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Ruthless, Other/Just Looking in 60558

Are two 4 bd/3bth homes comps if one is 1500 sq ft and the other 3000 sq ft but sq ft is not listed?

Asked by Ruthless, 60558 Sun Jul 29, 2007

The local agents all say, we don't use sq ft because of liability. But they want to price my house the same as homes half it's size on half the size of lot. I know I have the largest and most improved home on the block, but homes two streets over, the same size when I researched the sq ft on tax records are selling for 40% more than what the agent is suggesting.

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Ruth
Wow, I am so sorry to hear of your disappointment! You must be livid!
As a seasoned broker, I would like to communicate at that level. For those readers that are not"in the busines", please just read, don't judge or over react.
I am so sorry to hear that your first "full service brokers" did not properly market your property.
The good news - it can be re-marketed.
The bad news - it's going to cost you.
A couple of ideas
1. You know that selling price is different than List Price... you might need to be a little revolutionary...maybe 15% below market...the point is to get SHOWINGs and get OFFERS. The market will pick the price. I am sure you would agree that if the marketing is "adequate" no home will sell for less than the market wil let it.
2. I do not know the particulars of your market. I am assuming that you have monthly carrying costs. It may be that the market has shifted....as we say, "shift happens". Run the numbers. Take your carrying costs, add your expected profit, plus the costs of rennovatting...and through them OUT THE WINDOW!

TIME is you enemy. The market already knows that the home DID NOT SELL FOR.

This is my strategy
1. Change brokerages
2. Change the price
3. Re-shoot the pictures - you need a virtual tour
4. Repaint the front door
5. Add more flowers and landscaping..so the curb appeal looks different...not better ...but different.
6. Increase the commission to the selling office...if you need to, add it to the price,
7. Make sure the new agent sends an invitation to theopen house to at least 400 neighbors...email me and I will send you my template.
8. If you don't have ten showings, or two offers in two weeks, lower the price 5%.

I am not kidding, this should work.
Keith
Ruth, as you know, price is the first factor, marketing is number two. I am so sorry to hear that your first MLS listing R
0 votes Thank Flag Link Sun Jul 29, 2007
Keith Sorem, Real Estate Pro in Glendale, CA
MVP'08
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Hi Ruth,

As you described the situation, I would be annoyed and disappointed also. Brochures should be done timely and include information that is relevant to the substantial renovation and help the agents understand why there is such a price change.

Agents may know there was a foundation problem and be a bit shy with clients as a result. If that was a well known problem, I would address it to the agent community, but not in public marketing brochures. MAKE NOT MISTAKE, I am not suggesting that you withhold info from a prospective buyer. Disclose. Disclose. Disclose. Include all relevant data in disclosure materials and make sure all buyers are supplied with all facts before entering a contract. I just am not recommending including a prior foundation problem in a marketing brochure. :)

What I am suggesting is something along this note. Have a broker open, invite the brokers and have an engineering report, or something similar that helps build their confidence. If the foundation was a previously talked about problem among brokers, bring it up to them and let them know what has been done.

I pulled your Realtor.com listing. If you had a full service agent, I would not critique. Since you are directing this, and you are asking for help, I will share my feedback. Focus the banner message (the yellow frame) on Renovated, Perfection, etc. The kitchen shot is difficult to interpret and has a fish eye roundness. Seems like you put a decent amount of $$ in the kitchen and are not showing the kitchen for all it’s worth. I might try to pick up some of the architectural details closer up in your photos, also.

I am not a fan of buyer agent bonuses. I firmly believe you need to offer competitive compensation. Once the compensation is fair, my mind, as a buyer’s agent is focused on meeting the buyers needs. A bonus has no affect on me. I know that is not true for all agents. I am committed to finding my buyer what they need, and am not going to shift my focus based on a bonus. That’s me. As a result, I don’t support buyer agency bonuses. You will find several agents who will give a thumbs up on the buyer agent bonus.

I am sorry to hear that your full service agent disappointed you. Every situation that I approach, I try to bring more value than expense to the table. Every day, though, I rely on the updates and market knowledge I gain from the inside track and my contact with colleagues.

On the tract that you are now.........I hope some comments above can be helpful for you!

Keep me posted. I feel like we are starting to be friends!

Best Regards,
Deborah
1 vote Thank Flag Link Sun Jul 29, 2007
Deborah Madey, Real Estate Pro in Red Bank, NJ
MVP'08
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I do pull properties that have some size variations, but I adjust for those in the process of arriving at an opinion of market value and pricing strategy.

In many areas of the country, agents use square footage. Here in central NJ, you find sq ft on some listings, but many do not have it. So, I understand the "not using sq ft", but might expect a few other RE Pros to find that surprising. We do measure rooms, and include the room sizes on MLS.

What you are really saying in your post is that you are not satisfied with the comps that the agents have chosen. I suggest you meet with your agent. Are you currently listed? I know you were, but am not sure of the current status.

You can ask the agent to bring a list of all comparable solds, expires, under contract (pending), expireds, and active listings for the last few months. Try not to dwell on any particular comp. Instead, look for a pattern to emerge. Are you considering properties to be comparable that the agent is not? Identify where the difference are between your read on the comps and theirs by fdinding the emerging pattern. Are you looking at properties that are all on quiet streets, while you are on a busier street? Size, condiditon, function, updates or lack of are just a few of the factors that will cause adjustments ot pricing when comparing comps, or cause an agent to eliminate a property from being a valid comp.

Deborah Madey - Broker
Deborah@PeninsulaFirst.com
1 vote Thank Flag Link Sun Jul 29, 2007
Deborah Madey, Real Estate Pro in Red Bank, NJ
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Ruth
Thank you for your update.
I realize that it is difficult sometimes to face a challenge...after facing one or two!
I pray that you have success. If you have more questions...please post!
Keith
0 votes Thank Flag Link Sun Jul 29, 2007
Keith Sorem, Real Estate Pro in Glendale, CA
MVP'08
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My fisheye kitchen was in hopes of doing as Keith suggested and make the listing look different/new. So instead of having two of the same pics of the kitchen, I used the this one. I actually wasn't sure how the unusual picture would be interpreted. Thanks, that is valuable feedback.

Keith said, "Take your carrying costs, add your expected profit, plus the costs of rennovatting...and through them OUT THE WINDOW! "
Yes, I know!
0 votes Thank Flag Link Sun Jul 29, 2007
Ruthless, Other/Just Looking in 60558
MVP'08
The home was "on the market" FSBO for ten days before listing with the full serve agency. Once it was listed, I signed a POA with my partner and I went out of the country for 2 weeks. When I came back and realized that NOTHING had happened while I was gone. I asked to see the MLS listing, brochure and advertising. They said they didn't have any copies of the advertising and the brochure was a color print out on office stationary of the limited Realtor.com info. It took them another week to get me the MLS info and it said NOTHING about being renovated. It was a month after I signed the listing agreement when I got a "just listed" postcard. The reason it wasn't selling was because every agent could see that I paid $440,000 for it 6 months ago and the description was no different than a home half it's size that had never been improved. We put over $300,000 into the home. It was listed in the MLS for less than 60 days with 2 price reductions and a $5000 agent bonus before pulling it off for two weeks over the 4th of July. The flat rate service put it in the MLS with both market time and listing time 1 day on July 13th for $50,000 less and a half a percent extra commission to the buyer's agent. We have had one showing at this $799,900 break even price aside from open houses.

The problem is how to un-ring a bell?
0 votes Thank Flag Link Sun Jul 29, 2007
Ruthless, Other/Just Looking in 60558
MVP'08
Hi Ruth,

Thanks for the compliment! I went to your site for your home and spent a few minutes clicking on the links, etc. It is a lovely home.

Keith provided you a thorough and accurate response.

Since you have a real estate background, you know if you are reaching the agent community with your current marketing. When a property does not sell, it comes down to either price or exposure. If the exposure is strong and the market does not produce a buyer, than it is a price issue. Take one more look at your marketing to evaluate whether you have given broad and deep exposure to the agent community and public. If so, then, as much as you might not want it to be the case.........price. We can adjust price when a property doesn’t show well, or fix the property to bring the value up. In your case, your home is lovely. There does not appear to be anything to fix. Any factors about the property that are beyond your control to change (busy street, school district), must be adjusted in price.

Did the agents give you comps to support 600K since that was the pricing advice?

It does sound like you have done a lot of homework on this. You can’t advertise your way out of a bad market, or an overpriced property. If the price is too high and you throw marketing dollars at it, you will only be throwing money and more time away. (A reality I have to face as a broker when we have an overpriced property.)

Keith hit the nail on the head again when he made the suggestion about underpricing 10%. It does generate results. I don’t know what your market price is since I am not in the Chicago area. You have a wide spread between 799 and somewhere in the 6's as you mentioned in your post.

I wasn’t sure how you arrived at your numbers for the count of serious buyers per price range.

Regards,
Deborah
0 votes Thank Flag Link Sun Jul 29, 2007
Deborah Madey, Real Estate Pro in Red Bank, NJ
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Ruth
Thank you for sharing your background.
It sounds to me as if you true question is "hy isn't my home selling?" and ""How do I price it right?"
Is this correct?

You also wrote "Feedback from the Realtor Open House caused us to finally list it with our full service agents for $899,900 when the house was completed. "
Then later you wroteI "ow have it listed with a flat rate MLS office and am marketing it myself"
Is this correct?
How many days collectively has the home been on the market in the MLS?
You know at what price it did not sell, right?
Did you have showings? If no, it is priced too high
Did you have any offers? If no, it is priced too high.

Ruth, as a broker you are aware that the majority of the time an agent brings the buyer.
You need brokers to view and show your home to sell it. Price, schmeise, if the home is being "properly marketed", as you say it is, then it is price, plain and simple.

I would be happy to share a nifty article that was in the Wall Street Journal http://(www.wsj.com) last Sunday on making homes more saleable. Email me if you would like it.

To sum up, if you are not receiving showings, assuming it's in the MLS, multiple photos, virtual tour, etc., then it's the price. Prior to lowering the price, I would try an increased commission to the selling office. It's cheaper than a price reduction.

There was an earlier post I made today about selling home in a tough market:
Price it 10% BELOW market. Our operating Principal just did that, got multiple offers, it sold at market price with great terms (no contingencies) in two weeks.

Good luck!
Keith
0 votes Thank Flag Link Sun Jul 29, 2007
Keith Sorem, Real Estate Pro in Glendale, CA
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Bruce, to clarify, I am talking about just sold or under contract. In March I interviewed several agents and I had a pie in the sky price on my website while we were rehabbing. All of the agents said that price was too high and suggested about $875,000 to $950,000. The low ones said a year ago you could get $950,000 but now you have to ask below $900,000 and see what the offers are for. When stats came out for March, after the CMAs were done, they were beyond terrible. But the stats for high priced homes just before we were finished were incredible again and we listed it for $925,000 FSBO for 2 weeks. Feedback from the Realtor Open House caused us to finally list it with our full service agents for $899,900 when the house was completed.

Most of the houses in the area are 80 to 120 years old and vary from tiny bungalows to Frank Lloyd Wright mansions. The Victorians that have the same sq ft as our side-entrance Colonial need about $100-$300k worth of repairs and they are selling for over $1mil and don't even have air conditioning. Homes that haven't sold have no historical value and need work.
0 votes Thank Flag Link Sun Jul 29, 2007
Ruthless, Other/Just Looking in 60558
MVP'08
Deborah, I've been following your responses all day and you are good! Correct, I wasn't happy with the comps. The agents were handling things the same way 2nd mortgage appraisers have done in the past. They start with a preconceived price and work from there to make the comps fit the price. Well, the reason we bought this house last fall was because we got it for 50% of the its fair market value (partly due to $78,000 worth of foundation repair). So they pulled comps from homes that had the new bedroom and bathroom count but were still starting with our purchase price range. As we were improving the house, we were looking at all the homes that went on the market and the price point of similar sold properties kept climbing higher even though the market was slowing. But we were also noticing that everything had to be perfect so instead of just doing the foundation, kitchen and master suite, we had to upgrade the other bathrooms and the rest of the home, pushing us beyond our rehab budget but with evidence to substantiate it.

The agents just refused to look beyond their tunnel vision. I kept asking them to show me true comps or tell me why the comps I was finding were wrong. Granted, we are on a slightly busier street then two streets away and we are only a block away from a commercial street. But when I ran stats on sold homes on our street or other streets equal distance to the commercial street and compared them to homes on better streets, the average cost per square feet was about $25 lower. We have our home priced almost $75 per sq ft lower to compensate for location and market conditions. Then they said some of my comps were from a different grade school. I didn't believe that would make a difference, so I asked around and learned they were right. So I took out those comps and it didn't change the price any, it just gave me fewer comps.

They never actually said our house wasn't worth a million dollars but would say we need to price the house in the $600s because that is the price point with buyers in it.

I now have it listed with a flat rate MLS office and am marketing it myself. I was a Realtor and a Broker in NC back in '95 and am treating the house as if my business partner is the owner and I am the agent - which is true, I'm just not an IL licensed real estate agent and I have an owner's interest as well. I never lie about the situation and some people pick up on the difference or ask. It just eliminates some of that "I don't want to insult the owner" aspect.

I can guarantee you I know more about the local market now than most of the local agents. The DOM stat means nothing to me, I want to know the days on the market from listing to contract, not listing to sold. The average is only 19 days not counting one house that took 184 days. This is why I am worried - The bad agents stoled my window of opportunity. All of my statistics are from the past 6 months. There are approximately 41 serious buyers for $750k homes, 33 buyers for $800k, 28 buyers for $850k, 22 for $1mil, and 15 for $1.2 mil homes in Oak Park, IL.

What I don't know and why I am asking here on-line, is if I am completely off base and out of my mind? A lot of questions asked here are philosophical crystal ball reading sort of stuff and differing opinions. Also, there are so many factors that go into selling a home, it is almost impossible to figure out which one or if all of them are preventing the sale.
0 votes Thank Flag Link Sun Jul 29, 2007
Ruthless, Other/Just Looking in 60558
MVP'08
This doesn't sound right to me. I think in most cases they are not comparable. The person who would by the 1500sqft house is not the same person who would buy a 3000sqft, even if it were the same price. If homes are in the same neighborhood and same builder and similar in style and finishes I would think the bigger home would sell for less per sqft than the smaller home. Perhaps signficantly less. I would think if 2 or 3 agents all gave you a similar range than that would be reflective of the market. It's amazing to me that when I compete against other agents often times we are within 1% of the same price. There's one broker in my area know to "buy" listings or price them high to start and then take drastic price reductions. But even those prices are fairly predictable and we'll warn the sellers about it. My advice is ask them about the other house. Has it sold at 40% more or is it listed at 40% more. There is a difference. You can pick any list price, but that doesn't mean it will sell at that price.
Web Reference: http://www.teamlynn.com
0 votes Thank Flag Link Sun Jul 29, 2007
Bruce Lynn, Real Estate Pro in Coppell, TX
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At double the square footage, the other homes are not really comps. Your agent will have to find comps in the general vicinity of your home but not on the same street or in the same subdivision. Comps are usually taken for homes sold within the last six months......are there homes nearby that would fit the time frame and have simillar amenities like square footage?
0 votes Thank Flag Link Sun Jul 29, 2007
Let me clarify, the 40% more homes have Sold or are under contract, I'm not talking about over inflated listing prices. And the majority of the homes 2 streets over are also mostly small homes but the few big ones have received bigger prices.
0 votes Thank Flag Link Sun Jul 29, 2007
Ruthless, Other/Just Looking in 60558
MVP'08
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