Ch 5, Unit 7
Other internet sites
A popular Internet site is www.realtor.com which belongs to the National Association of REALTORS®. NAR maintains this site as a place for buyers all across the country to find suitable properties. Brokers can post at least one picture and a detailed description of each of their properties on this site. There are limitations however; so you need to contact NAR for specifics on how to upload information to their site.
Virtual tours
A rapidly growing marketing tool in recent years has been the virtual tour. Originally this technology required the use of a special camera that could take a 360° shot of each room and the exterior of the property. Although a level above "flat" digital photos, the tours had a "fish-eye" quality that tended to distort the views. However, this technology has advanced to the point that an agent can take digital photos and load them into a software program that will produce increasingly more professional-looking tours. Oftentimes managing brokers invest in the software and allow their agents to use it for a very modest monthly fee. If you plan to use this tool, be sure to get permission from your sellers in writing. Since these tours are available for viewing on the web, there is a concern that some viewers may be more interested in what is in the home rather than the home itself. You should make your sellers aware of the primary benefit of a tour - that the home can be "shown" when it's not physically available for a showing.
Neighborhood canvass letter
About a week or so after getting the listing, some agents send a letter to the residents of the neighborhood. The letter introduces the listing to the residents and asks for their help in locating a buyer. If you choose to use this marketing tool, be sure to include a property flyer with the letter and an indication that you will be calling the resident within some short timeframe. Then follow through! Note: Almost all of the tools described on the previous screens involve costs that the salesperson or broker will incur when marketing a property. Some tools, such as a video tour or a talking house sign are not done for every listing, but most of the others are pretty typical.
Flyers
Also called property briefs, these print pieces describe the home's features. They contain at least one photo, sometimes several. They should also include an Internet address where potential buyers can get more information about the property. Leave a large supply of flyers at the home, so each visitor can pick one up. You can use the flyers in several other ways. -Place in information boxes or tubes attached to the For Sale sign. -Distribute at open houses. -Deliver to agents from other offices. -Distribute to your own firm's agents. -Mail out in response to telephone or e-mail inquiries.
Ancillary marketing tools - home tours
Also referred to as caravans, home tours are very beneficial to familiarize brokers and agents with the new listings. They are usually set up as morning tours on a weekly basis. There are two types of home tours. -Office Tours - The agents from your firm tour the property. It would be beneficial to have the licensees fill out a property evaluation form after they do their walkthrough. These evaluations will give you valuable information to share with your sellers - both the positive aspects and those things the other professionals see as areas needing improvement. -MLS Tours - Many listing services set up tours for agents by area, since there are usually too many listings for any agent to see in a morning's time. If your listing is on an MLS tour, have property evaluations available for the agents to fill out. Be sure your sellers understand the importance of having their home look in top-notch condition for the home tours. Some tips about conducting a good home tour include: -Tell the sellers it is best if they are not at home during the tour. -Have some light refreshments for the agents - an appropriate beverage and some chocolate chip cookies are a nice touch. (If the owners bake the cookies shortly before the tour, the home will have a pleasing aroma when the agents arrive - also a positive touch.) -Have some soft mood music playing in the background if possible. -Give each agent a property flyer. -Ask each agent to fill out a short evaluation of the home.
For-sale sign
Always carry at least one sign with you and put up the sign as soon as you leave the house after obtaining the listing. If you are putting up a temporary lawn sign, let the sellers know when you will bring the larger, more permanent sign.
Activity reports
An important part of your seller communication is a weekly activity report. Many licensees prefer to send a monthly report because it looks like there has been more activity. But again, frequent communication with your sellers is critical, so the weekly contact is best. Let your sellers know that your weekly report will include, as applicable: -Number of inquiries on the property that week -Number of showings -Advertising done that week -Open houses held -Number of open house visitors -Comments made by other agents or prospective buyers You can also send along copies of any ads you placed that week, a copy of the MLS pages, copies of pages from any websites where the property has been listed and information about any e-mails that you sent to promote the home. Note: It's critically important to maintain communication with your sellers, even during weeks when there has been little or no interest in the property.
Agent open house
An open house for agents can give you important feedback on your listing as well as get the property in front of more agents. Most agents don't have the time to visit every new listing on home tour days, so a special open house could give the property the exposure it needs. It's especially valuable for properties that are unusual. Agents typically like to attend these events. It gives them a chance to spend more concentrated time at a property that could very well meet the needs of one of their clients. And they welcome the opportunity to enjoy the free food and beverages that are offered at most open houses. An additional incentive that the hosting agent can use is to hold a drawing or raffle for a prize such as a set of free car washes, a gift certificate to a popular restaurant, or even a weekend getaway. The agents can deposit their business cards in a receptacle, from which the winning card will be drawn. Once you have the business cards from everyone who attended, you can contact the agents for feedback or to see if they have any interested buyers.
Advertising plan
Another important piece of information to share with your sellers is your advertising plan. Sellers need to know the "schedule" of when their property will be advertised and the methods you'll use to do that advertising. Make sure your sellers know that every home your firm lists is not advertised every day or even every week. Explain that the idea of advertising is to create interest in homes with certain amenities. Even if someone calls the firm expressing interest in a home other than your sellers', once the agent talks with the buyers, it may become clear that your sellers' property is a better fit. So an ad for one property can and does create interest in others.
Preparing for offers
As a culmination to your meeting with the sellers, share a blank copy of the purchase agreement with them. Go over each of the paragraphs of the form, so that the sellers will be prepared and know what they are looking at when they receive an offer. It will help reduce the stress that comes when an offer is presented and the sellers are under a time constraint to make a decision. Also let the sellers know that sometimes new listings get quick offers. When this happens, sellers tend to think that they have set their listing price too low. While this could be the case, it most often is not. Sellers may want to reject offers that they perceive as coming in too quickly and they may later regret the decision, if other offers are not forthcoming.
Homeowner tips
As we mentioned on the previous screen, it's helpful to give the sellers tips or suggestions to help with the marketing effort. These suggestions should be written and include information about the cosmetic aspects of the exterior and interior of the home. Some tips for the exterior include: -Keep grass and shrubs trimmed. -Repair fencing and repaint if needed. -Place blooming flowers on the patio or near the front door. -Check condition of the finish on the front door and trim. Redo if peeling or worn. -Place lawn furniture attractively. -Make any roof repairs that may be necessary. -If there are outdoor pets, make sure pet area is clean and neat. Some tips for the home interior include: -Keep the home neat and "picked up." -Be sure floors, bathrooms, kitchen and appliances sparkle. -Be careful about cooking "aromas" - avoid vinegar and fried food smells; but blueberry muffins, home-baked bread or chocolate chip cookies can create the right atmosphere. -Repair leaky kitchen or bathroom faucets. -Clean carpets. -Make sure rooms are well lit - either through natural lighting or higher watt light bulbs. -De-clutter closets. -Remove excess furniture to make rooms look bigger. -Straighten and de-clutter the garage and basement. Move items to storage if necessary. In addition to tips for cosmetic changes, you might have become aware of an improvement that would increase the value of the home more than the cost to do it. If this is the case, share your suggestion with the sellers. Note: If sellers choose to make such an improvement, you may have to adjust the listing price to reflect that improvement. The sellers need to understand that anything they can do to make their home more attractive in a competitive market will be to their benefit in the long run. Also let your sellers know that it's best for them to be "away" when a buyer comes to view the home. Buyers tend to become very quiet if the sellers are present and it will be hard for the agent to get honest comments from the buyers when the sellers are there. Sellers need to understand that only when the agent has knowledge of the buyers' concerns will he or she be able to get those concerns addressed. The tips on the previous screen are not all inclusive. You can get more ideas on what to include in your tip sheets by searching the Internet for "homeowner tips." Also, some companies specialize in producing forms and materials that you can copy or print for use in presentations or share with clients. One such company is Realty Tools, Inc. The kit that they offer contains a variety of presentation materials as well as flyers for listings and open houses, tip sheets for sellers and a host of other documents that can all be customized with your company name, logo, your picture and your contact information. You can visit their website at http://www.realtytools.com/.
Estimating a seller's net
As we said, sellers are very anxious to know what they might net from the sale of their home. Doing a careful estimate will keep them from having any unexpected surprises. In most cases (since the licensee is counseling the sellers toward an accurate and realistic listing price), the licensee should prepare the estimate using the listing price as the estimated selling price. Then the licensee would estimate all the costs the owners are apt to incur. (It's better to overestimate the costs just a bit, so that if there ARE any surprises, they will be pleasant ones.) Seller's Net Example Note: We'll discuss the closing costs typically paid by the sellers in more detail in a later unit of this course. So for purposes of this example, we'll just give you some figures to work with. Jim and Karen Grand have listed their home at $240,000. Figures: Title Insurance Policy$ 600 Transfer Taxes 250 Inspections 450 Brokerage Fee (6%) 14,400 Current Loan Balance $75,000 Calculation Title Insurance Policy 600 Transfer Taxes 250 Inspections 450 Brokerage Fee (6%)14,400 Total Estimated Costs $15,700 Current Loan Balance$75,000 Total Loan Repayment $75,000 Estimated Selling Price $240,000 Less Total Estimated Costs -15,700 Less Loan Repayment -75,000 Estimate Seller's Net $149,300
Multiple listing service (MLS)
As you know, groups of brokers often join together to form a cooperative listing service, usually called a multiple listing service (MLS). Any member who belongs to this service sends the information on each of his or her listings to a central location for the MLS. An MLS employee then compiles the information and distributes it to everyone who is a member of the MLS. The information is usually made available on the Internet, but sometimes it's distributed on computer disc. Participation in the MLS increases the sales inventory available to licensees. Any member of the MLS can sell any property listed in the MLS. With MLS sales, the listing broker and the selling broker share the commission, based on a predetermined percentage split. Send the information on your new listings to the MLS as soon as possible, so that other agents will have the information quickly. Once the listing is uploaded to the MLS, print a copy and send it to your sellers as part of your weekly activity report.
Lockbox
Before you leave the house at the end of the listing meeting, install a lockbox. The lockbox holds the key to the home. Agents can access the lockbox either by using a special lockbox key or with an electronic keycard. Install the lockbox on the doorknob, a metal railing or some other stationary object.
Modifying a listing
If at any time during the course of the listing period, you decide that you made an error in your assessment of what the property is worth or if the market conditions change in such a way as to suggest the price should be modified, you'll need to let the sellers know immediately. The sellers may respond negatively to suggestions about a price modification, but it is possible to persuade them to your point of view, especially if you can support your recommendations with a solid argument. Sellers don't want to see their homes on the market for a long stretch with no activity and little chance of a sale. If you do make a change to the price or listing period, document the change using a contract amendment form that is provided by your broker or your local Real Estate Board. This will give you a paper trail showing what was done with the property and when. Also, alert the members of your MLS of the price change through an e-mail rather than hoping they will notice it on the MLS site.
Accurate pricing
It is critical for a property to be priced accurately. The most common reason a property fails to sell is because it was overpriced. The practice of listing a property a little higher than the determined market value to allow room for negotiation is perfectly acceptable and a common real estate practice. When comparing the sellers' property to the CMA properties, factors such as proximity, physical similarity, and date of sale need to weigh into the discussion. A licensee does nobody any favors when he or she knowingly lists a property much higher than what the market value indicates. Even though technically a property can be listed at any price, deliberately misleading a client as to the market value of the property to guarantee a listing could be a license law violation. This practice is commonly referred to as "buying" a listing. If a seller is looking for a quick sale to be concluded within a 60 day time period, this heightens the necessity of pricing the property accurately.
Importance of communication
It might seem logical that the major dissatisfaction sellers have with real estate agents is failing to sell the property during the listing period. However, the truth is that the primary criticism sellers have about their agents is lack of communication. Sellers often complain that once the listing agreement is signed, the agent "puts a sign on the lawn" and then "disappears." Their home becomes one of dozens of properties on the market that may be shown occasionally. A business card gets left on a table to show that someone came through, but the owners often don't get feedback on how the showing went. Owners can feel cheated or resentful when the person who so eloquently presented the reasons why he or she should get their listing seems to be so unavailable once the papers have been signed. One of the reasons that owners may start having these negative feelings is because the agent did not adequately prepare them for what would be happening during the first days of the listing period and beyond. During the first few days, the agent is doing multiple property marketing tasks - preparing flyers and ads, getting the property information into the MLS, etc. - which the sellers may not be fully aware of. While the agent is "busy being busy," the sellers are home waiting for the onslaught of prospective buyers, which usually doesn't happen in the first days. With a little planning and forethought, licensees can make sellers feel like partners in the selling process, while keeping the lines of communication open and flowing. Once the licensee has secured the listing, he or she should let the sellers know what to expect in the first few days. -Tell the sellers they will be receiving a letter from your broker. Most brokers send a "thank you for listing with our firm" letter to new clients to introduce themselves and to invite the sellers to call him or her directly if any problems arise. -Meet with the sellers a day or two after the listing appointment to go over your client-specific marketing plan with them. At this meeting, go through the home again to re-familiarize yourself with its features and make note of any particular suggestions you might have. -Establish what the sellers' goals and expectations are. For example, do they have a target price they need to meet? Is the timing of the sale critical? Once those goals are clear, you can devise a strategy to meet them and incorporate that strategy into your marketing plan. -Give the sellers some tips, ideas or suggestions on what they can do to help market the property. Let them know that selling their home is a team effort. When the agent meets with the sellers, he or she should share important information on the following topics. -Homeowner Tips -Activity Reports -Showings -Advertising Plan -Preparing for Offers
The marketing plan
It's vital for you to have a written plan for how you will market each of your listings. Some activities will be the same from one listing's marketing plan to another, but other tasks will be unique to the particular property based on its specific characteristics. ` The marketing approach you take will consist of: -Traditional Tools -E-Tools -Ancillary Tools
Classifies ads
Prepare several good classified ads so you can avoid repetition when you're on a tight deadline. Also prepare an open house ad and an ad that can be used in a home buyer's guide if your firm uses that as an advertising venue.
Public open house
Open houses for the public are the most familiar to agents, buyers, and sellers alike. In addition to any advertising your firm does for open houses, you can prepare for an open house by sending invitations to neighbors within a few blocks of the property. Also it's a good strategy to hand-carry invitations to the nearby neighbors. The advantages to this approach are: -Many homes are sold to neighbors' friends. -Neighbors are curious about the homes in their neighborhood because it may influence the value of their own home. You can make them feel welcome. -Neighbors can see first-hand how you work and may be inclined to call you for the future sale of their home. Preparing the Sellers Let your sellers know that you have sent out invitations to the surrounding area. Ask the sellers to do the following: -Be away from the property for an hour or so before the open house and during the open house hours. Potential buyers will refrain from making comments if the sellers are present. Tell the sellers you will share all responses with them after the open house. -Take pets with them or secure the pets so they will not be around the open house guests. -Secure all jewelry and valuables out of sight. -Leave the home clean and uncluttered. -Make sure all yard work is done.
Percentage of profit and loss
Percentage of Loss When figuring percentage of loss, subtract the selling price of the property from the original purchase price. Using the T formula shown above, place the result of the subtraction above the line and then divide by the original purchase price. Example: Greg purchased a lot for $10,500. After a zoning dispute, it is sold for $7,025. What was percentage of loss? $10,500 - $7,025 = $3,475$3,475 ÷ $10,500 = .33Percentage of Loss = 33% Percentage of Profit When computing percentage of profit, divide the amount of profit by the original purchase price. Example 1: Greg purchased a lot for $10,500 and then sold it for a profit of $3,000. What was the percentage of profit? $3,000 ÷ $10,500 = .285Percentage of Profit = 28% Example 2: Greg purchased a lot for $10,500 and then sold it for $15,000. What was the percentage of profit? (In this case, you'll have to compute the amount of profit first by subtracting the original price from the selling price.) $15,000 - $10,500 = $4,500 (amount of profit)$4,500 ÷ $10,500 = .428Percentage of Profit = 43%
Your internet site
Place your new listing on your own or your company's Internet site as soon as possible after getting the listing. As with the MLS, as soon as the information on the property has been uploaded to your site, print off a copy and send it to the sellers with the weekly activity report.
Conducting a public open house
Preparing the Property Here are a few tips to show off the property in its best light: -Put open house signs in appropriate areas, with permission if needed. -Keep the garage door closed. -Make sure all outside walkways and driveways are clear of hoses, toys, etc. -Open the drapes on all the windows for natural light (unless a particular window has a poor view). -Make sure all toilets are flushed and seat lids are down. -Turn on lights in dark areas. -Start a small fire in the fireplace. It adds a nice touch. (Get sellers' permission first.) -Add a "baking" aroma by putting one teaspoon of vanilla in a bowl-shaped piece of foil wrap. Set it in the oven at 275 degrees (with seller permission). -With sellers' agreement, have coffee and cookies on hand. Play some nice background music. During the Open House It's a good idea to have each visitor sign in and let you know why they came. You can design your sign-in sheet to ask if the visitor is represented by another agent, so that you can determine if this person might be a potential client for you. Be sure to give each visitor a copy of the property flyer and your business card. You should also have flyers available for other comparable homes in this and lower price ranges. Take the opportunity to dialogue with the visitors to ascertain their needs and you just might be able to interest them in another of your properties that is better suited to them.
Pricing a property
Probably the single most important decision when listing a home for sale is the listing price. We all know that if a home is priced right, it will sell relatively quickly. It would be easy for an inexperienced seller to overprice his or her property. After all, everyone wants to make a nice profit on the sale of his or her home. However, if the home is overpriced, it could lose its appeal after the first couple of weeks of showings and end up sitting on the market for some time. Typically, demand and interest fade after three or four weeks. On the other hand, it could be just as easy for the seller to underprice his or her home. If there are comparable homes for sale in the area and they have not sold, the seller could easily assume the homes are overpriced and, in an attempt to get a "quick sale," the seller could choose a price that is too low. Even though it is ultimately up to the seller to decide on the final listing price, it is the listing agent's responsibility to provide the seller with advice and information to help the seller arrive at the best figure. A listing agent helps the sellers set a realistic selling price by considering the: -Sellers wishes -Market conditions -Timing of the sale
Extending a listing
Schedule a meeting with your sellers a few weeks before the listing is set to expire. Review with them everything you have done to market their property and let them know what other marketing plans or ideas you may have. If you have done a good job for your sellers and have kept them informed, chances are good they will decide to extend the listing. On the other hand, if you haven't been vigilant in keeping them updated, they will probably decide against the extension. If you are successful in obtaining an extension, be sure a "thank you" letter goes out to them from your managing broker and let the MLS know about the extension.
Showings
Sellers are most familiar with the "showing" aspect of the marketing plan. Many sellers know, or their agent should tell them, that it is best for them to be gone during a showing. Some aspects of showings may not be so apparent, however; so be sure to advise the sellers of how things could go. For example, even though in most cases the sellers will have ample warning when a showing is scheduled, they should be prepared for that unexpected, last minute call. Sometimes agents are actually out showing property to buyers when they realize that a certain home has the specifications the buyer clients are looking for. They might then call the listing agent to see if a last minute showing can be scheduled. Another example is the case of buyers out riding around and seeing a home that piques their interest. The buyers will call the agent while sitting out in front of the home and ask if they can see it. It's not ideal, but it does happen and sales have resulted from such situations. Note: Tell the sellers that if someone shows up on the doorstep wanting to see the home, they should get the person's name and then call your office immediately so an agent can come to do the showing. On the other hand, sellers need to understand that there will be situations when a scheduled showing will not take place. You must assure your sellers that you will make every effort to give them warning when a showing has been canceled. However, circumstances do exist when an agent will not show for a scheduled appointment and the listing agent will not know until the seller calls to report it. Reassure your clients that in the event this should occur, you will do whatever you can to find out what happened and let them know. Whether the situation involves a last minute showing or a canceled appointment, it's important for your sellers to realize that flexibility will help keep such situations from becoming unduly stressful.
Market analysis
Since market conditions play a large role in setting a realistic selling price, one of the most important tasks a licensee needs to perform with the seller-client is to give a market analysis of what the property is worth. Many times a seller has an inflated idea of what his property should sell for. Occasionally, the seller will have a lower price in mind than what the market will actually bring. It is the job of the licensee to make sure that the owner understands how much can be obtained in the sale of the property. A market analysis falls under the category of opinion. Brokers train their licensees on how to create a market analysis so that the client can make a more informed decision about what to offer or what to accept for a property. If the broker and his or her affiliated licensees are members of the MLS, there is usually a training class on how to use that information to know what similar properties are selling for. The market analysis should be shared with a seller during the listing meeting. However, it should NOT be left with the seller, unless the seller has decided to go ahead with the listing and has signed the listing agreement.
Talking house
Some signs contain a radio transmitter that broadcasts a message about the home using an AM or FM radio frequency. Potential buyers can pull up in front of the home and listen to the message on their car radio. If you plan to use this tool, record a thoughtful and careful message and install the sign within a couple of days of taking the listing.
Video tours
The latest technology is the video tour. Video tours are shot with a digital movie camera, edited, and then produced on DVD. The quality is truer than what is produced by virtual tour software, but the cost is also higher. The primary benefit is that the high-quality final DVD product can be duplicated and distributed to out-of-town buyers to view on their private DVD players. In addition, brokers can have a "library" of videos available at the office. Video tours are not appropriate for all listings, but a full-motion tour can be positioned as an "extra" and "special" offering to sellers of high-end properties.
Rider strips
These strips attach to the For Sale sign. Attach a strip with your cell phone number to the stake below the main portion of the sign. If you have rider strips that note the home's special features, attach it to the stake above the sign.
How much profit?
To answer the sellers' foremost question about how much profit they will get from a sale, the sellers need to determine the listing price - with the licensee's help. In order to lay the ground work for determining a realistic listing price, the licensee should share a Comparative Market Analysis (CMA) with the seller. (Note: You will learn more about CMA's in the Valuation Module of this course.) Often, a seller's reaction is surprise - thinking that the homes shown on the CMA sold at prices that were too low. The licensee needs to explain to the sellers that those homes listed with a price above the market value are the ones that have been on the market for a considerable length of time. Conversely, those homes that were listed close to their actual selling price or market value sold quickly. The seller certainly has the right to establish the listing price for the property. However, an unrealistic inflated price will make it difficult for the brokerage to market the property. In some cases, the sponsoring broker may even refuse to accept the listing at all.
Computing seller's net
To determine a seller's net on a property sale: -Step 1: Subtract the commission percentage from 100% to obtain the aggregate (opposite) of the commission and put that result below the line on the right in the T-formula shown above. -Step 2: Put the sale price below the line on the left in the T-formula above. -Step 3: Multiply the sale price (number on the left) by the commission aggregate (number on the right). Example: Bob's home sold for $227,000 and he owes his broker 8% commission on the sale. 100% - 8% = 92% $227,000 X .92 = $208,840 Bob's net on the sale is $208, 840.
Computing sale price
To determine what a property must sell for in order for the owner to net a certain amount, do the following: -Step 1: Start with the amount that the seller wants to net, add any expenses (including a mortgage that needs to be paid off), and subtract any refunds that the seller may be receiving in the transaction. The result goes above the line in the T-formula above. -Step 2: Subtract the commission percentage from 100% to obtain the aggregate (opposite) of the commission and place that number on the right below the line of the T-formula. -Step 3: Divide the result of your calculation in Step 1 (number above the line) by the aggregate that you obtained in Step 2 (number on the right below the line). Example: Tim wants to net $65,000 from the sale of his home. He owes $75,000 on the mortgage, will pay about $9,000 in expenses on the sale. He will owe his broker 7.5% commission on the sale. $65,000 + $75,000 + $9,000= $149,000 100% - 7.5% = 92.5% $149,000 ÷ .925 = $161, 081 Tim needs to sell his home for approximately $161,000.
Photos
You'll need several good photos of the home, both inside and outside. Using a good digital camera, take the photos as soon as possible after you get the listing so you can start using them in flyers, ads and mailings. You'll also want them for your Internet site.
Your marketing plan
Your standard items might include all of the following, plus others: -Install the lockbox -Put up the "For Sale" sign -Enter the listing into the MLS. -Place a classified ad in the weekend paper. -Host agent and MLS home tours. -Send a weekly activity report. -Compile comments from agents and visitors. Customized items in your marketing plan could include: -Do a virtual or video tour. -Install a "talking house" sign. -Place an ad in a "specialty" newspaper. -Hold an evening wine and cheese reception for agents. The customized activities in your plan are limited only by your ability to devise unique strategies to showcase a particular property. Organize your plan by weeks, showing which specific tasks you plan to do each week and also which tasks will be ongoing - such as showing the property and reviewing agent input.
