractive photos, floor plans, maps and other images into these databases as possible. Similarly you should list as many positive selling features of the home as space allows. In my local database, this means using all 400 characters (80 words), and on Realtor.com this means using 25 photos to show off a home. For many homes, though, this is simply not enough space to adequately display the home’s features. How do I get around these limitations?

Property specific websites! With a custom website built specifically for your home, we can feature as many selling features, photos, floor plans, maps, and virtual tours as we want. We don’t need to leave any selling feature out! Then the website can be mentioned prominently in the local MLS database and on Realtor.com to supplement all of the materials on those sites. You can mention a website on a custom flyer, on a business card, on a TV ad, in a newspaper or trade publication ad. I can even mention it here: go to http://www.2972oldarcataroad.com/ to see what I’m talking about.

So don’t let the system limitations stop you from showing off your home to the 90% of buyers using the internet every day. Go the extra mile with a property specific website, and hook the heart and mind of those buyers so that your home stands out above the rest.