Pricing Clinic 2: I can always come down

‘Ok,’ said Bob,  the seller,  ‘I get what you’re saying.  This is a great time to buy and the loss in value I might have with this place will be more than offset by the greater loss in the house we buy.  But, still,  I want to get every dime I can out of this place in the process.’ 

‘And of course, that’s one of the reasons you called Help-U-Sell,’ Said Broker Al.  ‘We’re going to help you do that by saving you some commission expense.’ 

‘Right,’ answered Bob, then glancing over to Carol.  ‘But I want to start higher than $285,000.  I mean, I can always come down . . . and who knows?  Maybe next week you’ll come by with someone who falls in love with the place and is willing to pay more!’ 

Al tried not to make a face . . . but he was unsuccessful.  ‘How much more?’ he asked.

‘Why don’t we start at, say:  $350,000.  People are going to make offers anyway, and like I said, we can always come down.’ 

‘There are at least half a dozen reasons why that’s not a good idea,’ said Al.  ‘Let me share just a couple.’

‘Oh, sure, Al,’ chimed in Carol, ‘You’re the broker.  Your job is to get this listing as low as possible, right?’ 

‘Not at all.  My job is to get you the best transaction we can pull from the market, which means: best price, most walkaway dollars and a minimum of surprises and inconvenience for you.  My job is also to save you money over what you’d pay an ordinary agent.’  Al was taken aback and it showed.  How could they be this far into the process and the sellers not trust him?  Carol saw his discomfort.

‘Oh, come on, Al,’ she chirped, reaching out and grabbing his knee for a moment, ‘I was just teasing.  Go ahead, tell us why we shouldn’t try to get more.’ 

‘Well first there’s the appraisal.  Unless we get a cash buyer — which is pretty unlikely — the lender is going to insist on an appraisal and they will only make a loan based on the value reported in the appraisal.  Now, I’m not an appraiser, but they work with the same information I used to do your market analysis, the same comps, prices, days on market . . . and they’re almost certainly going to get the same result I got:  Something between $275 and $285.’  Al took a moment to let that sink in.  ‘Can you see how the appraisal keeps people from over-paying for a house?’ 

‘Well, yeah,’ said Bob, ‘but still, we can always come down.’ 

‘If you get a chance,’ interrupted Al.  ‘Here; take a look at this.’  He again pulled at a laminated sheet in his clipboard.

window

‘You have a narrow Window of Opportunity when you first put your home on the market.  The day it hits, there is a bucket of potential buyers out there for whom it might be perfect.  They’ve been in the market for awhile and they’ve seen everything that’s out there.  Your house is fresh and new and they’re all going to want to see it.  Really:  the first month your house is on the market is when the greatest traffic — and therefore the greatest chance of getting a good offer — occurs.  After that, the backlog of people who have been waiting for a house just like  yours to come up is gone, and you’re left with just new buyers trickling into the market.’  Al paused and looked over at Bob and Carol.  They were leaning forward over the table, studying the graph. 

‘What happens when you overprice,’ continued Al, ‘is that you hit the wrong bucket.’ 

‘Huh?’ said Carol, her brow knit and her head cocked to the side.

‘If you price at $350, you’re going to find that backlog of buyers who have been looking at $350,000 houses all along, and to them, you house is going to look like less than what they’ve been seeing for the same price.  Your house might actually convince them that that bigger house a few miles away is a pretty good deal after all.’  Al noticed that Bob was starting to nod.  Yes! he thought, He’s with me!

‘The people who are looking for a house like yours are probably never going to see it.’ Al said . . . and shut up waiting for a reaction.

‘What do you mean?’ asked Carol.

‘ People looking in the high $200’s — which is where your home will probably sell — will have told their agents not to go over $300, and they’ll never even see that your house is on the market.  And if they do stumble across it by accident, it’s just going to look overpriced to them.’ Al took a breath and sat back.  The defense rests, he thought.

Finally Carol chimed in.  ‘You know, Bob, he’s right.  I remember when we were looking for this place.  After awhile I could tell when something was overpriced. Couldn’t you?’ 

. . . to be continued . . .

Pricing Clinic 1: I’m Just Gonna Wait

‘So, according to the Market Analysis,’ said Broker Al, ‘we should price your home between $275,000 and $285,000.’

There was a long pause. Bob and Carol slowly sat up and exchanged concerned glances. Although it seemed as if a decade had passed, Al said nothing. He knew this was a closing situation and remembered what Tom Hopkins had told him to do at times like this: Shut Up!

Finally, it was Bob who spoke. ‘I know the market has dropped . . . I mean, this place was worth about $400,000 not too long ago. We just can’t afford to lose that money.’ He looked back at Carol. She was nodding. Bob continued, ‘I think we’re just going to wait until the market comes back.’

Another long pause; but this time it was Al who slowly sat up.

‘I know it seems like you lost a lot,’ he began, ‘ But, truth is: you gained.’

‘Gained?’ asked Carol, ‘How do you figure?’

‘Here, let me show you.’ Al pulled two laminated sheets from his clipboard.

‘According to the National Association of Realtors,’ he began, ‘Trade up buyers — that’d be you — tend to buy 50% more home when they move. They spend 50% more than the price of the home they sell.’

‘In your case, using the peak value of your home, that means you’d have sold for $400,000 and probably bought something at around $600,000.’

price1b

‘Whoa!’ said Bob, ‘We can’t afford $600,000!’

‘Of course not,’ answered Al, ‘But back when your home was worth $400,000 that’s probably what your dream home would have cost.’  Carol looked skeptical. 

‘Now,’ said Al,’Let’s assume prices drop 30% . . . which is a good guess, because that’s about right.’  He picked up the second sheet.  ‘Here’s what you’d be looking at.’

  price2

‘Your $400,000 house is now worth $280,000 and you feel like you lost $120,000 — but you really didn’t lose it.’ 

‘We didn’t?’ asked Carol.

‘No,’ replied Al.  ‘Because we’re not really talking about dollars here, we’re talking about value — and that $600,000 house you’ve always dreamed of is now worth $420,000 — a drop of about $180.000.’

‘Oh, we can probably afford that,’ said Bob.

‘Of course,’ replied Al.  ‘And the good news is:  you’re actually ahead of where you’d have been a few years ago.  The drop in value has been greater in your trade up house:  $60,000 greater.  That’s $60,000 you won’t have to finance . . . ‘

‘Oh, don’t worry,’ laughed Carol, ‘We wouldn’t have qualified anyway.’

‘Right,’ chucked Al, ‘But that additional $60,000 could mean as much as $115,000 in mortgage payments over the life of a typical loan.’ 

‘So, I guess you’re telling us to go ahead and take the hit now?’ asked Bob.

‘It’s not really taking a hit,’ answered Al, ‘It’s taking advantage of an opportunity.  After all, your dream home will never be less expensive than it is right now.  Despite what you read in the papers, this is actually a great time to buy!’ 

This was followed by another long pause, one that was far less uncomfortable for Al.

 . . . to be continued . . .

Money Loves Happy

Indulge me for a moment.  After all, I’m probably a lot older than you — which means I might be wiser or maybe just senile.  In either case the proper thing to do is to cut me some slack, give me the benefit of the doubt, go easy on me.  I say all this because I’m about to become  less business-like and more personal and it makes me a little nervous.

I’ve spent a lot of time wandering this world and I have come to believe that abundance is pretty much all around us.  I picture it as a great river of money flowing just above our heads.  The trick is to find ways to reach up and pull some of it down.  That’s what we’re all trying to DO:  pull some of that money down and put in our pockets.  So we set goals and work long and hard, we practice, drill and rehearse, and constantly work to improve our performance . . . and so on.   

What I’ve noticed is that working to create abundance (jumping and grabbing at that river), while necessary and important, isn’t nearly as effective as attracting it.  And nothing attracts abundance better than Happiness.  Money loves Happy.  It longs to be with Happy and is constantly looking for a time and place where they can be together.  It’s a love story. 

Happy people have abundant lives; and it starts with getting Happy. 

In other words:   Abundance doesn’t create Happiness.   Happiness attracts Abundance. 

I call Help-U-Sell brokers every day and, as I’ve said, I’m always blown away by the Heroes I find out there.  This Happiness theme runs through those conversations and it comes out as optimism, determination, faith and confidence. 

But let’s also acknowledge reality:  it’s been a very difficult couple of years in this real estate business and the chaos of the recent past has left some wounded and bleeding.   I’ve talked with a few who are so down, so depressed, so defeated that getting anything started is . . . well, it’s probably not going to happen. 

If this is you, if you are one of the crawling wounded who has lost your faith and your hope, then I have something to tell you:

You don’t have a business problem.  You don’t have a sales problem or a market problem.  You don’t have a recruiting problem or a support problem or a cash flow problem.  What you have is a Happiness problem.  And if you can’t find a way to get Happy now, you’re probably not going to turn things around.

********************

How do you get Happy when you’ve forgotten what that feels like?  Well, once again, being positively ancient, I have some ideas.

1.  Move!  Really:  get moving!  If you want to change your emotion, change your motion.  Run.  Dance, Work out.  Walk. Bike. Climb.  I do yoga.  It keeps me from becoming a question mark shaped fossil and makes me sane.

2.  Revive Grattitude.  You want to nurture a spirit of continual gratitude for all of the wonderful blessings you have in your life.  What?  You can’t find any?!?  Then do volunteer work somewhere every week helping those who really have nothing:  orphans, victims of abuse, homeless, mentally ill, infirm, elderly and alone.  Opportunities to reconnect with just how lucky you are, are all around you. 

3.  Picture a positive outcome.  Spend a little time each morning quietly sitting and thinking about what you’re working on.  Picture things working out.  Picture successful results.  Picture these things in detail.  Taste it, feel it, smell it.  It’s unfortunate, but most of us spend much of our quiet time doing  exactly the opposite.  It’s called worry.

4.  Put your subconscious to work.  As you close out your day, take a few minutes to plan the next day.  What are you going to do, when will you do it and what are you trying to accomplish.  Do this within an hour of going to bed and do it in writing.  You may find a good Day Planner will help or you might do better with a yellow legal pad.  If you do this exercise, your brain is going to work on all of that stuff while you sleep through the night.  You’ll find it easier to get started the next day, easier to stay organized, easier to get to yes. 

5.  Get Connected.  Everywhere.  Plug in.  Connect with your family, your friends, your colleagues.  The natural tendency when times are tough is to withdraw and it’s probably the worst thing you can do.  This is especially true with Help-U-Sell family members who are scattered across the country.  You have to seek out ways to connect.  Join the teleconferences on Tuesday, Wednesday and Thursday at 11am Pacific Time.  Get a Facebook account and join the 100+ brokers who have become a friend of Help-U-Sell Real Estate.  Every day you’ll get an update of who’s doing what and what everyone is thinking . . . and  you’ll feel part of something bigger than yourself.  Above all:  next time you hear of a Help-U-Sell rally near your home, make reservations and get to it.  Really:  a day spent in a Help-U-Sell rally is better than a whole bottle of Valium! 

Your job is to find a way to get Happy, then stay Happy, then turn Happy into a habit.  It’s step one to an abundant life.

NAR Convention 2009 – The Exhibit Hall

The National Association of REALTORS held its convention this weekend in San Diego (my home), so I took today to go down and walk through the exhibit hall.  I’ve done this many times before and find it a good way to get the pulse of the business and spot new or at least interesting things.  Here’s what I noticed this year:

  • Only a handful of the large national real estate firms were present.  Of course, Realogy was there with CB, C21, ERA and BH&G in their booth.  Prudential was down the aisle a bit.  And Keller-Williams was there . . . so was Exit.  Oh, and Re/Max.  But that was about it.  And truth is:  most of the booths were pretty empty. 
  • There were tons of exhibitors focused on Short Sales and REOs.  Some were networks you could join, others offered training and there were a few vendors with software for managing the process.  It seemed pretty clear, though, if there is a focus, REOs and Short Sales are it.
  • Actually, there were very few people in the exhibit hall.  Now, it was the last day, and many were probably in meetings, but I remember years past there being crowds pushing through the aisles.  Not so today. 

I saw only a few things that really excited me:

  • Listingbook.  I’ve already written about it here.  But after wandering the Exhibit Hall and looking at everything that hopes to be similar, I discovered that nothing else comes close.  Listingbook is absolutely the best way to share market data and listing information with your clients and potential clients.  It keeps you in control and delights them.  I had a meeting with their VP of Sales and we will be doing some things with them very soon.  Stay tuned.   www.listingbook.com
  • David Knox.  Sometimes what’s tried and true can be fresh and new.  David’s message has always been spot on and now, with some upgraded technology, I think he’s in an excellent place to reach even more people.  He’s spoken at Help-U-Sell conventions in the past and something tells me we’ll be seeing more of him in the future.  www.davidknox.com
  • RepTech.  They have software that will let you doctor interior and exterior property photos to look as they would if the house was fixed up!  Particularly valuable in distressed property situations where it’s important for the customer to see what might be possible, the software shows how the place would look with fresh paint, new landscaping, a pool and more.  The lady who did the demo for me ripped the carpet out of this living room, put down hardwood floors and an oriental rug and changed the drapes and it was easy.  www.reptechcenter.com
  • WindowVision.  Remember how we used to post photos and descriptions of our listings in our storefront windows?  Well, some of us still do, but these guys have put that idea on steroids.  Photos of individual listings are displayed in a lightbox (so they are illuminated and beautiful) and each has a 3 digit number.  A customer wanting more information about a listing, walks a couple of steps to the right where there is an actual touch screen device in the window that allows them to access and view more photos and information about the listing on a flat panel display.  You can even wire up a speaker and they can hear a description while viewing.  This all happens outside your office — at any time of the day or night.  Now,  here’s what I saw:  You could work with these folks to build a small self-contained mall kiosk that could really make a statement and pick up some leads.  They’ve actually done this and have examples to show.  WindoVision demo
  • Finally, I found a memorable chatchkie.  Moments to Remember USAis doing a calendar that might actually be kept and used by your customers.  It comes on an 8.5 x 11 inch laminated background with a photo of their house and your photo and contact information.  The calendar itself is two full years in length (from the day of closing) and each page is big enough for a few notes to be added each day.  It’s attractive, it features their house and you and actually has some shelf life.  All for $21.90.  www.momentsusa.com

Heroes

Since coming back to Help-U-Sell in June, I’ve talked with a lot of brokers.  What I’ve found is a bunch of heroes.  I mean:  here in the most difficult real estate market in history, we have people working harder than they ever have, managing to survive and even thrive, all the while maintaining an infectious, positive attitude.  There are so many I’d just like to give a medal to.  What they’re doing is no small feat, either.  They are, against great odds, preserving the dream of home ownership for all of us.  I’m always proud to be an American.  Today I’m proud to be a REALTOR.  And I’m even prouder to be part of Help-U-Sell, where courage, commitment and passion for a job well done reign. 

In this challenging real estate universe where only the strong survive, I’ve noticed a few common themes in the attitudes and conversations of  the Help-U-Sell brokers who are making it happen.  First is optimism.  They acknowledge that the market is complex and demanding, but they are up to the challenge and know — really, know — they’re going to make it no matter what.  They seem hungry and open to new ideas and soak up new information as if it were a rare commodity.   Then I see them installing the best ideas into their own businesses.  That says a lot about  flexibility and adaptability. 

I see remarkable confidence and self-reliance.  These are the folks who regard everything at their disposal — even their Help-U-Sell franchise — as a tool for increasing their productivity in the field.  More than a few have said something like:  ‘I love Help-U-Sell.  I can’t imagine working without the brand, the set fee, and the system.  I appreciate corporate and I’m excited about what’s happening but, frankly, I’m going to make this thing work no matter what anybody else does.’  You can see in that statement the heart of the American Entrepreneur.  It’s that dogged determination to take a business on your own shoulders and make it work.

These are the ones who are not looking for a handout, not looking to be rescued or protected.  They’re not looking for some magical new idea to somehow save them.  They don’t have time for that.  They’re too busy finding ways to save themselves, and having a darn good time doing it. 

It takes a lot of heart to dig down deep in the midst of chaos and collapse, and find the optimism, enthusiasm and energy to pull yourself up and out.  And I assure you:  this team of Help-U-Sell brokers we have out in the field today — they have that kind of heart in spades.   Thank you all for being here and for doing what you do.  You are heroes to me.

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