Pricing a house

Preparing a house for sale

Marketing a house
Getting from the offer to closing Summary Market Time
     I have always encouraged people to learn from success.  Other than during a short difficult time period in my life years ago, I have not had my listings not sell and be relisted by other agents.   In the past several years, I have only had one listing not sell and those sellers plan to relist soon.  That compares to an industry average of 1 of 6 houses not selling while listed.  

     What can a good agent do for you and how important is it?  I have attributed a score to each of the parts of the importance of your agents work in selling a house with the total being 100.   First, lets take a quick look at the real estate industry:

      It is unusual in a vocation  for the highly trained professional and the untrained newcomer to receive the same pay from their clients.  The real estate fees are similar throughout the industry.  Agents need to be qualified, experienced and have integrity to give the best service.  I believe I meet that criteria and look forward to sharing my experience with you.  CONTACT RICK.

Good and bad agents:

  Normally the most difficult part of my job is dealing with unscrupulous and or inexperienced agents.  When I am representing a seller, many times I have to deal with those types of agents and often do their work as well.  The buyers agent many times brings an offer that is poorly written, isn't legally binding on either party, and that will not protect my seller. 

   I send buyers and sellers to different parts of the country to agents that I have never met.  My experience has helped me to identify criteria useful in choosing a qualified agent.  I interview the manager asking for one of his better agents who is reputable and knowledgeable in the price range and area that my buyer or seller may be interested in.  Then I also interview the agent.  I have had 100% success with the agents that I have referred buyers and seller to.  In other words, by me asking the right questions my buyers and  sellers have been 100% happy with the referred agent. 

   "The turn over rate is about 80 percent mortality for real estate agents in the first 24 months. "

   High production is a beneficial quality but it doesn't necessarily mean that an agent is good.  They can be dishonest and do a poor job at what they do.  They may just have a very good contact base and have the kind of personality that attracts people to them.

   I'm going to use some percentages as examples.  If 80% of the agents have over 2 years experience and 50% of those agents are competent and 75% of those are for the most part honest,  then 30% (80%*50%*75%=30%) would have all three qualities.  I know fellow agents that would estimate this number at closer to 10% of the industry.

   If you are making one of the largest financial decisions in your life, I believe it makes sense to choose wisely who will help you.

   What do those agents do and how important is it?

Pricing a house  


        This is by far the most important aspect of a real estate agents work.  If the house is priced more than a few percentage points above market, the house won't sell, can become stagnant and price reductions will be necessary.  Properties with over 5% in price reductions normally sell for significantly less than properties that were priced properly to begin with.  Pricing the property slightly above sold comparables and just below the competition is the key.  If the house is vacant, it will mean unnecessary costs from excessive marketing time.  The more unique the house, the more the house can be priced above market without being priced out of the market.


 Uniqueness Matters 

  If a house is in a tract for example, surrounded by almost identical houses and a couple of those are currently for sale for $340,000, and a seller prices the seller's house at $345,000, a buyer will tend to buy one of the less expensive ones.  In this situation, a house priced just $7,000 or 2% high may be priced out of the market.  

   In another scenario, a unique house, for example a small house in poor condition, with an excellent view on a busy street could be priced even 10% above market value without being priced out of the market.  Why?  Because buyers are unable to make the positive and negative adjustments easily and won't be able to immediately perceive that the house is overpriced.  There are no comparable houses for them to look at side by side.  They may in fact pay over market value for the house and the appraiser will normally "rubber stamp" the purchase price even if it is a little to high.


   Pricing a house too low obviously costs the seller money.  It takes expertise and an understanding of appraising that few agents possess to do a proper job at this.  The common error is comparing "apples and oranges."   To get a house priced right, it is important to use an experienced agent.  That agent needs to do a comprehensive analysis and make adjustments for differences in square footage, location, condition, number of bedrooms, baths, garages, etc.  If prices have been changing over time, then an adjustment for time of sale is also necessary.  A quick analysis that doesn't adjust for the differences between the houses is just not accurate.  


After I list a house, agents tour and give me their price opinions.  Those average price opinions range from 3% less than the listed price up to an average of 15% less than the price I list the property for.  My listings sell for 0-3% less than my original listed price.  Clearly the average agent, giving their quick opinion isn't accurate.


   On the other side, to get a listing, many agents will "buy" the listing.  In other words, they will tell the owner that the property will sell for a price that is well above market value to cause the owner to like and use that agent.  No matter what any agent tells you, your house will still sell for it's value (or less if the agent under prices it), not an inflated value.  Whereas starting off a little higher than what other houses have sold for is wise, starting off above what the competition is selling for will in most cases net the seller less money and substantially increase the amount of time it takes for the house to sell.  

Preparing a house  


     It takes a trained eye to determine what needs to be done to help a house sell for the most amount of money possible.  It also helps to have someone who is not used to living in the home look through it.  Most owners, without professional advice, perform work that is unneeded and don't complete tasks that facilitate getting the home sold.  Just so you have an idea of what I do when I inspect a home, here are some basic principles that can be used in determining what to do and what not to do.  

1.   What NEEDS to be done?   Most, if not all items that would be required by a lender (work order items) are best to do prior to putting the house on the market. 

   Some owners wait to do repairs on items such as an old roof, failed gutters, rotted bathroom floor or broken windows.  The buyer would see the house in a condition that would be worse than what they will end up buying the house in.  Many buyers can't visualize what something will look like.  It is hard to "fall in love" with something that needs attention.  The house will sell for more with the necessary work finished prior to being put on the market.


2.  What LOOKS worse than the rest of the house?


   There is only one chance to make a first impression.   Here is my experience.  When a buyer approaches a house that doesn't feel cared for or seems run down, the husband may think, "I don't want a project." and the wife may think, "He'll never get it done!"  They start off looking for a reason not to buy.  Here may be their thinking or feeling, "Obviously this house needs so much upkeep that the owner hasn't been able to.  We may not be able to either."  Some buyers will be able to look past the original impressions, but if a seller loses 25% of good buyers, they will end up most of the time with a lower sales price.  In general, people will judge the overall condition of the house by its worst attribute.  Each of us gets used to our own homes and we know the facts about it and view it as it is.  A buyer looking at it for many times less than an hour won't necessarily have the same conclusions we have.   It is so important to have a professional take a fresh look and make recommendations.  For those who choose to, here is a do it yourself guide.  

   Once the needs are out of the way, cosmetics are the next and really the most important in staging the house.  Start at the sidewalk.  Looking for negative things, what is the first thing you notice?  Walk through the house and note what items stand out to you as worse than the average condition of the rest of the house.   If possible everything up to and including the front door ought to look a step above the average condition of the rest of the house.  Here are some examples of important issues to attend to.


Poor lawn condition


Flower beds

Untrimmed bushes

Paint condition

Moss on roof

Obvious dirty gutters

Dirty windows or walls

Broken light fixtures

Dirty carpets

Cluttered rooms

Stained sinks/tubs

Peeling or chipped paint

Dirty walkways or driveways



     To green up a lawn quickly use Sulfate of Ammonia/ Ammonium Nitrate  20-0-0.  It is available in a 20 pound bag at Home Depot for about $4.  Make sure to water well right after applying.

     Paint can be color matched at most paint stores by bringing in a 2 square inch sample.  Moss killers are available in spray form at most hardware stores.  It takes about a week for the moss to die.  There are cement cleaners on the market if you don't have access to a pressure washer.


Marketing a house


   You may wonder why the score I gave above was only 20%.  Most of the value of marketing is putting the listing in the multiple listing service which is fairly simple.  I could train the average person to do so in just a few hours.

   Marketing includes several possible tasks.  This was my major at the UW.  When marketing anything one needs to determine where the buyers are.  In the case of real estate, I have found that the vast preponderance of buyers are already working with agents.  Those agents have friends, family, past business and referrals.  I estimate that over 80% of buyers are already working with agents.  For that reason, marketing to agents is the most important part of getting a home sold.  They have access to most of the buyers.  I attributed a score from one to 100 as to how effective each of these tools are in obtaining a buyer.

Prudential NW  We command a the largest portion of the South King County market.   A great portion of buyers will come from Prudential NW agents through the below methods..

Advertising (5) (Local paper, metropolitan paper, homes magazines)  These types of advertising help give exposure to the property.  Both buyers who aren't working with agents or buyers whose agents aren't working for them may notice these ads and find out about the house through those ads.  The big full page ads one may notice are purchased by the real estate firms predominantly to impress sellers.  Those particular ads aren't as easy to read through as the column ads which are sorted by location and keywords.  Whereas advertising plays an important role in obtaining buyers, very few buyers actually buy the house they call on in the ad.  The exception to this is when the house is unique or very expensive.

Brochures (2) -  the more positive features a home may have that are not easily noticed, the more important it is to have a brochure available to buyers and agents that point out those features.

Brokers Open House (1) - This is a good tool to use when the house doesn't have easy access with a key-box or is substantially better in appearance on the inside compared to the outside.  The better agents don't have time for Brokers Open's and would already learn of the property through NWMLS searches.

Multiple listing (80) - This is crucial as this is where both agents and buyers are able to find properties.  The property must be listed properly.  In other words, the NWMLS area, bedrooms, square footage, style, view, etc. must be market properly or agents or buyers searching for property won't access yours.  The remarks must identify the main selling features of the property.

Open House (3) - Open houses seem to be the most effective at mid plus priced homes that are not unique.  It is not usual to sell a house from an open house.  Most agents hold open houses to have a source of buyers.  Many times agents will offer to hold my listings open for that reason.  For open houses to be effective, (in this area anyway) I've found that it helps to avoid weather extremes.  People just don't seem to show up on hot days, very rainy days or on very nice days in the winter.  It seems that someone in the family finds something more important for them to do.

Sign (7) - a visible sign will attract neighbors and those driving by.  The busier the street the more important the sign will be.  Buyers who are working with agents many times call their agents when they see a new sign.

Web site (2) - As time goes on, a website becomes more and more important.  Buyers have an opportunity to view the features of the house and interior pictures from their homes.  

Getting from the offer to closing


Reviewing the offer 
   There are many issues to consider when protecting a seller's rights.  The offer supercedes the listing agreement so each part of it must be carefully looked at.  It takes experience and attention to details to make sure this part is done properly.  Many time agents who are gifted at "selling" struggle with the details.  Failure to have the knowledge and attention to detail can cost the seller thousands of dollars and potentially end up in litigation.  An area that most agents fail to protect a seller is when an offer is written that either requires the buyers house to be sold or requires a house that is already sold to close prior to the seller's house being able to close.  The first one is called a contingency; the latter is called "subject to."  In both these cases, the entire sale of the house that isn't closed yet needs to be scrutinized.  It can end up being like dominoes.  If one house doesn't close, then those seller's won't be able to close on the one they bought and it can go on and on.  I have been involved in a sale that had 3 other houses tied to it.  If house one doesn't close, house four won't either.   Closing is when the paperwork is all done and the seller receives their money.  Think of all the people involved!

BUYER 1  $175,000  SELLER 2--BUYER 2 $250,000 SELLER 3--BUYER 3 $400,000 SELLER 4-- BUYER 4  $600,000  SELLER 5 

Here you have 4 houses, 5 people.  If buyer 1 fails to be able to close the sale with Seller 2, all the rest of the sales won't close.  All the houses go back on the market!  What a mess!  So what do I do?  When I have seller 5's house listed and I get an offer from Buyer 4 and am satisfied with buyer 4's financial capabilities and the wording of the offer, I write a clause in the offer before accepting it making the offer subject to my approval of the wording and financing capabilities of buyer 1, 2 and 3.  I actually call all the agents, review documents and when needed, talk to loan representatives to verify progress.  Although many agents may consider this time consuming procedure above and beyond, a seller who had to unpack and start over may wonder why it wasn't done.

Negotiating the sale
   This requires again some experience and wisdom to know how far to push a buyer when making a counteroffer.  There are many issues to negotiate such as price, terms, closing date, included items, and dates to have financing and inspection contingencies removed.
Taking the sale through to closing
   There is much to do between the time of sale and the time of closing.  It is sad to say that the quality of work done by escrow, title and loan companies isn't what it used to be.

     I recently had an escrow assistant ask  my seller to bring certain documents to closing.  These were requested on the morning the seller was to come in.  Per the earnest money agreement, the buyer had already been provided with one of the documents and the other document was a "trust agreement."  The seller called me bewildered.   I asked this representative what a "trust agreement" was and she said, "I don't know, I just pass on information."  The seller went to closing with no documents and things closed just fine.

     Another time, the manager of a loan company wrote a letter of pre approval for a buyer that had not been pre-approved.  It took days of investigation and asking the right questions for me to uncover the fraud.

    Due to lack of knowledge or care on the part of the other agent or other associated companies involved, the experienced agents become baby-sitters of a sort.  About one time out of five I meet up with one of those other top agents in the industry.  What a delight.  There are few if any changes to make on the earnest money agreement, and I have much less work to do between the time of sale and the time of closing. 

     Experience, intelligence, diligence and integrity are all important qualities in the agent that you choose.  It is also helpful to have an agent that works for a company with enough agents to give support.  The qualities of the agent you choose are crucial in pricing and preparing  your property for sale, and in reviewing the offer and getting your property closed.  The professional gets you the most amount of money in the least amount of time and you receive a check at closing very close to what you were told you would when you listed the house.  That is the job of a real estate agent!
Market Time

    The actual market time is different than what many may perceive.  Market time is many times (for example in the Seattle Times) determined by taking the average of the time it took for houses to sell.  That tells the market time of only the houses that sold.  If for example only 25% of houses sold during a particular time frame, the market time for the other 75% of sellers is not considered.  Actual average market time can be determined by dividing the number of sales in a given time period by the number of available listings.  If 100 houses are sold in a given month and there are 900 listings available for sale then 900/100 equals 9 months.  That is the actual average marketing time for those who are trying to sell.  I have seen this number as low as 7 weeks and as high as 2 years.  The average marketing time that you will normally see computed in other publications usually ranges from 30 to 100 days.

   The more unique the house, the more acceptable it is for marketing time to be longer.  It takes longer to find just the right buyer.  A "normal" house that is priced at market should sell quickly.

   My primary goal is to sell an owner's house for the most amount of money net to them.  That many times means not having a long market time as at times long marketing times mean increased costs to the owner.

  Statistics are available to agents on the Northwest Multiple Listing web site.  Since those statistics have been input to the recent site (which is about 4 years), my listings sell 2-3 times faster than multiple averages.


                                                                                                            Including unsold properties

Days           Rick's listings       Multiple average                Rick's listings              Multiple average


0-30                    64%                         32%                                60%                                    21%

31-60                  27%                         22%                                25%                                    14%

61-90                    9%                         17%                                  8%                                    11%

90 plus                 0%                         29%                                  6%                                   53%