For almost all of my listings, I have flyer boxes in front of the home to provide interested buyers (or neighbors) with instant information on the home.

Sometimes I wonder....

• Do flyers help possible buyers realize that a home might be perfect for them, and thus incite them to look at the home? or...
  
• Do flyers make some possible buyers discount the home as an option for them whereby if they had seen inside the home they might have been more moved?

And the bigger question....

• If I removed all of my flyer boxes would more or less buyers schedule appointments to visit the home?

As I mentioned a few weeks ago, some sellers think, or assume that the date filled into the contract will be the actual closing date.

So, if a seller wants or needs to nail down a specific closing date, can it be done?  A common inclination is to insert "time is of the essence" into the contract.  This seemingly innocent phrase signifies that if the closing does not take place on or before the closing date stated in the contract, the deal is off!

This is a problem, because in almost all cases, the seller who wants the closing to happen on a particular date does not really want the deal to fall apart.

The fact of the matter is that it is, reasonably, very difficult to contractually mandate a specific closing date.  It isn't reasonable for a seller to demand a particular closing date because the buyer isn't always in total control of the timing of the closing.  If an appraiser, loan underwriter or settlement agent (for example) is behind in their part of the process, the closing can be delayed without the buyer having any control over the situation.

If, as a seller, you want to nail down a specific closing date, I would suggest that you:

1. Communicate this strong preference kindly but repetitively to the agent representing the buyer.
2. Consider putting a positive financial incentive into the contract for closing by a particular date.  Ex. If settlement on the subject property occurs on or before November 15, 2008, the Seller shall credit the Buyer $500 towards the Buyer's closing costs, points or pre-paids.
3. Follow up with every person or company that will touch the transaction to make sure they are aware of the importance of a timely closing.

In the last three months, 250 properties have sold in Harrisonburg and Rockingham County.  On average, it took 177 days from the time they hit the market to the time they closed.

There have, however, been some record-breakers....

• The five homes that sold most quickly sold in 18, 19, 25, 28, and 28 days.
• The five homes that sold most slowly sold in 539, 541, 558, 704, and 752 days.  (That's a range of 1.5-2 years.)

As you can see, there is an enormous variation in the time that it takes for a property to sell.  It is interesting, in contrast, to look at the "days on market" for active listings.  This group of 886 properties has an average current days on market of 194 days, with the low being 3 days, and the high being 1,151 days (3.15 years!).

What does this mean for you?

1. We should analyze average days on market for your neighborhood or part of the city/county before putting your house on the market, and while it is on the market.
2. Even with the analysis referenced, we must bear in mind that it is hard (in our current market) to predict how long any given property may take to sell.
   

While houses are certainly selling, and some are selling quickly, there are many homes that are languishing on the market because of a collective increase in hopeful sellers, and decrease in able buyers over the past two years.



For the owners of those homes, the selling process can be an emotional roller coaster of an experience.  I have witnessed that first hand several times lately in conversations with some of my seller clients, and in watching the Facebook status of some of my Facebook friends who are selling their homes right now.

What a high when someone actually wants to come see your house --- what an anxious feeling when you're waiting to hear how they liked your home --- and what a low when you discover they may not be making an offer on your home.

My advice for sellers in today's market:

1. Familiarize yourself with market conditions and price/market your home accordingly.
2. Seek to understand how supply/demand in your price range may affect the timing of your sale.
3. Be reasonably optimistic as you see buyer activity --- do everything possible to make a sale possible, but don't expect that every buyer that sees your home will want to buy it.

Does anyone else have advice based on their current experience selling their home?

Yes --- sometimes we are still seeing multiple offers!

A house that shows well, is priced well, and is marketed well can still generate strong buyer interest --- even in a market where we are seeing 22% fewer sales than last year.

We received three offers in the first week on this delightful home on the northern end of Harrisonburg.


1143 Waterman Drive, Harrisonburg, VA

The "Settlement" section of a standard Virginia real estate contract reads....

Settlement shall be made at the office of the Purchaser's settlement agent on or about October 1, 2008.

Did you catch the three small words so innocently wedged between the location and date of the closing?  The meaning of those three words (on or about) is often overlooked!

Some sellers think, or assume that the date filled into the contract will be the actual closing date.  It very well might be --- but oftentimes a buyer or seller's circumstances will shift it a few days in either direction.  So, the first thing to remember is that it is usually just a close estimate of when the closing will occur.

But what happens if (in the above example) a buyer informs the seller that they won't actually close until October 22nd --- three weeks later.  May the seller indignantly demand that the buyer close on October 1st, OR ELSE?  Contractually, no!  "On or about" is typically understood to mean plus/minus 30-60 days, depending on the attorney.  That certainly allows for some flexibility, and this is the second thing to remember --- the standard contract language will not allow you to precisely plan the day or week of closing.

So, what is a seller to do?

BAD:  If you need to close on a precise date, or no later than a particular date, you'll want to add "time is of the essence" to the standard contract language.  With such language, if the settlement does not take place by the date in the contract, the contract automatically becomes null and void.  Of note -- I rarely suggest using "time is of the essence".  Having the contract "die" after a certain date usually doesn't help either the buyer or the seller.  If the buyer wants to buy, and the seller wants to sell, and the final closing documents are one date late, should the deal really automatically die??

BETTER:  A better option is to introduce a (positive or negative) financial incentive for the buyer to close in a timely fashion. Perhaps a positive financial incentive for closing on (or before) the scheduled closing date.  Or, an increased purchase price or other penalty if the closing is more than X days later than scheduled.

BEST:  Leave well enough alone --- don't change the standard contract language.  Understand the above, but be flexible and willing to adjust, within reason to make the closing process smooth and successful. 

I hope this is clear --- feel free to leave a comment below, or call/e-mail me for further clarification.

I received a call the other day from a Realtor who was representing the seller of a house that I had showed to some of my buyer clients.  I was informed that "the owner just had the house appraised, and the appraisal came in $20,000 above the asking price."  I believe the conclusion that I was supposed to come to was that the house was a great deal, even at the asking price. 

This all started me thinking about the many ways that a value of a house can be defined.  I would argue that the value of a home is NOT (necessarily):

• how much the owner paid for the house
• how much the owner paid, plus the value of the owner's improvements to the house
• the tax assessed value of the house
• the appraised value of the house
• how much the neighbor's house sold for a year ago
• how much the neighbor's house sold for yesterday
• how much the owner needs to sell the house for in order to pay off a mortgage
• how much the owner needs to sell the house for in order to buy their next home

A house is worth what a buyer can and will pay for it, in the current market.

Certainly, this is a bit ambiguous, but my main point is that we can't make any assumptions about what the market value is of a house. 

No interior photos? 
No need to visit that house!

Some sellers find it absurd that a buyer would have this mentality as they decide which homes to visit --- they assume that if a buyer is serious, they'll come see the house for themselves even if there aren't any (or very many) interior photos.

But buyers are smart, and make reasonable generalizations: most homes without interior photos are hiding something.  Perhaps it is the awful condition of the home, or the hideous decor, or the tiny rooms.  In most cases where only one photo exists for a house for sale, there is something that the seller doesn't want to have highlighted for the world to see.

And thus, as busy buyers pare down their list of homes to view, they will often assume the worst of houses that do not have interior photos.

Sellers -- you don't need to go overboard with how many interior photos are posted to the MLS or other web sites, but do include some interior photos so that prospective buyers can have at least some idea of what to expect.

Are all buyers created equal?  Certainly not --- especially from a seller's perspective in our current market. 


Here's how I would rank buyers, from the most exciting to sellers (#1) to the least (#9)...

1. Cash buyer, without a home sale contingency
   
2. Pre-approved buyer, without a home sale contingency
3. Pre-approved buyer, with a home sale contingency (with the house under contract)
4. Buyer without pre-approval, without a home sale contingency
5. Buyer without pre-approval, with a home sale contingency (with the house under contract)
6. Pre-approved buyer, with a home sale contingency (with the house on the market)
7. Pre-approved buyer with a home sale contingency (with the house not yet listed for sale)
8. Buyer without pre-approval, with a home sale contingency (with the house on the market)
9. Buyer without pre-approval, with a home sale contingency (with the house not yet listed for sale)
   

It is important to note where you are on the list above since the factors represented above often affect a seller's willingness (or lack thereof) to negotiate.

The good news is that you can (sometimes) take steps to move up this list:

1. Get pre-approved
2. Get a contract on your current home
3. At least put your current home on the market
   

To note, here are some other buyer characteristics that are desirable amongst sellers:

1. Minimal inspections
   
2. In a hurry
3. Large down payment

As a buyer in today's market, it's important to understand a seller's perspective before or during the process of making an offer.

Here's an interesting phenomenon --- in most real estate transactions, the buyer makes the first move, by submitting an offer to purchase a house.

In stark contrast to this (time-proven?) norm, I have recently had several Sellers make an offer to sell.  More specifically, when it became known that a buyer was seriously considering the purchase of the seller's home, the seller proactively either:

• made a general offer of being willing to negotiate on price or pay the buyer's closing costs, or
• made a specific offer of a price below the asking price, or the inclusion of a certain amount of a closing cost credit

So far, it has had mixed results --- in some cases it has worked (and a transaction has come together), and in some cases it has not worked.

If you are a seller, considering such a strategy, I would advise you to consider that:

• Proactively making an offer to sell that is more compelling than that suggested by your list price can sometimes motivate a buyer to engage in the negotiation process.  This is valuable, as many current homeowners who are attempting to sell their home would love to even have an offer to try to negotiate.
• You should expect that (most) buyers will try to negotiate further below your offer to sell.  Thus, if you have a hard and fast bottom line, don't reveal that number in your offer to sell, as the transaction may not come together.
• In addition to offering something specific to a buyer, it often will serve you well to (attempt to) explore what would be most helpful for a prospective buyer --- a price reduction vs. closing cost credit vs. repair/upgrade.

I'll certainly be among the first to let you know when the tables are turning again -- but for now, buyers definitely have unique opportunities to negotiate -- and sellers can sometimes spur that on by a proactive offer.

If only it were that easy!

When I am representing a homeowner in the sale of their property, I am:

• creatively presenting their home in the best possible light
• aggressively marketing their home to potential buyers
• diligently following up with each Realtor who shows the property to potential purchasers

But many sellers want me to go one step further --- and convince the buyers to buy! 

The reality is that I often don't have that opportunity!  Most buyers these days are working with a Realtor and thus have someone representing their interests.  I can talk the ear off of their Realtor to try to convince them of the merits of the house that their client has viewed, but I don't have the ability to directly affect the buyers' decision making.

Alas, in a market where sales are much slower than previous years, most homeowners really wish that I (or their Realtor) could make that connection with the potential buyers --- and somehow, somehow, convince them to buy!

Driving around town, you might see quite a few "Price Reduced" riders on real estate signs.  Have you ever wondered whether most sellers are holding fast, or reducing their asking price?  Let's take a look....

In Harrisonburg and Rockingham County, there are currently 953 residential properties on the market (single family, townhome, condos) without a contract on them.

In the past 30 days (June 2008), 134 of those properties had a price change (that's 14% of the active inventory).  I'm going to assume most of those were price reductions, although some could have (??) been price increases.  (It isn't possible via our MLS to see en masse whether the prices went up or down).

In the past three months (April, May, June 2008), 293 of these properties had a price change --- that's 31% of the active inventory.

And if we look at all of the listings to see how many have, versus have not EVER had a price change, here's what we find:
    384 listings have had a price change (40%)
    569 listings have NEVER had a price change (60%)

This is rather interesting (in my view), as I suspected that most owners may have reduced their price at some point while it has been on the market.  But in fact, most home sellers (60%) have NEVER reduced their asking price.

Here are some other interesting stats looking at how long properties have been on the market.

I was showing a house last evening and as I pulled up, the homeowner was hurrying out of the house to let us view his home.  His departure immediately upon our arrival didn't seem too out of the ordinary, until we walked into the house... and smelled... freshly baked chocolate chip cookies!

On the counter we found some fresh-out-of-the-oven cookies and several ice cold bottles of water, along with a note inviting us to enjoy the treats as we looked through the sellers' home.  We really did partake of the cookies, and they were great! 

Many people would suggest that viewing a home is an experience taken in by all of the senses.  Thus, if the smells (and tastes) that a prospective buyer encounters while they are viewing a home are pleasing, they will be more likely to have a pleasing assessment of the home.  In contrast to our delight upon smelling still-warm chocolate chip cookies, think about how you would experience a home that has a heavy smoke or pet odor!

So --- did the cookies and bottled water convince these prospective buyers to buy this particular house?  This remains to be seen, but we do have a hunch that the cookies may have been laced with a strong aphrodisiac, as we all fell in love with the house!

A lot of people feel this way right now --- that they have been trying to sell their home for many months (or longer) without success.  This situation is mainly a numbers game ---- closings are down 23% this year, and new listings are up 43%.  Clearly, there are many more sellers in the market than there are buyers, which creates the impatience for selling.

To put your situation in perspective, let's break down the listings that are currently for sale in Harrisonburg and Rockingham County:  This information is showing how many months these sets of properties have been on the market without having sold:


If your house as been on the market for a few months without having been sold, don't despair --- it is just taking a bit longer for these properties to sell.

For some time now, I have provided monthly updates on the months of supply of housing available in four price ranges.  (see May's update)

Per Andy's request, I will now also graph the trends in these supply indicators.



How it works . . .
Months supply is an measure of the relationship between our market's supply and demand in four price ranges. The numbers represent the months of supply of properties available in each month based on average demand per month during the past twelve months.

As I discussed a few weeks ago, the value of an open house is often unknown (and perhaps questionable) to home owners, and the Realtors representing them. But at the same time, open houses often get people inside of homes who may not have viewed the home otherwise --- and an important step of a successful sale is to have people view the home.

So --- I'm testing out a new strategy to get potential buyers in the door at the open house . . .



I printed (front and back) 500 of these business card sized mini-flyers advertising the open house. Then, almost all of them were distributed on parked cars in an often packed parking lot near the home that is for sale. As you might imagine, I had a lot of internal conversations and questions about doing this:

1. Is it o.k. to put things on cars in a parking lot? According to the local police officer who I spoke to, yes, so long as a "no soliciting" sign is posted.

2. Will some car owners be annoyed by the mini-flyer on their windshield? I hope not -- I hope they say "wow, that Realtor really works hard to sell the houses he has listed" -- though I imagine some may be peeved. My apologies!!!

3. Will the owner of the parking lot be upset that some might end up in the parking lot instead of the pockets of the car owners? I hope that all of the car owners take their treasured mini-flyer home --- but I do realize that some may end up in the parking lot. As a result, I imagine that I'll either get a call to come pick them up, or a "no soliciting" notice will be installed (or both!?).

4. Will it actually work? Will I be able to generate more traffic to the open house? Will the house sell as a result? This is to-be-determined. The open house started about 19 minutes ago, so I'll have to provide another update later on.

If this new strategy for getting people into open houses does work --- you know that I'll be repeating it to work to sell the other properties I have listed for sale --- if not, I'll be back to the drawing board to think of a new, creative way to market homes!

This is an illustration of the relationship between our market's supplyand demand in four price ranges. The numbers (6, 11, 14, 25) representthe months of supply of properties currently available based on averagedemand per month during the past twelve months.



This month (May 2008) shows an increase in months supply in all except the lowest price range.  The most significant increase was in the $400k+ price range where the months of supply available jumped from 21 months to 25 months.  This was largely because of the increased supply of homes --- 152 homes for sale in May as opposed to only 137 in April.

Not at all! They are for buyers as well!

First, a CMA is a comparative (or "competitive", depending on who you ask) market analysis --- or, an analysis that compares one property (the "subject property") to other similar properties that have either recently sold, or are on the market. As I explain to my clients, my CMA's attempt to account for all significant aspects and characteristics of a home including square footage, functional space,age, style, condition, and more.

Why would a buyer want a CMA? When making a purchase offer, sometimes buyers determine price based on what they think the seller will accept, or what would be a reasonable offer given the asking price. Ignore the asking price! That's not to say that all offers should be low offers trying to "make a deal", but consider these two examples:

1. House is worth $200,000, but listed at $250,000. Buyers try to negotiate 10% off, and offer $225,000. Negotiations fizzle.
2. House is worth $200,000 and listed at $195,000. Buyers try to negotiate 10% off, and offer $175,500. Another buyer comes along and buys the house for $193,000.

This illustrates the great need for a buyer to understand the segment (location, price, etc) of the market in which they are buying. Once a buyer has settled on a particular property, an great way to provide the buyer a context for making an offer is to perform a CMA, to compare the property to similar, recently sold homes.

I am having an open house today (May 4, 2008, 1:00-3:00) for one of the properties that I am marketing, a 5-bedroom, 3.5 bath colonial with 3,796 SF priced at $469,000, and located at 3064 Briarwood Court in Harrisonburg, VA.

I have held several other open houses over the last few weeks, and will have another two weeks from now.

So . . . how effective are open houses? I suppose it depends on how we define effective . . .

Open houses do (unless nobody shows up) get people inside of homes who may not have viewed the home otherwise. The people who are coming through aren't always qualified to purchase the home they are viewing, and they don't always end up having interest in it, but one important step of a successful sale is to have people view the home for sale.

Open houses don't necessarily sell homes. I don't have the exact figure at hand as I am currently writing, but the research shows that only a VERY small percentage of home buyers find the home that they purchase by attending an open house.

Some Realtors see open houses as an opportunity to meet new buyer clients. I suppose that could happen from time to time, but certainly, that doesn't accomplish any of the original goals of the owner of the home.

Here are some interesting stats to consider from several recent open houses:

Property #1 -
Prior to the open house, there had been 3 showings of the property.
During the open house, 4 groups visited.

Property #2 -
Prior to the open house, there had been 7 showings of the property.
During the open house, 4 groups visited.

Property #3 -
Prior to the open house, there had been 6 showings of the property.
During the open house, 10 groups visited.

Property #4 -
Prior to the open house, there had been 2 showings of the property.
During the open house, 2 groups visited.

Property #5 -
Prior to the open house, there had been 18 showings of the property.
During the open house, 5 groups visited.

For several of these homes, the open house generated more prospective buyers inside the home than had seen it to date. However, none of these properties have sold yet, so the open houses didn't accomplish that main goal of selling the house.

The Virginia Association of Realtors recently released their First Quarter 2008 housing market report, entitled "The Virginia Housing Market in Uncertain Times."

Their opening paragraph provides a good summary:

The word "uncertainty" sums up the current housing market. A national recession, foreclosures on the rise, tight credit markets, potential federal legislation—all of these factors make it difficult to predict where the market is going. In Virginia, the housing market is performing better than in some other states, although certain local markets within the state are in for a rocky 2008.

The report, provided by George Mason University's Office of Housing Policy Research, is based in part on reported sales from around the state of Virginia.

The methodology is slightly different than my recent April report, but the numbers are very close.  Essentially, sales are down, but prices are up.  In the Harrisonburg-Rockingham area, the number of sales was down 21%, but the median price was up 5%, and the average price was up 14%.

For even more insight into the first quarter of home sales around Virginia, listen to this media conference call where Realtors from around Virginia (myself included), and staff from George Mason University provide commentary to the media on this recent report.