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Home Pricing

Why Most Real Estate For Sale By Owners (FSBO) Fail

by Bill Gassett on May 3, 2010 · 12 comments

One thing that makes the world go around is the desire to save money. Everyone likes to save a few bucks. In Real Estate saving a commission translates into big dollars. It is hard to blame anyone for wanting to save the type of money that is made when a Realtor sells a home or condo.

While commission rates are negotiable, in most areas around Massachusetts someone selling their home will more than likely be paying a Real Estate commission between 4%-6% on the sale price of the property.

On a $400,000 home a commission of 5% is $20,000. There is no question that is a lot of dough! Selling a home for sale by owner is not an easy task and that is why most people end up using a Realtor. Nationally the success rate of a for sale by owner (FSBO) is very low. Over 80% of all FSBO’S end up listing with a Real Estate agent. Why is going the for sale by owner route so so difficult to pull off? There are a number of reasons why selling a home on your own is a hard thing to make happen.

The Wrong Price

I have written numerous articles about pricing a Massachusetts home properly. It is the most critical element when selling any product but especially so when you are talking about something as large as a home sale. Over 75% of a homes marketing is about setting the proper price. Homes that are listed with a Real Estate agent and are overpriced stand a slim chance of selling. Overpricing as a Massachusetts for sale by owner (FSBO) makes it next to impossible!

Many sellers seem to either do their own market research and end up choosing the wrong price or have a Realtor help them with appraising the property and ignore their advice. If more for sale by owners priced their homes based on comparable market data there would be a higher success rate. Doing extensive research of what like homes in similar neighborhoods are selling for would go a long way!

Often times people want more money for their homes because they have done some kind of recent improvement. Unfortunately many projects for the home do not have a high return. For example if you replaced a roof, a septic system, or added a pool don’t expect to see much payback on the money you invested.

Lack of Exposure

Some for sale by owners do nothing more than throw an old beat up for sale by owner sign in the front lawn and expect that will do the trick. Then there are others that think that going in one of the for sale by owner sites like I sold my house.com, for sale by owner.com or buy owner.com is going to bring lots of traffic. WRONG!

These sites generate a pittance of Real Estate traffic in comparison to the sites some of the top web savvy Realtors use to promote homes. Their sales pitch is always “we will give you world wide exposure and save you thousands of dollars!” This could not be further from the truth. Just go to Google or any other major search engine and type in a local search with Real Estate keywords a buyer would use.

Things like your town, state and homes for sale. Using my home town as an example would be Hopkinton MA Homes for sale. Do you think a for sale by owner site is going to come up in the results? Not a chance! Go ahead and try it with your town. It will be dominated by sites that show homes listed by Real Estate agents. These FSBO sites promise the world and deliver empty promises the majority of the time.

A Realtor that knows their way around proper internet exposure can change the traffic going through a home exponentially when compared to a FSBO site. Take a look at the Metrowest Massachusetts Real Estate marketing I provide all my seller clients. There is absolutely no comparison what this kind of internet exposure can do when compared to a for sale by owner website. The cold hard facts are thousands of buyers will not even know a FSBO home is for sale.

Buyers Want to Save the Commission

One of the other factors associated with selling a home by owner is the fact that many of the people viewing the home are going to want to share in the commission savings. Many of the potential buyers who will be looking at for sale by owner homes are bargain hunters. The line of thinking is that since the seller is not paying a commission they should be able to offer less for the home. Sellers end up receiving low ball offers on many occasions. Buyers will often take 5% right off the top regardless if the home is priced well or not.

Home Accessibility and Buyer Qualifications

These last two reasons are often overlooked by someone trying to sell their own home. It is hard to sell a home if a buyer can not get in to see it. Often times when a FSBO is trying to sell they need to match their schedules with the buyer which sometimes is not that easy especially for those that work full time. A Realtor of course makes this part of the home sale process go much smoother. Lastly, home sellers need to be equipped with the knowledge of knowing how to qualify potential buyers. There is no point in having unqualified foot traffic going through a home. This is also part of a Realtors job. Most buyers that view homes today are pre-approved. As a FSBO you need to make sure that the same holds true when showing your home.

If you can sell your home on your own all the power to you! You will be in the minority of you can make it happen. Above all else remember how important pricing and market exposure is to your home selling success.

How Not to Sell a Massachusetts Home

by Bill Gassett on April 26, 2010 · 3 comments

Every week on the Multiple Listing Service (MLS) you see countless homes that come up “expired”. For those that are not familiar with the term, an expired listing is a home that did not sell. When looking over the possible common denominators of why some homes do not sell the reason is usually pretty easy to spot.

In most cases the reason is very simple. The home was improperly priced. In a very competitive Real Estate environment, the price that is set on a home can be more than 75% of the marketing!

What the hell do you mean by that Bill? Very easy… if you come on the market at the wrong price, the best Realtor in the country with the most sophisticated marketing will not be able to get a home sold.

As the graph above shows, the further you get from market value, the percentage of buyers dwindles.

So who is to blame when a home comes on the market at the wrong price? Tough question to answer but most of the time the fault lies with the Realtor. How so? The Realtor is the one who does the market evaluation on the property and gives the seller a suggested list price and probable sale price. I know there are some that are probably thinking that is all well and good but on many occasions sellers think their homes are worth more than the suggested value and insist of the home being listed for a higher price.

My response would be the Realtor doesn’t have to take the listing! The problem in our industry is that for every overpriced home there was a Realtor who was willing to take it. There are some agents that have the hardest time walking away from potential business.

Then there are the Real Estate agents that always tell sellers what they want to hear in order to get the home listed, especially when the agent knows they are in competition with other Realtors. Shocking but true. Buying a listing in this industry has been going on since the 1st Real Estate companies went into business. Tell em what they want to hear, get a signature on the contract and then beat em over the head for price reductions. So unprofessional but it happens a lot! Some agents don’t care because they use a listed home to generate buyer calls which can turn into future business.

How do you avoid this? When you are sitting down with Realtors to go over the value of your home you should be getting some kind of appraisal report preferably with pictures that show other like homes that have sold. The homes being compared to yours should look similar. If they don’t a red flag should be going up in your head. Likewise, if the homes do look similar yet the agent is telling you a much higher price for your home there should be a rock solid explanation of why that is the case.

Remember fair market value is what other similar homes have sold for. Not what you need or want to sell your property for. Buyers could care less what your perceived needs are. All they care about is paying the right price.

Over and over again statistics show that homes priced properly out of the gate sell for more than those who believe a higher list price leads to a higher sale price. As the days on market grows for any property on the market so does the gap between the original list price and final sale price. Ask any buyer which home they feel they have more bargaining power on…the one that has been on the market for 200 days or the one that has been on 20.

The second biggest part of the equation to having a successful home sale is picking the right Realtor.

Over the years this has been the one thing that really baffles me about the Real Estate business. Selling a home is a huge decision yet on many occasions there is so little effort that goes into picking a Real Estate agent to work with.

Unfortunately, some folks mistakenly believe we all do the same thing to sell homes. This could not be further from the truth! Choosing a top producing Realtor should be an important criteria yet it does not always work that way.

In most industries when you want a hire someone to do work for you the persons track record and qualifications are of the utmost importance. From what I have witnessed 1st hand, a fair amount of time this does not enter a sellers mind when putting their home on the market. Instead they pick someone they think has a good personality or again tells them something they want to hear.

In most industries there is an 80/20 rule where 80% of the business is done by 20% of the people. Most people do not realize that in the Real Estate industry 94% of the business is done by 6% of the agents! While that is mind blowing, it also is easy to see why there can be a lot of disappointment amongst consumers with their agents.

So much goes into being a successful Realtor and an entire article could be written about it but some of the important traits you should be looking for are a past track record of success, a powerful marketing plan centered around the internet, excellent communications skills, and brutal honesty. If a Realtor possesses these four traits you are more than likely going to have a very pleasant experience selling your home or condo.

Asking some good Real Estate interview questions for Realtors always goes a long way in making better decisions.

Other obstacles to a successful home sale include making it difficult for people to get into the home and not presenting the home well. In a competitive market you want your home to shine not stick out like a sore thumb. It is awfully tough to sell homes when they look like the pits and equally as difficult when potential buyers can never get in to view it.

Real Estate Pricing Ending in 900 May or May Not Be a Good Idea

by Bill Gassett on April 19, 2010 · 9 comments

When I 1st got into the Real Estate business twenty four years ago we used to carry around the big bulky MLS books. Back in those days this was how we knew what properties were on the market in Massachusetts. The internet was in it’s infancy and jumping online to look at properties was not an option for a consumer wanting to purchase a home.

For as long as I can remember Realtors have been pricing homes so that the list price ended with 900. As an example, instead of the home being priced at $350,000 it would be $349,900. The majority of the Massachusetts homes on the market are priced this way. In fact, you see this type of pricing strategy for a lot of different products whether is be for a car, gas, or something on late night television.

The reason for this is psychologically the price looks lower in our minds when it is just under a certain price point. Expert marketers know this is the case when trying to sell product.

As consumers we fall for it all the time. Come on admit it, you know you have at least one of those gadgets from late night TV that are supposedly going to give you rock hard abs somewhere in the back of your closet at home! Besides the fact you want abs the price looked pretty good too.

Going back to the days of the MLS book, Realtors would jockey for position and soon instead of pricing the home to end in “900″ it became “899″ or some other number. We were all trying to position our listings to be seen by more eyes.

Pricing ending in “900″ continues in Real Estate to this day but I can tell you it is not always a good idea.

As I am sure you are aware over 90% of all buyers find their homes from doing an online search. The days of newspapers and magazines being an effective medium for finding homes is over.

When people are looking for homes for sale in Massachusetts more often than not they are searching in either $25,000 or $50,000 increments. So let me show you why pricing your home at $349,900 instead of $350,000 is not a good idea.

Lets say I am a home buyer looking for a property between $300,000 – $350,000. Doing a standard search from either an MLS search portal or visiting a site like Realtor.com is going to show all the homes in the selected range. In this search the home priced at $349,900 is going to be seen with no problem as it falls $100 shy of the end of the search range.

What if a buyer is searching for a home between $350,000 and $400,000? Well guess what the home priced at $349,900 is going to be missed by this buyer because it was just under the range.

By pricing the home at $350,000 a lot more eyes are going to be looking at this property! As a seller, you are going to hit both ends of the range.

Obviously when selling Real Estate this is a good thing. We want as many people looking at our properties as possible. Having proper pricing and a marketing plan that delivers outstanding internet visibility is what sells homes today.

If the price of the home does not fall on a quarter increment then pricing it ending in 900 is perfectly fine. You are going to see no difference in a home priced at $364,900 or $365,000 in terms of traffic generated online.

While we are on the subject of marketing, a few other pricing schemes that you should be aware of are the soldin70days.com and value range pricing. These strategies are both quite different but are essentially marketing gimmicks used by some Real Estate agents. Do your home work and don’t be mislead by these kind of tactics that do little to sell your home!

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About the author: The above Real Estate information on Real Estate pricing strategies was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-435-5356. Bill has helped people move in and out of many Metrowest towns for the last 24+ Years.

Thinking of selling your home? I have a passion for Real Estate and love to share my marketing expertise!

I service the following towns in Metrowest MA: Hopkinton, Milford, Upton, Southboro, Westboro, Ashland, Holliston, Mendon, Hopedale, Medway, Franklin, Framingham, Grafton, Northbridge, Shrewsbury, Northboro, Bellingham, Uxbridge, and Douglas.

Tagged as: Home pricing strategies, Massachusetts home pricing, Massachusetts Real Estate pricing, Pricing a home properly, Real Estate pricing ending in 900, Real Estate Pricing Gimmicks, Real Estate Pricing Strategies

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Sell Your Massachusetts Home in 70 Days Guaranteed?

by Bill Gassett on March 22, 2010 · 14 comments

Have you ever seen the Massachusetts Real Estate advertising that says “We will sell your Massachusetts home in 70 days guaranteed” and wondered what the hell that was all about?

This is just another marketing gimmick that in some respects is no different than value range pricing. The difference being is that more times than not the list price is under the current market value of the property. In some cases WAY under!

I have to hand it to the Realtors that use it as part of their marketing plan because there are quite a few home sellers that actually believe there is something special going on.

It’s seems that some consumers believe that these guys are really not your average Real Estate agents but some kind of Realtor super hero! I can picture it now when they arrive on the scene all dressed in a sharp suit ready to sign up the next home seller only to head off to a local phone booth for a quick change of clothing.

Well maybe not a phone booth anymore as they are much harder to find.

There is no doubt in my mind that plenty of homes can sell in under 70 days no matter what kind of market we are in if they are priced at or below the present market value. In fact, I know this is the case because I sell quite a few Massachusetts homes every year that go under contract in less than 70 days and these are homes that are not under priced!

According to the Sold in 70 days website you will receive an up front guaranteed price in writing from these Realtors and if they receive an offer that is higher than their guaranteed price from a Buyer, you will get the higher offer, not them. WOW… well isn’t that SPECIAL.

They go on to say they are not passive agents and do more than just put a sign in the yard and wait for a buyer. YIPPEE! There is nothing magical about this. In fact you can bet your bottom dollar that the number they are going to guarantee you is no where near what you would expect a buyer to pay for your home.

Yet they sign up a lot of clients this way so I have to give them some kudos and a good old fashion pat on the back.

There are usually two sets of consumers that will respond to this type of Real Estate marketing. Those that think the Realtor may have been born on Krypton and a seller that is DESPERATE to sell their home. If you really need to sell your home at all costs why not go with someone that will guarantee that they will buy it?

It would be interesting to know just how many homes that they actually do end up purchasing. My guess is not many! Buyers know a value when they see it and in most cases will jump at the chance to buy a home under market value. Aggressive pricing is the same reason why most bank owned homes sell quicker than traditional homes.

What is interesting to note is the sold in 70 days website (soldin70days.com) has no strength in the search engines for any kind of competitive Real Estate search terms. Consumers looking to find the homes these Realtors are marketing will not be finding them online at least not from their website. They find desperate sellers using television ads to get their message across.

When consumers search online the most searched terms for Real Estate are the city, state and the word “Real Estate” or “homes for sale”. Using my home town as an example a consumer searching for Real Estate would enter into Google Hopkinton MA Real Estate or Hopkinton MA homes for sale.

Want to see what I mean? Click this… Let me Google that for you. What you will see is all the results in Google for the term Hopkinton MA Real Estate. Between my website and blogs I have a number of positions on the 1st page. This is how sellers get great exposure for their homes online besides some of the popular Real Estate portals consumers visit.

When the home is priced under market value this is not that important because all you are going to need is the multiple listing service (MLS) to get the job done.

A seller that is willing to price their home under market value is the kind of client any Realtor would love to have because it is pretty much a sale in the bank. When you are looking to sell your home for the market value this is obviously not the route you want to take.

Some excellent considerations for picking a top Realtor include their track record, ability to market well, and their communication skills.

Asking good Real Estate interview questions is always an important consideration when hiring a Realtor to represent you.

BTW – If you happen to see a website called sell your home in 69 days guaranteed that is just me improving on this magical system.

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About the author: The above Real Estate information on Selling your Massachusetts home in 70 days guaranteed was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-435-5356. Bill has helped people move in and out of many Metrowest towns for the last 24+ Years.

Thinking of selling your home? I have a passion for Real Estate and love to share my marketing expertise!

Tagged as: Massachusetts home sales, Massachusetts Real Estate, Massachusetts Real Estate pricing gimmicks, Sell your Massachusetts home 70 days, Selling a Massachusetts home 70 days guaranteed, Sold in 70 days guaranteed, Soldin70days.com, Top Massachusetts Realtor, Top Metrowest MA Realtor

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Real Estate Value Range Pricing is Nothing But Deception

March 17, 2010

Real Estate value range pricing is not that common in Massachusetts thankfully! The term value range pricing can also be known as “variable pricing”, “value range marketing” and “range pricing”. So what is Real Estate value range pricing exactly? It is when you list a home for sale and rather than going out on the [...]

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Price Per Square Foot is Misleading for Real Estate Values

March 10, 2010

Over the years working as a Realtor I have seen numerous home buyers as well as other Realtors try to use dollars per square foot as a good measuring stick for market values. Sorry folks but that is a very poor way to analyze value. There are a number of reasons why this is the [...]

10 comments Read the full article →

Home Pricing

Why Most Real Estate For Sale By Owners (FSBO) Fail

How Not to Sell a Massachusetts Home

Real Estate Pricing Ending in 900 May or May Not Be a Good Idea

Sell Your Massachusetts Home in 70 Days Guaranteed?

Real Estate Value Range Pricing is Nothing But Deception

Price Per Square Foot is Misleading for Real Estate Values

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