Expired listings – Price your home right – Price it on the zeros

As I’ve been working expired listings, I’ve found that frequently the pricing is wrong. This is the most common reason that homes don’t sell. Most agents and consumers realize this. Some home sellers do, but a lot of them do not. What they may not realize is that the home is in the correct price range, but is priced wrong. The real estate agent is to blame for this and I am amazed at how many people get this wrong.

The basis for this is a classic psychological pricing strategy.

To learn more about this theory visit Wikipedia http://en.wikipedia.org/wiki/Psychological_pricing.

The classic pricing example is used in infomercials where I’m sure you’ve noticed that almost all products are priced at $19.99. People think, “Hey it’s less than 20 dollars.” This backfires on you in real estate pricing. The reason for this is because of the way home buyers shop for homes. This tactic probably works great in Best Buy when your wife won’t let you spend over a $1,000 for a TV, that one for $999.99 looks really good.

People don’t shop for homes like they shop in Best Buy. You can’t walk into a store and see hundreds of homes lined up right next to each other. Shopping for homes is started online. In fact, 87% of homebuyers begin their search online. How do you search online when you look for a home? Trulia, Zillow, and Realtor.com all have searches from blank to blank. Do you type into the search a price range of $250,000 to $299,900 because you don’t want to spend $300,000?

Several individual agents use an IDX feed on their website allowing you to search for homes. This search function is designed with price range options to select such as $250,000 – $300,000, not $250,000 to $299,900. My point is, very few people are searching any other way.

When my wife and I were actively looking for a new house, we were looking for homes between $250,000 – $300,000. I would sort with the $300,000 homes on top. During the market conditions at the time I wanted to get a great deal. My wife, who wanted the lower mortgage payments and gets stressed over money, would sort with the $250,000 homes on top. If your home is listed at $249,900 isn’t going to even show up on our list. It might be the perfect home for us.

I’m not sure why other agents price homes that way. I’d like to hear from them. If your home was priced like this and it didn’t sell, is it possible your agent could be making other marketing mistakes as well? If you would like to talk to someone who can help you sell your home that has not sold, please call Mike Henderson at 303-949-5848. I would love the opportunity to have you interview me as your next agent. Even if you don’t choose me or decide not to put your home back on the market, at least you will have a good idea of your present situation and options after speaking with me.

It’s no secret that the attitude toward owning a home in recent years has changed. In the go-go years of 2003-2006 Americans got caught up in a frenzy of speculative home buying, banking on unlimited future appreciation to compensate for miniscule down payments and massive overleveraging. In retrospect this real estate bubble was all too apparent. But like all bubbles throughout history it’s easy to identify when it’s over, yet millions were swept up by it when the going was good. So, where do we go from here?

What we are experiencing now is like a twist on the classic 4 step grieving process – let’s call it the Real Estate Bubble Grieving Process. It’s made up of the following stages: Denial, Grief, Overcompensation, and finally Acceptance.

We saw Denial in full force as we led up to the peak of the market in 2006. People were standing in line to buy chits to purchase condos in Florida, then selling those chits to the next sucker in line for $20,000. Cleaning people were buying penthouse apartments in Manhattan, then selling them for a $500,000 profit and buying a bigger one. Crazy!

Next came Grief. The market collapsed and millions of people faced financial ruin, the inevitable consequence of a market gone mad.

Then we entered Overcompensation. In this stage large numbers of people decided ALL home ownership is bad. Clearly this is wrong, but the lessons of the past few years will take a long time to fade. So for now, many people who arguably SHOULD buy homes are not because they are too scared. If they don’t own, they rent. So now the rental market is overheated and rents are skyrocketing.

Finally we will get to Acceptance. I don’t think we’re there yet. Acceptance will happen when homebuyers finally accept the fact the buying a home should be a lifestyle decision as it was for most of our history, not a speculative investment. The folks that realize this first will get some great deals as the rest of the buyers sit on the sidelines, too scared to act.

What stage are you in?

Yesterday I attended the 2nd annual Rocky Mountain Writers Summit. It was a free event for all types of aspiring authors. I attended out of curiosity and my business reason was to potentially write books about real estate to enhance my business. There is always that sneaky suspicion or desire to write a real book.

This was a free event. You were encourage to give a $5 donation for Habitat for Humanity, of course I did. I was real curious to see the attendance and the type of people who were there.

This photo was taken between sessions and it was a packed house. It gave me several ideas on how to help my real estate business.

The pain and setbacks we go through as real estate agents is nothing compared to what these writers go through. For us that one listing that is not selling or the buyer who is difficult can bring misery into our lives, but the writer has it worse.

The vast majority of these writers put there heart and soul into their book and many of them spend years on this project. Think we put the same time and effort into a listing? Not a chance. My book, booklet, or e-book on How to buy a HUD home is simple compared to what they do.

I plan on doing an individual breakout of each of the individual speakers that I saw.

Jonathan Manske – Author and Life Coach

Patti Thorn – Editor

EJ Thornton – Author and Publisher

Joe Sabah – World Renowned Author and Speaker

Thubten Comerford – Social Media Expert

The officail web site of the writers conference

DENVER METRO MARKET FOR $1 MILLION OR GREATER

DECEMBER, 2010

 To see a list of Denver metro area million dollar homes for sale click here.

Forty three (43) single family homes sold/closed in December, 2010 for $1 Million or greater.

Forty two (42) were residential and one (1) was a condo.

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For residential, 12 were in Boulder County, 10 were in Denver County, 8 each were in Arapahoe County

and Douglas County, 3 were in Jefferson County, and 1 was in Broomfield County.

Of the forty two (42) residential properties sold/closed, the lowest sold price was $1.0 Million, the highest

sold/closed price was $3.1 Million, and the 42 properties represent $61.0 Million in closed volume.

The one condo property represents $2.1 Million in closed volume.

They are selling people.  If you think that now is the time to buy or sell in this market please contact me for a free analysis based on the exact target of what you are looking to buy or trying to sell in the Denver, CO market.

To see a list of Denver metro area million dollar homes for sale click here.

There are a wide variety of reasons that your home didn’t sell last year.

• Your home was not priced correctly.  This is typically the biggest reason.  Many real estate agents are inexperienced, lazy, don’t understand the neighborhood, or simply don’t want to tell the seller what there home is worth.  They are afraid to communicate with their client that there home is not worth what the homeowner wants it to be.  If you had a price reduction was your home remarketed to everyone who previously saw it

• Marketed correctly your home was not.  Yoda and sounding like him is great for the movies.  Writing ad copy for sell an asset in the six figures is probably a bad idea, unless you are trying to sell Skywalker ranch. 

• Was your home available for showings?  When agents tried to sell your house able to get inside at a convenient time?  Was the home clean and well kept?  This is one of the hardest things for homesellers to deal with.  Did you get feedback on your listing from other clients. 

• Staging – Did your agent hire a stager or recommend that you get one?  Did they offer tips themselves?

There are a wide variety of reasons that your home didn’t sell last year.  These are just a few.  There are many others but if I told you everything why would you need to call me.?

These are all reasons that you need to contact a different real estate agent for this year.  Most consumers are unaware that once you go under contract with a real estate agent no other real estate agent can tell you any of these things!  If nothing else use this opportunity to get that second opinion before you put your home back on the market.

If you really want to get your home sold this year make sure you get a second opinion.  In the Denver, Colorado market I would love to give you a second opinion and likely show you housing market data you haven’t seen before

Mike Henderson

303-949-5848

The changing demographics of homeownership have big implications for both buyers, sellers, and homeowners. 

Although 51% of survey respondents said the housing crisis has not affected their overall willingness to buy a home, 33% said they would be more likely to rent their next home than buy. In January, 30% of Americans surveyed said they would rent a home the next time around.  This does not sound like a big deal but it is a 10% increase. 

Overall, 89% of homeowners, as well as 49% of renters, feel they would be better off owning a home in the current economy. However, Fannie Mae found that the homeownership rate among young adults (ages 25 to 29) decreased 11% “since peak rates” before the housing crisis.  These are the future homebuyers and if they go away it has big implications for builders and move up buyers.  Without new homeowners coming into the market both these groups will suffer.

The good news is that some 40% of all home sales went to first time buyers last year.  There is hope.  Please subscribe to our email list if you are interested in attending a free first time homebuyer class.

Current analysis of the luxury home market in Denver, Colorado it is fragmented to say the least.  One of my biggest focuses lately has been expired listings in the Denver metro area.  The market has started to shift to a neutral market on the whole it favors neighter buyers or sellers. However certain areas and market segements are unique.  To search the Denver luxury home market.

Working my expired listing market is not price constricted it is geographically targeted.  I’m going by this house in a great Denver luxury home neighborhood.

This home is designed to be a scrape.  The home itself is not that attractive.  It was priced around $800,000.  It is a well established neighborhood.  I absolutely loved the neighborhood driving around in there.  It was quiet and out of the way, off the beaten path, surrounded by luxury homes. The buying of a lot and scraping the hold house off is quite common in these areas.  It definitely was before the real estate crash. There is a lot of challenges in the construction loan market. There is also a plethora of luxury homes in the Denver market. These scrapes aren’t done nearly as often as they used to.

Building luxury homes is still going on!

Just up the street a new luxury home is being built.  This is what really gets the economy moving, new home construction.  Absolutely this is a luxury home going in here, just look at the sign.  Whenever you see a custom sign for a new home consider that it’s not a tract home.  Then you see this going on in the same neighborhood.

The bad news that is going on the same street

Whoops

Here we have a luxury Denver foreclosed property.  People are all to familiar with this situation.  The foreclosure crisis is even hitting the luxury home market.  This makes sense for a few reasons.

1. The rich generally have more assets and options than most people.  This allows them to delay foreclosure longer.  They can liquidate assets to help with their situation.
2. Option Arm’s were generally more prevalent among luxury properties.  These are finally coming due, resetting, and/or becoming fully amoratizing.
3. The stated income loans went away.  This takes away the option of refinancing for a lot of people.

So here on one little street you can see a snapshot of the entire luxury home market. If you would like to search for Denver luxury homes.  My analysis, especially in this market is that each property and neighborhood is unique.  Some favor the buyer and others the seller.  There is a great deal of customization of homes and there is a much greater variety and divergence in these homes compared to track homes.  On the whole I’d rather be the buyers agent rather than the selling agent.

Denver luxury home sales hit highest level in two years. This applies to homes that sell for over $1,000,000.  Sixty-seven existing homes, including houses, condominiums and townhomes, sold in that price range last month — up 3 percent from 65 in June 2009 and up 22 percent from 55 this May. “It was the highest level for luxury sales since 89 properties changed hands in August 2008.  Read the complete article in the Denver Business Journal.

• The most expensive $1 million-plus sale in June was a six-bedroom, five-bath Denver house that sold for $3.95 million. The home included 7,403 square feet.

• Denver had the most million-dollar sales, with 17, followed by Boulder (13), Castle Rock (7), Cherry Hills (6)and Greenwood Village (5).

• Average days on market for high-end homes dropped to 115 in June from 103 for the same month last year.

My analysis of the Denver luxury home market. The biggest factor is jumbo mortgages. It is possible to get a jumbo mortgage today, July 19th for under 5%. The rich aren’t stupid.  They recognize this incredible environment and are taking advantage of it.  By the way a non jumbo mortgage is 4.5% or lower.  Think this is a good time to buy a house?  The Denver luxury home market still favors buyers over sellers. In my market segments I want to work with sellers instead of buyers. It’s not that don’t know how to market the luxury home market,  it’s just that my negotiating skills work out better on the buyers side.

To search for Denver luxury homes.

Recent real estate sales for commercial, land, and light rail in Denver, Colorado. There are several entries on the complete list which came from the Denver Business Journal. There were several transactions that stuck out to me.

Real Estate Builders buying land

• Vacant land, Douglas County — Celebrity Custom Homes Inc. of Englewood bought this acreage for $4.37 million. The seller was D&D Real Estate LLC of Englewood.
• 1397 Sky Rock Way, Castle Rock 80109 — Meritage Homes Colorado Inc. of Greenwood Village purchased this vacant land in The Meadows subdivision for $2.09 million from Arcadia Holdings at The Meadows LLC.

Builders buying raw land will be one of the predictors of the housing turnaround and US economic recovery. This is step one of building new houses and creating jobs.

1. Buy Land – Somebody made some money by selling land that was not generating any income.  Now they can spend that money or invest in another capital producing investment
2. Builder builds a house.  This is where the bulk of the value is created.  Think of all the contractors that are needed.  The raw material and capital investment is big as well.
3. Builder sell the house.  This is where title companies, real estate agents, and mortgage bankers makes the transaction happen.
4. Customer moves into house.  They likely need new lawn equipments, furniture, LCD TV’s etc.  This helps with retail sales.

It all starts with the purchase of land.

Light Rail Properties

• 5155 E. Yale Circle, Denver 80222 — The Urban Land Conservancy purchased this 1.2 acres, near the light rail station at Yale and Interstate 25, for $1.33 million. The City of Denver’s Transit Oriented Development (TOD) Fund covered 90 percent of the cost. Affordable, workforce housing will be built at the site. The seller was Denver residential developer Wally Hultin of Byers Street Properties LLC, as East Yale Circle LLC, according to property records.

What does this mean for the light rail in Denver, CO.  I view this as a positive stop for the light rail. One of the key factors in the success of transit is the amount of people that live around it.  This leads to people using the light rail. Wouldn’t you use if was in walking distance?  Perhaps you like driving down I-25.  This increases revenue and use of the light rail system.  This also leads to higher retail sales for business in the Transit Oriented Development (TOD) district.  At the risk of stating my political views, not supposed to talk about politics while selling real estate, and the answer is.  I’m a conservative and I believe light rail should be a conservative issue.  If you don’t believe in the welfare state you want people to work.  One of the biggest problem the poor and unemployed have is access to transportation. Why don’t we make it as easy as possible for them to get a job.  If you are probusiness don’t you want people to have reliable trasportation?  Don’t you want the widest applicant pool possible.