In This Chapter

Your home will sell in any type of market—even in a rapidly falling one where home sales appear to have stopped altogether. It will sell in any city or town in the world, with the exception of locations where a natural or environmental disaster has occurred.

We understand that the prospect of selling your home in a market where prices have fallen dramatically can be very frightening. The newscasters and other media may report daily on a crisis in the real estate market. You’ll hear statistics about falling values, foreclosures, and sellers who owe more on their homes than they are worth. It’s true that many homeowners will lose money when they sell and may even face the possibility of personal bankruptcy. Perhaps they put too little money down when they bought, received bad advice from a lender about affordable monthly payments, borrowed too much money against the property during the course of ownership, or made overly expensive renovations or upgrades.

However, the majority of homeowners do not owe more on their homes than they are worth. The goal of this chapter is to show that not only can a buyer be found in any economic climate, but you can make more money than other sellers in your neighborhood with similar homes.

Even when it appears that the buyers have disappeared, certain homes in any area will always sell no matter what is happening in the real estate market. Why? The simple answer is that those homes were properly priced and marketed. This chapter is going to show you specifically how to do that for your own home. There is an enormous misconception out there that buyers simply stop shopping in a falling market. This is not true. There are always buyers in search of a home. Life goes on; housing needs are always changing. People have growing families, get relocated, get divorced, and retire. In a rapidly falling market, it may feel as though buyers have stopped buying because it takes time for most Realtors and sellers to catch up to changing home values and make appropriate price reductions to reflect the declining market. Once they do, a home will sell. You may be thinking that anyone can sell their home if they give it away for a bargain basement price, but you will not give your home away if you use the strategies discussed in this chapter. On the contrary, you will not only attract a buyer and sell your home, you will actually outperform the market.

Let’s look at a fictitious but typical example of Anytown, USA. Perhaps there are 140 properties on the market. In the last three months, only eight of them have sold. What did those homeowners do differently that separated them from the pack? Why did they attract buyers and receive offers while your home sits on the market with no offers—not even a lowball offer? And more importantly, do you want your home to be one of those eight?

Following are four steps that will sell your home anywhere, anytime, and in any type of market. To remember the steps, think of the word “SALE.”

Staging is essential when selling. There is no question that you can drive the sale price up by presenting your home in a way that appeals to the majority of buyers. Through staging, you can get thousands, and often tens of thousands, more than what you’d get without staging. If you do not take the time to address staging, you can actually undersell your home or experience what’s called “leaving money on the table.” This is when your home sells for less than it is worth because of a poor perception of value.

You might wonder why a homeowner would not bother to stage when it has such a big impact on the sale price. There are a number of reasons. The seller’s Realtor might not know how to stage or appreciate its importance. The seller might think that it costs a lot of money or that the home doesn’t really need it. But every home needs some degree of staging, even professionally decorated homes. Interior decorating for everyday living is not the same thing as staging a home in order to sell it.

With some relatively easy and inexpensive steps, you can strategically manipulate the value (sale price) of your home. Best of all, it’s not hard! If you have read Chapter 6, you know how easily the features can be highlighted and how the eye can be redirected away from weak spots by rearranging furniture, removing certain pieces, painting, letting light in, and creating outdoor rooms.

Of the four steps, pricing is the most important. It is so powerful that it is the one step that can get a home sold on its own—without proper exposure or staging. As we said in Chapter 4, in the absence of proper pricing, no amount of advertising, marketing, or staging will sell your home.

What we are focusing on here is not just listing your home at a reasonable price, but listing it at an aggressive price.

An aggressive list price draws buyers to your property, often in swarms, and away from others. It results in a high number of showings in the first days or weeks on the market which, as we all know, is when the highest sale prices occur.

The main reason that sellers get higher sale prices in the first days and weeks of being on the market is that the most desirable type of buyers view the home in this time period. There are three different types of buyers, and they come in “cycles”; therefore, we call them “The Three Cycles of Buyers” (discussed later in this chapter). Understanding and targeting them is the key to selling your home for top dollar.

You may have heard of the term target marketing. It is based on the belief that, in order to market something effectively, the sellers must first understand the buyers, their behaviors, and which among them are most likely to buy. Corporations spend billions of dollars in market research trying to understand what motivates a consumer to buy.

There are three types of home buyers. They each have certain traits which affect their ability and readiness to buy. They include:

Cycle-one buyers represent the brass ring for sellers because they are always poised to make an offer. They are clearly “in pursuit,” very proactive, and focused. They will come through your home when it first comes on the market—typically within the first few hours or days—maybe even a week or two. They see it early because they are very tuned in to the housing inventory and found—or more likely, their Realtor sent them—your listing the day that it came on the market.

Cycle-one buyers are experienced, highly motivated, nearly fearless, and have a strong sense of urgency. If they like your home and it is priced well, they will make an offer quickly.

A cycle-one buyer is easy to spot for the following reasons:

He is a great buyer because he has seen enough houses, perhaps dozens and dozens, and understands the value of homes in your area, as well as the style and type that are right for him. He has been thoroughly screened by a bank or lender and is in a strong position to buy. And he knows exactly where his financial comfort zone is.

This buyer is very motivated—partly through experience, and partly because he is growing weary of shopping. Buyers get tired. It’s an exhausting and taxing process to find a home. For many weeks or months, he has been fighting the fear that the right home may never appear. When it finally does, he is no longer afraid. He is rejuvenated and excited. He is focused and wants to move forward. He will make an offer and it is usually realistic. He will have an inspection performed and negotiate in good faith. Overall, he will do what’s necessary to keep the deal together.

You can target cycle-one buyers through aggressive pricing. If you don’t, these buyers may still walk through your home, but they won’t buy it because they didn’t perceive value. They will move on to the next new listing until they find and buy a home that is priced well.

Cycle-two buyers are the second group that comes through your home, typically when your home has been on the market for about two to six months. They are far less attractive for a seller and we call them “chameleons” because they are not always easy to spot. This buyer did not see your home in the first few days or weeks because she has been looking casually, is not yet highly motivated, and is still in the early part of a home search.

She may think of and present herself as being “in the market” for a new home. However, when you pull back the layers of skin, you see that, in reality, she is still only window-shopping. The cycle-two buyer is often unprepared to make a serious offer. But that doesn’t always stop her from making one anyway—often making the ride to closing a very bumpy one. She will negotiate in an overly aggressive or unrealistic manner, drawing lines in the sand while subconsciously willing the deal to fall through. In a word, she is a risk and that risk is to you because she was not fully educated and experienced at the time she made the offer. Many cycle-two buyers have not seen enough homes, or been in the market long enough, to make educated decisions.

A cycle-two buyer is sometimes hard to read for the following reasons:

Cycle-three buyers are the least likely to make an offer on your home. They come in after it’s been on the market for six months or longer, sometimes even a whole year after it was introduced. They are at the earliest period of home buying and are still in an information-gathering stage. That’s why they are so late to the party at your home. They are educating themselves by looking at every home in their price range. They remind us of the buyer who is in the market for a new automobile and goes into the dealership and browses the various cars for sale. “Tire kickers” is an old-fashioned term for unmotivated buyers. They do research to gain knowledge, perspective, and experience so they can morph into cycle-two and eventually cycle-one buyers.

If your home does not sell for over six months, you will be in the business of scheduling showings for cycle-three buyers. You don’t have to worry that they will make an offer and then back out of the deal. They are not likely to make one in the first place.

The greater danger is of having your home used by Realtors as a teaching tool for these buyers. It has grown very stale by now and Realtors may only be showing it to help sell another home in your neighborhood that is newer to market and better priced than yours.

The cycle-three buyer is easy to read for the following reasons:

The cycle-three buyer is well aware of who she is and how much further she must go before she buys a home. It is you who must recognize that this is the kind of buyer who will most likely be in your home after it has been on the market for several months—and making no offers.

After you get a contract on the sale of your home, it’s up to you and your Realtor to take a leadership role in managing the deal all the way to the closing table. This is not the time to sit back and be passive, expecting the buyer and his Realtor to hit all their marks and get through each stage of the transaction. There are many ways for this deal to fall apart on the road to closing. Your Realtor may be more experienced than the buyer’s Realtor. Your buyer may need help and direction. We have seen hundreds of deals that were kept together only because the seller and seller’s Realtor were proactive, cooperative, and involved.

The following explains how to lead and manage the deal:

If your home is sufficiently exposed (marketed) to all of the buyers looking for a home in your price range and community, the real estate market will speak and ultimately tell you what your home is worth. But the exact worth will fluctuate month to month, week to week, and even day to day, depending on the market conditions and if the entire buyer pool was made aware of your home. A seller whose home was not sufficiently exposed to all potential buyers may have gotten a lower price than a home that was properly exposed.

There are several steps that you must take to achieve maximum exposure. They include how buyers will hear about your home, when it becomes available to be shown, the window of time in which they can see it, and how soon you will consider offers.

Today, there is no single greater vehicle to expose a home for sale than the Internet. It can reach billions of people in seconds. But just because it can doesn’t mean that it will. The Internet is a crowded place. Reaching the right buyer on the Internet is one of the top goals of just about any business in the world. It can be done—in one of two ways.

The first way is if money is no object and you can place your message anywhere and everywhere on the Internet. That’s not realistic, of course. The second way is by strategically targeting buyers within the Internet. We talked about target marketing earlier in this chapter—by using price to capture cycle-one buyers. You can also use the Internet to target and capture cycle-one buyers through their representatives, their Realtors.

By now, you are familiar with Multiple Listing Services (MLS’s). There are hundreds of MLS’s available directly to buyers. Some of the more well known are referenced in the back of this book. But the listing information is not always complete, and many of the buyers browsing these MLS’s are cycle-two and cycle-three buyers. It’s not that you can’t sell your home to one of these buyers; you can. But if you want to sell your home, get top dollar, and make it to closing, you need to reach the best buyers, which are cycle-one buyers.

Cycle-one buyers will get your listing e-mailed directly to them without having to surf the Internet to find it. It will be forwarded to them by their Realtors, who reviewed it on a comprehensive, private, and regional MLS, accessible only to licensed professionals. The MLS’s used by Realtors are their most powerful professional tool. Without it, they cannot do their jobs. Realtors are using their MLS daily and often hourly. They are communicating all day with cycle-one buyers. They have the buyers’ home and cellphone numbers, and they are beeping, e-mailing, and texting them on a constant basis.

Most other businesses spend a great deal of money trying to target their buyers.

For all the billions of dollars spent on research, at the end of the day, it’s still almost impossible to accurately measure whether they actually reached them. However, in the field of real estate, the best buyers can easily be found because they are communicated with, educated, and represented by Realtors.

When you put your home on the MLS, announcing that it is for sale, it is sometimes a good idea to delay showings for a few days. This gives buyers time to plan when they can come see it within the first few days that it is on the market. If you give the buyer pool little or no warning, you can miss or lose some of the best buyers due to sheer scheduling conflicts.

In addition, this tactic often helps to create buzz among the buyers; it helps build excitement. Think of a new film. The movie studio releases clips and previews before it opens in theaters. By the time the movie comes out, audiences have been waiting to see it. This is why movie studios place so much emphasis on the first weekend’s box-office receipts. They know that the most money a film will make is usually in its first weekend. A very similar analogy can be applied to homes. As you know by now, homes sell for the highest prices in the first few days or weeks on the market.

If you’ve ever sold a home before, you may recall cars driving slowly down the street with the passengers craning their necks to get a closer look. There is a certain level of energy around a home that is about to come on the market.

Figuratively speaking, you are selling your home to Realtors, not to buyers. Cycle-one buyers will have your home screened by Realtors first. It is imperative that the Realtors are very familiar with it and its features. Having an open house exclusively for them is a terrific way to do this. Even better, serve food; that will keep them in the home for a longer period of time, which leads to conversation about the selling points. Many Realtors will conduct these open houses, with refreshments, at their own expense.

It amazes us when we hear stories about how a seller was so happy because he received and accepted an offer one hour after his home went on the market. It’s true that homes sell at the highest numbers when they first come on the market—but only after it has been exposed to the entire buyer pool! It is not physically possible to get all of the interested parties through your home in an hour or day, or even two days. Give them a fighting chance!

Create a window where all the legitimate cycle-one buyers, who have done basic due diligence in finding your home, have a chance to actually see it. If you receive an offer one hour or one day after it’s been on the market, you will never know if you undersold your home. If you put it on the market on a Thursday and sold it on a Friday, you will never know what a buyer might have offered on Saturday or Sunday. This is why aggressive buyers make offers contingent upon your immediately putting a halt to showings. They know they’re getting a deal. Your home had a very strong perception of value. That’s why the buyer has such a sense of urgency.

Instead, allow showings to take place for at least three days or perhaps even four or five. If there is an interested party on day two who wants to present her offer, let her know that you would be happy to hear it but that you cannot respond until after the other buyers with appointments have concluded their showings.

She may feel that you will “shop” her offer or use it to find another buyer who will beat it. If she feels this way, ask her to hold it and then present it on the designated day. If she is a real buyer, she will wait. Tell any other buyers who are interested in the first few days that you will hear offers on day three, day four, or day five (at a certain time). This way, the playing field is level for everyone involved, and you will know that the property was sufficiently exposed to all the cycle-one buyers and you did not undersell the value of your home.

Most sellers want or expect their home to be advertised and to have their Realtor conduct a public open house, but relying on these two approaches to get your home sold is a mistake. The reason is that they attract cycle-two and -three buyers. Buyers who respond to ads are usually “free agents” who are not yet working with Realtors. And, if they are not yet working with a Realtor, they are typically just beginning their home search and are not truly prepared to buy.

Good, qualified buyers working with Realtors don’t need to search advertisements to find homes in your area. Every home is presented to them personally by their Realtor—usually before the ad even runs.

He alerts the buyer immediately to every new home on the market in his price range. If it appears to fit his needs, he will request a private showing, and usually quite quickly. This is the key: cycle-one buyers see a home as soon as it comes on the market, usually within the first week or so, and in a private showing.

So why do Realtors advertise and conduct public open houses if they don’t work? For one thing, sellers have come to expect them as part of the package that a Realtor provides. Realtors are happy to conduct them because they bring in new clients. If most of the buyers who walk into an open house are not represented by a Realtor, then they will need one eventually. When the Realtor strikes up a conversation, makes a connection, and gives them her business card, she may work with them one day soon.

Additionally, advertising accomplishes something called branding, or creating an ongoing awareness of the Realtor in the community. When readers repeatedly see the name of the Realtor or agency in print, they may recall it when the time comes for them to buy and sell.

It’s not that the Realtors are dishonest about the benefits of advertising and public open houses. It’s just that it is a mutually beneficial practice between sellers and Realtors. Both parties seem to get something out of it. But the goal is to sell your home and you just can’t rely on these two approaches to do it.

When your home has been sitting on the market for several months or more, it can be very depressing. Don’t despair. You are not powerless. Now is the time to re-create demand.

You can still capture the cycle-one buyers after your home has been on the market for a long time and has grown stale. The way to do this is to recreate demand.

Supply and demand is a phrase that people tend to throw around. They usually refer to it when things are not selling. They say, “Oh, well, there is too much supply … not enough buyers. They can’t give the stuff away.” They assume that the demand somehow went away. It did not. It’s a myth that demand goes away. The demand (or a buyer’s willingness to pay that price) is temporarily on hold. Demand becomes active again at the very moment that the price has been properly adjusted.

When homes stop selling, it’s not because there is no demand. It’s because, over time, the prices became high enough to temporarily slow down selling. The minute that prices adjust lower to reflect appropriate values, the items will sell. It works every single day for commodities like pork bellies and orange juice, and it works for homes. As soon as a seller makes an appropriate price reduction, the buyers instantly reappear to make offers.

If your home has been on the market for months, you are showing it to cycle-two and cycle-three buyers. It’s time to get the cycle-one buyers back. The way to do that is to make your home seem new to the market again by adjusting the price. It’s not enough to simply make a price reduction. It must be an appropriate price reduction. It must accurately reflect the current climate or market conditions. As we said earlier, a home always has value—unless there has been a natural or environmental disaster. The trick is to find the value. After it’s found, the home will sell—always.

Sometimes a seller (or his Realtor) feels that the home has been on the market so long, and has become so stale, that an entirely new approach is called for. This may be the time to consider temporarily withdrawing the property and reintroducing it a few weeks later with some strategic changes. A price change is a given, but perhaps there are some tactical changes that can be made in terms of staging or upgrades. Be careful about spending a great deal of money at this point unless you and your Realtor are sure that it will have an impact.