October 19, 2005

Playing Real Estate "Marco Polo"

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Playing Real Estate "Marco Polo"

- by Jeff Hoffman

© Jeff Hoffman- All Rights reserved
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In a quickly changing real estate market where only 5%-7% of homes are selling week to week and 12%-21% of area sellers are dropping their price, sellers who are frustrated with few showings and no offers are finding themselves in a game of real estate "Marco Polo" with prospective home buyers.

I got to thinking of this after reading yesterday's Sacramento Bee article by real estate columnist Andrew LePage titled "Housing Market Cools Off."

Back in 1992-1998 was the last time we had a real estate market where inventory levels zoomed upward and all but a few home buyers seemingly went underground. I vividly remember how sellers and real estate agents struggled to find buyers for their listed homes just as the kid stuck with being "Marco" had a hard time finding the kid named "Polo."

If you remember how the game is played you remember that after a short while of groping around without being able to grab "Polo" the game wasn't nearly as much fun.

The same is true when a seller is having a tough time grabbing a buyer. The longer the hunt goes on for your elusive "Polo", the less fun it is. Eventually, if the game goes on too long, you want to give up and not play anymore.

Unlike the silly kid's game, in the real estate version, for most sellers giving up isn't an option. Job relocation, the new home you want to or already have moved to, or economic or physical reasons that necessitate your move don't allow you the option to quit the game. As luck would have it I was always better than any other local real estate agent at knowing where to find plenty of "Polo's" for my listed homes, regardless of the worsening market conditions.

There were 3 things I always did to find "Polo" in a tough market, here's how you can do it too.

Know How to Call Out So "Polo's" Can Hear You

Three are three main criteria buyer's use to search for home, they are price, then location, then size, in that order. Just as location is the key determinate of market value for the seller, price is the key determinate a buyer uses to search for a home. Sellers who believe they can overcome this hierarchy of buyer needs because they believe their home offers more amenities that help justify their overpriced listing are on the fast track towards becoming an expired listing.

Even if your home is located within the preferred location that a buyer would truly like to live in, and it is within the particular size range of home they want to buy, and it's upgraded to the hilt, if the buyer can't afford it, they won't be looking at it. To receive an offer you must make the showing list. And to make the showing list, you must be priced correctly.

Expert listing agents like me know how to estimate the correct market value for a home. Watch what happens as our local market continues to weaken; all of those newly licensed inexperienced agents who got into the business to chase what they considered to be ease money will drop like flies. Read Rachel Osterman's article in the today's business section of the Sacramento Bee about real estate agents and the big shakeout that's coming. Seller's who list with an agent who hasn't experienced the kind of market we're in right now are in for a rude awakening. Pricing your home at market value is still the best way to call out to interested "Polo's."

Swim To the Area of the Pool Where the Most "Polo's" Are Hiding

Knowing where to find a hiding buyer is second in importance only to knowing how to call to them. According to the National Association of Realtors 2004 Profile of Home Buyers, 69% of buyers found their home by utilizing a Realtor, yard sign, and the internet. What is really interesting is that a whopping 93% of buyers who used the internet did so with the assistance of an agent. Most of today's buyers are receiving e-mail notifications of newly listed homes from internet MLS searches their real estate agent is conducting for them. Ironically, only 5% of buyer's found their home using the old staple of advertising, a newspaper ad. To find a buyer you need to list your home with a real estate agent like me who advertises aggressively to top area agents, who consistently sells a lot of homes, who uses great Internet marketing, and who has a strong for sale sign program like my special Guaranteed Sale Program sign panel, 24-Hour #800 Home Information Hotline billboard, and my Talking House Radio sign that sits in every one of my seller's front yards. Currently I'm creating close to 100 buyer and agent views of my listed homes each and every week using this approach, if your agent isn't getting this kind of exposure for your home you're not looking in the right part of the pool to find your "Polo."

Know How to Catch "Polo" When You Have the Chance

Once you've found a buyer, don't let him slip past you. Find out as much as you can about the buyer's needs, wants, and motivations, and know your numbers. What list-to-sales price ratio are homes similar to yours selling for? What is the median price point at which other pending sales are coming in at? In a market like we have now, where prices are declining, buyers often back out of negotiations if they don't feel they're getting a pre-built-in value when buying a home. Consider offering incentives if the buyer can close by a certain date or allow you to remain in possession until a certain date. If you list with an agent like me, I can offer to give a buyer a $10,000 Realty Cash Reward Certificate if they make an offer at 99% or more of the current listed price at no additional cost to my seller. It's like making a ten thousand dollar price reduction without having to pay for it.

Too often a seller will let a buyer slip past them because they let their pride get in the way a making a good decision. In a declining real estate market your belief about what you think your home is worth will sabotage your sale. The market dictates value, not what you want or need. Today's low offer is next month's above market offer. Remember, it does you no good to find your "Polo" if you can't tag him.

Tough markets require tough sellers and tough real estate agents. Following this proven to work advice will guarantee you don't drown in the process.

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Jeff Hoffman is the President of Hoffman Realty Group, Inc. and has assisted in over 100 relocation transactions during his real estate career. He is the creator of a powerful home selling system designed for the home seller not the real estate agent. To learn more about his Smart Seller Home Selling System visit
www.SmartSellerListing.com

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