Are Luxury Home Open Houses Effective

Over the past several years I have had the privilege of listing and selling some noteworthy luxury properties in the area ranging in price from $1 to $2.75 million.  Through those sales I gained some great experience working in this exclusive and extremely small segment of the market.  Further, through attending the National Association of REALTORS® conference in the U.S. I have met and kept in contact with two of the top luxury home REALTORS® in the U.S. and I have read both their books dealing with the luxury home segment.  This has and continues to give me additional insight into the luxury home market which along with my own experience I will share via this blog.

  Many sellers and REALTORS® for that matter question the value of Open Houses.  I can honestly say that in over 13 years of practicing real estate, I have never sold a home through an Open House.  I have however met many people to whom I sold another property to at some later point in time.  Properly utilized, Open Houses have always served as a great way to meet people and gain potential clients.  Every once in a while, a house will sell through an open house but it’s rare.  Times however change and the validity of holding an Open House even for an expensive luxury home should not be discounted or casually dismissed.

  

  As I have stated before, technology and primarily the Internet has had a profound impact on all manner of businesses and real estate is no exception.  Many buyers spend weeks if not months searching for properties online.  Buyers have often viewed countless listings and gathered an abundance of information before they ever talk to a REALTOR® much less step inside the front door of a home listed for sale.  An open house, properly executed even for expensive properties can serve to bridge the gap between a prospective buyer sleuthing around online versus physically getting into a property and meeting a REALTOR® with whom they can develop a relationship.

 

  Much of the real estate market here on southern Georgian Bay has traditionally been made up of secondary properties.  While some potential Buyers in this market may be moving up from a lesser property to one of greater size and value, many of these buyers currently do not reside here nor are they ultimately familiar with the market.  I often find that a great number of attendees at Open Houses ask more market related questions than they do about the property they are in.  As a REALTOR®, this creates an excellent opportunity to demonstrate your expertise, thus potentially gaining their trust as a client. 

  What’s changed in recent times however with respect to Open Houses is this. On an increasing basis however, I learn by asking questions of my Open House attendees that they have seen and have been watching the listing online.  They have never called or emailed me to inquire further but as soon as they learn of an Open House being held, they are there.  The Open House is a non-threatening way to get inside for a first-hand look without feeling pressure by contacting a salesperson.

  In my next post I will touch on the various ways in which a luxury home Open House can be organized and executed in order to generate the best results.   

Pricing Your Luxury Property To Sell

So you’ve decided to sell your home, condo or perhaps it’s a vacant lot.  As per my prior post, the #1 reason that properties sell or fail to attract a buyer is PRICE.  Sure, we can debate the matter location, condition and the desirability of the neighbourhood etc. but at the end of the day these are all factors relative to price.

  No matter how well maintained and up-to-date your home is or the fact it is in a great location, price is ultimately the most significant factor in securing a Buyer.  Today’s Buyers are forever fearful of over-paying.  Further, the Internet has enabled Buyers and Sellers to become very knowledgeable and informed.  Via their online searching and comparative shopping, they get a good sense of values. They know which properties have been listed for an extended periods of time and they determine by looking at photos and virtual tours which ones are physically worth going to view. 

 I would hazard to guess that when most Sellers decide to sell and contact a REALTOR®, the scenario unfolds like this.  The REALTOR® arrives at the property with little if any information to review with Mr. and Mrs. Seller other than perhaps a couple of MLS® data sheets for some other sales in the area.  They take a tour of the home with the Sellers then sit down to discuss price.  The REALTOR® will have a price in mind that they have arrived at based on the comparable MLS® sales they may have printed off in conjunction with their just completed tour.  Mr. and Mrs. Seller will also have a price in mind.  The Seller’s price will be based on the following:

• What they paid for the property plus any money they have since put into it.
• What they feel the home would cost to replace if you were to build it today.
• What they need to get out of the home in order to move on to the next home they wish to purchase.
• What their neighbours have told them their property is worth.  This price is usually high as the neighbour is selfishly protecting their own interests and  the perceived value or their property.

  The fact is, none of the above matters and is of little consequence to a Buyer(s).  The property is ultimately worth what a willing Buyer is prepared to pay.  For the most part, the most they are willing to pay is an amount equivalent to what other comparable homes in the area have sold for.  The REALTORS® job is to analyze the market, look at what has sold, what hasn't and also take a look at what is currently listed for sale as that is what the Seller(s) will be competing with.

  In order to effectively do the necessary legwork to establish price, as a Market Value Appraiser I prefer the two stage listing approach.  The first visit is to gather information about the subject property which can then be used to compare it to other recent sales in the area.  Differences in lot size, location, the size of the house, number of bathrooms, features, finishes and other criteria all need to be reviewed, with dollar adjustments made for the many differences that are bound to exist.  Only then can you arrive at a realistic selling and listing price.  In some instances and this is especially true with higher end homes, they may be no good comparables.  Nonetheless, conclusions can and still be drawn in order to arrive at a realistic price that will resonate with Buyers.  This entire process takes some research and skill.  It’s not a matter of pulling a number out the air so-to-speak or simply listing it for what the Sellers want.  Doing so will probably result in the property being listed for an inordinately long length of time coupled with the need for multiple price reductions in order to secure a sale.  When this scenario unfolds, the property may in all likelihood, sell for less money than it would have if priced correctly at the start.

  If you are interviewing a REALTOR® with the intent of listing your property for sale, the onus is on the REALTOR® to provide you with the following information:

• A summary of other properties in the area that have sold?
• How do they compare to yours in terms of location, size, condition & features etc?       
•  How long did it take for these properties to sell?
•  What was the listing versus sale prices for these properties?
•  What other area properties are currently for sale that you will be competing  with?

  There are other questions to ask as well but I think you get my point.  Selling your property is more than having a REALTOR® walk through and throwing out a price with nothing to substantiate it.  Doing so will inevitably result in an unduly lengthy days on market, the need for multiple price increases and in the end, a sale price lower than what you mind have attained early on had the property been priced so as to be in the market versus just on the market.

  Pricing a luxury or higher-end home is often a much different matter than what I have described above.  Finding a comparable sale(s) to a $1 or $2 million plus property can be a challenge. If you are the owner(s) of a luxury, high end property I will in the next post on my luxury home blog  “Southern Georgian Bay CarriageTrade Homes” talk about the process used to arrive at an appropriate price for that distinctive one-of-a-kind property.

  One closing comment.  Everyday I see REALTOR® ads offering "FREE Home Evaluations."  With about 100,000 REALTORS® in Canada there are tens of thousands of "FREE Home Evaluations" being offered.  As a seller, insist on obtaining one that is done thoroughly and professionally utilizing some of the guidelines I have explained above.

Why Is My Luxury Home Not Selling?

We are now almost one and a half months into the new year.  Despite the relentlessly cold weather we have been having, spring will indeed come and with it, an upturn in the real estate market as traditionally happens once the better weather arrives.  

  As previously reported, 2013 was the best year in six years in terms of the number of properties sold through our local MLS® system.  Further, it was also a “record” year in terms of dollars sold with almost $625 million in properties changing hands via MLS® sales in our market area.  Luxury home sales in the area were also strong last year with 26 properties selling over $1 million.  With all this positive news, some sellers are probably asking themselves; “Why is my house (or condo) not selling?”  

  Earlier this week I completed an update course in order to renew my MVA (Market Value Appraiser) designation.  This designation must be renewed every two years and it requires taking some additional courses relative to appraisal in order to do so.  The course I completed was titled “Pricing to Sell” and it reinforced some of the various appraisal methods and steps taken in order to accurately value a property.  As I worked my way through the materials it really struck me that a large percentage of REALTORS® are not aware of and or do not follow the necessary steps to establish accurate property valuations.   

  The #1 reason that properties do not sell is PRICE. I know this may seem like I am over simplifying things but let’s look at the follow scenarios:

1 - The home make simply be just over priced.

2 - The home may be priced too high for the neighbourhood.  Having the most    

      expensive home in the area is not a good thing.

3 - The house may be dated and in need of renovation and upgrades.

4 - The house may be situated in an area that for some reason has become 

      undesirable ie: increased traffic or it has been re-zoned so as to allow 

      commercial uses etc.
5 - There is a lot of housing inventory on the market to compete with.

6 - Market conditions have changed, perhaps interest rates have gone up or the 

      economy has slowed down.

  Every one of these six reasons is in some way tied to price.  The first two are obvious, but what about the other?  If a home is dated and in need of some renovations, the price needs to reflect that.  It needs to be priced in such a way that if the buyer is in fact interested in the property, they will want to purchase it at a price that will allow them to undertake and finance the required.  Some buyers may just simply not want to get into a "project" and there is little you can do about that.  

  As for items #4 and #5, if a home is situated in an area where the land use and zoning have changed or say a new highway went in, you may need to price it lower in order to attract a buyer.  If there is an abundance of inventory listed for sale as there now is, you may have to lower the price to attract a buyer.  As of this post there are 104 properties listed for sale over $1 million.  If the economy has slowed or interest rates have increased etc. then again the price may have to be adjusted to account for those factors again in order to attract a buyer.  One way or another all of these reasons tie back to the issue of price.

 At the end of the day, maybe you made a bad choice in the REALTOR®  you selected to list and market your property.  That too may relate back to price.  Did they prepare a comprehensive evaluation which they reviewed with you to arrive at the current market value of your home?  Many times they don't instead just throwing out a price at which to list the property without doing any research or worse, they listed it at a price dictated by the seller.

 As we approach spring and head into the prime selling season, I am going to spend some time talking about price as it is the most crucial component in getting your home or other property SOLD!  In my next post I will review several ways in which a property evaluation can be prepared in order to arrive at a realistic market price.  There is a difference between having your property "on the market" versus "in the market" and my desire is to show you how you arrive at the latter.  Stay tuned.....

Announcing My Live Play - Georgian Bay APP

I have commented from time to time in prior posts about how much technology has changed not just our daily lives.  It has also had a profound impact on entire industries and professions including the role of REALTORS®.

  Smartphone and mobile device usage has grown significantly over the past couple of years.  It’s not just our kid’s texting that has increased mobile device usage.  CBC News reported back in July of last year that Smartphone usage by Canadian adults had increased 33% from the prior year.  With this in mind, I am very pleased and excited to announce the launch of my own real estate APP, Live Play – Georgian Bay which I believe is the first such APP for our area. 

   

  Available for iPhone, iPad and Android devices as well as HTML for Blackberry and similar platforms,  Live Play – Georgian Bay is aimed at providing consumers with current and relevant information that will assist them with their real estate buying and selling needs.  Our role as REALTORS® has changed, much of it driven by technology but also by the changing demands of today’s consumer.  As professionals, consumers expect and need their REALTOR® to readily provide a degree of information, knowledge and service with respect to real estate that is consistent with the degree of expertise they receive from their lawyer or accountant.

  More than just an MLS® search tool, I have developed Live Play – Georgian Bay in such a manner as to give users access to an abundance of information via their Smarthphone or mobile device including my quarterly Georgian Triangle Real Estate News and Condo Communique newsletters, blog posts, open house notices, access to Royal LePAGE TV help videos and more.  I have endeavoured to develop an APP that will both engage and inform my clients and users.  My intent is to build an online community, a place where users can share photos of their new or perhaps dream home, their latest home renovation project or to simply ask questions or post comments.    

  While I believe my APP is the first of its kind in the area, it will not remain static or stale.  I will continue to refine its features in tandem with today’s ever changing technology and in accordance with what people want.  As REALTORS® we must demonstrate our knowledge and willingness to assist consumers without expecting anything in immediate return.  With my APP and other initiatives such as this blog, I not only want to keep my current and past clients informed about our local real estate market but I hope my efforts will provide a degree knowledge and service to others, earning their respect, trust and perhaps future real estate business in the years ahead.

 Please click on this link to download the correct APP for your respective device.  After exploring its use I would love to hear your feedback and do not hesitate to mention other features you would like to see. 

Dealing With the Home Inspection Part 2

When dealing with the terms of an Agreement of Purchase and Sale, Sellers and Buyers often face-off over issues that me be identified as the result of the Buyer’s home inspection, which can jeopardize not only the negotiation process but the very sale itself

  Just like humans, every home will have its own personality if you will.  Certain characteristics and yes issues that may or may not constitute a “fault” and a reason for a Buyer to either abort the purchase, or solicit a price reduction.   Just as Sellers need to address the appearance of their home from a cosmetic standpoint when listing their home for sale, attention should also be paid to maintenance issues that have been neglected.  Does the roof need to be repaired or replaced?  Is there evidence of water leaks such as stains in the ceiling?  Are plumbing faucets leaking, have some windows lost their seals and are fogged up.  These are all factors that (a) represent how well a home has been maintained and (b) are  items that a good home inspector will identify and flag in a report along with some issues that may not be readily visible to the casual observer.

Depending on the property, Sellers may be well advised to have their own home inspection done prior to listing.  This is not meant to take the place of a Buyer’s home inspection but it will serve top identify items that should be addressed prior to listing the home for sale and eventually haggling with a Buyer over.

  From my experience, most Buyers are reasonable.  Buyers looking at a century old farmhouse will for the most part be prepared to deal with a host of things that a home inspector may find.  That is part of owning an old house.  Someone buying a newer home however may not be so tolerant.  Regular maintenance of small items that have been neglected will probably not be questioned by a Buyer as most of these will be duly noted when the Buyer views the property.  Personally, I do not feel that a Buyer should be looking to amend a price to repair items that were clearly visible when they viewed the property that is simply a Buyer trying to take advantage of someone.   It is the larger unforeseen items that are uncovered via a home inspection that will no doubt raise concerns and perhaps bring about a change of heart with the Buyer.  Is there inadequate insulation in the attic?  Is their aluminum or in the case of older homes, knob and tube wiring present?  Galvanized pipe in older homes is another issue that is of concern?  Is the furnace and or air conditioner, or the swimming pools liner on their last legs?  These are just a small sample of what a home inspection might uncover that could impact a Buyer’s decision to move forward with their purchase of a specific property.

  As a REALTOR®, I may handle the situation differently if I am representing the interests of a Buyer versus a Seller.  The following are some of the options available to Buyers and Sellers in terms of how to negotiate dealing with issues that may arise from a home inspection. 

• -          First, the Buyer may simply not fulfill or waive their home inspection condition by the required date.  As such the deal becomes null and void and the buyer’s deposit is returned to them.
• -          Second, the Buyer requests (in writing) that in exchange for the Seller fixing the items at the Sellers expense prior to the closing date, the Buyer will remove their condition and firm up the purchase.
• -           Third, the Buyer can ask to have the previously agreed to price amended ie: reduced in order that they do the needed repairs at their own expense after closing.  This price reduction can be done up front or it may be done as a credit to the Buyer on closing.
  

 Sometimes a Seller may dig in their heels and insist that they will do nothing to remedy a problem that may have been identified in a home inspection.  That is most likely not the most prudent position to take.   Being unwilling to fix a problem or consenting to a price adjustment may result in losing the sale and they will only have to face the same issue with the next Buyer that comes along.

  As always, my best advice to Sellers is to get your home in top shape before you list it for sale.  In the event your home needs something like a new roof, furnace or other such item and the funds are simply not available that’s okay.  Your REALTOR® can price the property accordingly which should take the item off the table when it comes time to negotiate with a Buyer as the issue has theoretically at least already been dealt with via the price.

  For additional information about home inspections, see my Home Cents Help Tip “The Importance of a Home InspectionBefore Buying.”

Dealing With The Home Inspection Condition

One of the often contentious issues regarding the sale of a property is the attainment of a satisfactory home inspection report.  This aspect of selling a home or condo need not be the confrontational situation that it sometimes turns out to be and sometimes it’s not the property but rather the REALTORS® and or the home inspector that is to blame.

  Most Agreements of Purchase and Sale threes days will contain a home inspection condition which has been inserted on behalf of the Buyer.  What does this condition stipulate?  The condition is worded as such that the offer is “conditional” upon the Buyer obtaining a home inspection report that is satisfactory to the Buyer in the Buyer’s sole and absolute discretion.   Failing this, the offer can become null and void and the Buyer’s deposit is returned in full to the Buyer without deduction.  In the event issues with the home are uncovered during an inspection, there are several remedies which can be made so as to keep the Agreement alive.

  Sometimes when representing a Buyer where we have completed a home inspection, the Seller’s REALTOR® will call me asking, “..did the house pass the home inspection?”  A home inspection is not a test.  There is no passing or failing.  A home inspection is simply a report detailing as best as the inspector can following a visual inspection, the condition of the property at that point in time.  No home is perfect not even new or ultra expensive ones.  One home inspector that I use and respect, often does inspections on homes in new subdivisions.  Time and again he has found the same issues in most if not all homes built by a particular builder.  It’s not necessarily a fault or even a building code violation, it’s just a repetitive characteristic found in these homes or condos that may pose a problem down the road or may detract from the energy efficiency of the property etc.

  Just as a home inspection is not meant to be a test, it’s also not meant to be a ways and means of driving down a previously agreed to price.  Often Sellers approach the home inspection condition with fear and trepidation and that need not be the case.  Again when home inspections create problems, it’s often the REALTOR® or the home inspector that is to blame. In my next post I will cover what Sellers can do in preparation for the inevitable home inspection and some of the available options that Buyers and Sellers have when addressing items of concern that has arisen during the home inspection process.

Southern Georgian Bay's Luxury Property Market

Welcome to my newest blog, Southern Georgian Bay Carriage Trade Homes.  With upper end, luxury properties becoming an increasingly important segment of the local real estate market, I decided it was time to share with you, the distinctive aspects of luxury home ownership.  Whether you currently own a luxury, upper end property, are intending to purchase one or just like dream,  I will try to offer something here for everyone. 
  What constitutes a luxury property? From a monetary perspective we typically consider anything that falls in the top 10% of the market as being as being an upper end luxury property.  In the southern Georgian Bay area that is any home or condo that is valued over $750,000.  But value alone does not necessarily make a property worthy of a luxury home Carriage Trade designation.  
  The accompanying graph illustrates southern Georgian Bay luxury home and condo sales during the past 5 years.  Just like the overall real estate market in general, this segment of the market took a downturn during the 2008 recession by has bounced back significantly since then. 
  In future postings I will  share with you what today's luxury property buyers are looking for.