Get Serious

Any business needs a certain degree of focus. The same goes for flipping homes. If you want to make money at it, it is time to get serious about it. You need to make an absolute decision that you are going to follow through no matter what life throws your way. This is probably the most important step because the only way to make money at this is to complete the process. Make a decision to be successful before you even begin.

Learn The Ropes

I can’t say enough about this step. There is no business that someone can be successful at if they don’t know what to expect. The real estate business comes with many variables, some work for you and some work against you. By having enough knowledge to know when to back out, you are half way to making a killing in this business.

Pick a location

Location, location, location if you don’t believe it, then maybe you should get out while you are ahead. You have to teach yourself how to find the best locations to invest in. There are several tactics that work well here. That doesn’t mean go out and buy property on the best side of town. It means there are instances when that is good and instances when another location would be better. You need to figure this out to make the best decisions.

Find A Realtor

This might seem like a given, but believe me it is not as easy as it sounds. You are looking for someone who wants to help you find exactly what you are looking for. You need them to seem as if they can read your mind or you will waste a lot of time searching with few results. You may even find it necessary to teach your method of making money flipping homes to get it right.

Make Connections

It never hurts to have a few people on your side. This is pretty much a given in any industry. With real estate you want to kind of develop your own little good ole boys club. It can do wonders for getting things done.

Keeping listing clients happy during a real estate downturn is no task for the faint-hearted. In fact, it’s hard work, and sometimes stressful work.

What can you do to hang on to them until things pick up again?

First, stay in touch. It’s not easy to pick up the phone and call your clients when there’s no good news, but when they keep hearing from you, they know you haven’t forgotten them, and you’re still trying to sell their house.

Start keeping a log of the things you do for each listing – everything from straightening their sign to adding new materials to their flyer box, to mailing a flyer to an out of town inquiry.

If, after a couple of weeks, you see that you haven’t done much, then find something to do for them!

Maybe you should take the time to do a new market analysis. After all, if your market is filled with repossessions and short sales, the price you told them 3 or 4 months ago may be wrong today.

It might not be good news – not news they want to hear – but your honest evaluation is something they need to see.

They may object to having their well-cared-for home compared to a repossessed home, so you need to choose your comps with care and assure them that you have indeed seen the homes you used. Point out the adjustments you’ve made for condition, if that was necessary. Also point out the similar features.

Take your time with the adjustments so you can explain them to your clients. That will assure them that the price you now see is the right one.

Once you’ve shown them your figures, have a serious talk about what they need to do. Maybe they’re fine with waiting until the market comes back up, but maybe they have a reason why they need to move soon and need to make a price adjustment. Let that be their informed decision.

If you do make a price adjustment, send out a “just reduced” message to everyone on your buyer list who might be a fit for that house.

If the price looks right, then work on improving your advertising copy and get some new photos for your virtual tour. Make it look like a different house than the one your potential buyers saw last week. If nothing else, it could cause someone to take a second look and perhaps decide they need to see it.

If your ad copy so far has been routine, talk with the sellers and learn something that you can use in your new copy. Ask them what they’ve enjoyed most about living there. Ask them what features in the house give them the most benefits. It could be relaxing on the back deck and watching the leaves change in the fall – or feeding a variety of birds in the back yard feeders. It could be the cheer and warmth of the fireplace on a cold winter’s night.

Whatever it is, paint some word pictures and add them to your copy to entice buyers. Make them want to enjoy those same comforts.

If you haven’t already done so, get out and make some contacts in the school district personnel office and visit any corporations that routinely relocate employees. Get permission to leave your flyers with them while you promise to take good care of their incoming employees.

Go to the local motels and ask if you can leave flyers for their guests. Ditto for restaurants and service stations. Any place where newcomers stop is a good place for your marketing materials.

Then, be sure to enter those activities on your log. At the end of the month, send a little report to each of your listing clients, letting them know what you’ve done on their behalf this month.

I guarantee that staying in touch and keeping them informed will give you a far better chance of hanging on to that listing than will ignoring them.

Take care to keep your listing clients happy and hold on to those listings, so you’ll be ready when the market turns around – you can do it if you communicate well.

It’s not only the case when you are applying for a job at some company, even if you are willing to start on your own; you need to educate yourself on continuous basis, whether through conventional means (college, online courses) or other sources (books, magazines or articles). Getting hold of most up to date information is crucial, irrespective of your area, be it construction, appraisals, land surveying or running a real estate agency.

Real Estate & Economics:

Knowledge of economics comes handy when determining future prices or other property trends. You must have sufficient comprehension of the law of demand (buyers, owners or users in case of property) and supply (sellers, developers and agents). You should also be familiar with the economic factors that will or can affect property prices, you are supposed to know the answers to basic questions like what’s going to happen when demand of homes surpass supply or vice versa?

Real Estate Finance:

Most real estate professionals start their careers from this line of work. If you are looking to join this field, you should equip yourself with the knowledge on how mortgage works, and know-how of other commercial or non-commercial lenders as well. You must be able to guide your customers (after listening to their requirements and limitations) to the most appropriate source.

Law & Regulations:

All real estate transactions and activities have a specific set of laws and regulations set down for them. These laws cover all the major areas like buying and selling, construction, tenancy, commercial properties, quitclaim deeds, financing and foreclosures. A real estate professional should be well versed with at least the basic ones.

Marketing & IT:

Property marketing is slightly different from traditional marketing. You cannot go around marketing all “for-sale homes or properties” one by one because of the costs attached. All you can do is to work on establishing your brand name as an authentic real estate agent. Like all other sectors, internet boom has also alleviated the field of property marketing. Ignoring the cutting edge technologies this medium provides can cause serious damage to your growth. That is why good proficiency in using internet as a marketing tool is very important for anyone who is looking to excel in real estate marketing.

It’s not only the case when you are applying for a job at some company, even if you are willing to start on your own; you need to educate yourself on continuous basis, whether through conventional means (college, online courses) or other sources (books, magazines or articles). Getting hold of most up to date information is crucial, irrespective of your area, be it construction, appraisals, land surveying or running a real estate agency.

Real Estate & Economics:

Knowledge of economics comes handy when determining future prices or other property trends. You must have sufficient comprehension of the law of demand (buyers, owners or users in case of property) and supply (sellers, developers and agents). You should also be familiar with the economic factors that will or can affect property prices, you are supposed to know the answers to basic questions like what’s going to happen when demand of homes surpass supply or vice versa?

Real Estate Finance:

Most real estate professionals start their careers from this line of work. If you are looking to join this field, you should equip yourself with the knowledge on how mortgage works, and know-how of other commercial or non-commercial lenders as well. You must be able to guide your customers (after listening to their requirements and limitations) to the most appropriate source.

Law & Regulations:

All real estate transactions and activities have a specific set of laws and regulations set down for them. These laws cover all the major areas like buying and selling, construction, tenancy, commercial properties, quitclaim deeds, financing and foreclosures. A real estate professional should be well versed with at least the basic ones.

Marketing & IT:

Property marketing is slightly different from traditional marketing. You cannot go around marketing all “for-sale homes or properties” one by one because of the costs attached. All you can do is to work on establishing your brand name as an authentic real estate agent. Like all other sectors, internet boom has also alleviated the field of property marketing. Ignoring the cutting edge technologies this medium provides can cause serious damage to your growth. That is why good proficiency in using internet as a marketing tool is very important for anyone who is looking to excel in real estate marketing.

When buying or selling Atlanta Luxury Homes it is critical to have your agent develop a Competitive Market Analysis. The recent fluctuations in the Atlanta Luxury Homes market make it impossible to understand what you should pay for a new luxury home or the price at which you can successfully list your luxury home without a detailed market analysis.

For instance, in the two Atlanta zip codes that command the highest median price – 30327 and 30305, the following price fluctuations have occurred. In 30327, the Median Price hit its high in July 2008 at 1.65million. Today the Median Price for 30327 is $1.25 million or a 24% drop. And in 30305, the Median Price hit its high in October of 2007 at $900k and today stands at $700k, at 22% drop. With price fluctuations this severe occurring in the past 24 months, a CMA is a prerequisite before entering any real estate transaction.

CMA stands for “Comparative Market Analysis.”

A CMA is an excel spreadsheet prepared by your real estate consultant that provides objective data comparing the features of your property to similar properties which are on the CMA list, are pending sale, just sold, or listings that failed to sell.

The CMA is developed in advance of listing your home for sale. This is a professional assessment of what your house is worth, but not a formal appraisal. The CMA will be employed during negotiations with buyers to demonstrate that your home is priced correctly.

To gather data for a professional CMA, your consultant (agent) will inspect your property (pricing inspection) and list the selling features that drive and support their final price recommendation. This inspection deals with readily viewable features of the home. The consultant is not going to crawl under the house, nor does the house need to be cleaned and ready for an open house. It should be in such a condition that allows the agent to make an accurate assessment of its condition and worth. If you plan to make improvements before selling, inform the consultant during the pricing inspection.

Following the pricing inspection, the consultant will collect data on properties with comparable selling features through FMLS, use their market knowledge and contacts in the field to back up the data and when the analysis is complete, review the resulting CMA spreadsheet with you.

With this information in hand you will be prepared to make a competitive offer on a home or list your home at a price that the market will bear.

Overpricing a home for sale is one of the worst things an agent and seller can do in any real estate market.

By over pricing a home for sale, many sellers believe they will have room to ‘negotiate’.  In actuality, there will be no negotiation room since buyers looking for a property will be looking within their specific price range which is usually guided by their real estate agent and mortgage lender.

Here’s an Example…

Let’s say a fully qualified buyers price range is $250,000 for a single family home (let’s exclude all wants and needs for the moment).  Their search criteria would most likely include homes in the range $230,000 to $260,000.

If the seller of a home whose comparables are priced between $230.000 and $260,000 prices their home at $300,000 (counting on this ‘negotiation’ room), buyers will not have the opportunity to view the home since it is well out of their specific price range for which they are searching!

Agents who take on these over priced listings are neither helping the seller nor themselves.  The listing will continue to sit on the market until one of several things occurs:

• The sellers adjust the price to market value – Optimum
• The property sits on the market until the market appreciates to the asking price – Could be a very long wait!
• Or the property is taken off the market – Most likely to happen if the price is not adjusted.

No matter how much advertising an agent does, if a home is over priced it is not going to sell.

I understand sellers wanting to get the most from their investment.  It’s understandable that you worked hard and want as much as you can get from the years and money you’ve been putting into your home.

Many home sellers have fallen victim to this trap for various reasons which include:

• Sellers are unaware of the current market conditions and comparable prices
• Sellers don’t believe real estate agents know what they are talking about
• Agents are willing to take listings just to have the listing no matter the price

The list goes on…

Believe me; I know it is not easy when you are told your house is appraised for $250,000 when you want $300,000.  It’s not easy for a real estate agent to tell a seller this either!

However, sellers do not set the price of home nor do real estate agents.  The market price of a home is set by what a buyer is willing to pay and a seller is willing to accept.  Let’s not forget that the price of the home will have to meet the appraisal value or the lender will not fund the loan.

So, how can you avoid this over pricing trap?

It’s easy…

First, consult with a real estate agent who will give you the facts about the price of your home as well as the comparables for other homes in your area.

Make sure the agent explains how: days on market, price and condition all effect the sale of your home.

Get an appraisal – When a home is sold a lender will not fund on the price of home that does not meet the appraised value!  While this is not a 100% guarantee of getting an asking price, at least it will give you some place to start.

Have them point out why the selected comparables are being used.

Try to detach yourself emotionally from the home you’ve built and think of it as property.  There are several reasons why someone wants to sell a home: Upgrading, downgrading and relocation to name a few.  In all of these situations, your current home will at some point be your past home and the emotional attachment will be removed.  Try to do begin to detach yourself as soon as you decide to sell.  This will help you deal with market price fluctuations as well as being able to see the property as an outsider.

How can you tell if your home is over priced?

If your home is on the market and you are not getting showings it is a clear sign that it is over priced.

In addition, if you are getting showings but no offers it is either over priced or needs improvement.

Did you know that any home priced effectively will sell in less then 30 days?  Most sellers are not aware of this as their homes are over priced to begin with.

Summary

Over pricing a home for sale may have significant financial repercussions to all parties involved:

• Sellers are disappointed when the home doesn’t sell
• Sellers will have to continue to pay the mortgage until the house does sell.  If you are relocating that could mean two mortgages!  Are you prepared to pay two mortgages?
• The listing Agent loses money on advertising
• Any showing agent loses time and money showing a home that won’t make appraisal
• Buyers lose time and money ‘negotiating’ on an over priced home when they could be making an offer on a home that is priced correctly.

To avoid the ‘Overpriced’ trap in the future, do your homework and use a professional real estate agent.  We are here to help you in every way we can.  We are on your side and want you to get the most out of the sale of your home.