Article Archive
Seller Power in a Down Market 10-08
Richard Barbee, M.Ed., GRI, CRS
Real Estate Broker
Realty Executives Associates, Inc.
10255 Kingston Pike
Knoxville, TN 37922
Office 693-3232 Cell 388-1621
Seller Power in a Down MarketCan we truly make lemonade out of THESE lemons? The real estate market has taken some real blows across the nation. Though regional in nature, the national press coverage would convince us that there is no real estate activity whatsoever. If you have friends or family in California, Florida, Michigan, Ohio, Nevada, or a few other states, you may have heard their lamentations about the status of home sales in their areas. But, let not your heart be troubled. Though the market is down, it’s not out. To use a boxing analogy, the market has taken a standing 8-count but is ready to jump back in the fight.
I talk with mortgage lenders all the time. They have money to lend! The main problem seems to be qualifying buyers with the new, tougher financing requirements. The desire to buy is out there. Credit scores and cash down payments are relatively unchanged. The issue is that the free-wheeling stated-income, no-money-down mortgages are very scarce. Even those with 700+ credit scores need some money down in most cases.
So, what power do home sellers have at this point? If you need to sell, what hope do you have? Please allow me to empower you with 3 suggestions:
1. Condition - The condition of the property is in the control of the seller. You must take a look at “the competition’s” condition. Are other homes in your price range offering better flooring, newer appliances, updated roofing, more attractive landscaping, or nicer kitchens? Visual impressions within the first 2-3 minutes can make or break a buyer’s interest.
An experienced Realtor or home stager can offer you sound guidance on competing well in the current market. If I see 15 houses in the $250,000 range, I can do a mental comparison of conditions. While every house may have a 2-car garage, new roof, and updated HVAC system, not every property has new carpets, fresh paint, updated plumbing and lighting fixtures, clean smell, and so on.
Take a look at the house from a buyer’s perspective. Get with a Realtor to take a tour of similar homes in your price range. Go to some open houses near your property. Look online at www.richardbarbee.com or www.viewhomes.com to see pictures of other homes in your price range. If you have been on the market for awhile, have a friend (or family member or church member or co-worker) come over to give you an honest opinion on the condition of the house. If cash is a problem, there are free and cost-efficient methods for improving condition.
Take a moment to think about any features of the house that might turn off buyers. One mental note in selling a house, think of it as a house on the market rather than “your home.” Try to remove all sentimental emotion from the situation. You are trying to sell a product, not your heart or your sense of belonging or your family. Taking a business-like perspective to the process can help your “market vision”.
Additionally, having a pre-listing home inspection can help you get to know more details about the condition of your home. I mean, how many of us crawl under our houses every 3 months to check moisture, insect status, insulation, plumbing, etc.? My friend Jack Feldmann of Clayton Inspection Services has proved to me time and again that a professional home inspection BEFORE listing can help a home be far more competitive in the market and eliminate / mitigate any potential risks to the purchase contract.
2. Price - An old saying in real estate goes “Price cures all ills.” There is a price at which every house will sell within 30 days, within 7 days, within 1 day. This is not a Realtor trick. It’s just true. At this time, many potential sellers know that they do not have a lot of wiggle room in pricing their home. Generally speaking, it is a bad idea to try to use the mortgage balance or desired capital gain to determine pricing for your property. Regarding emotion, this is almost always a hot-button issue between sellers and agents.
My good friend Thaxton Brown, a professional appraiser, always recommends a fresh appraisal when pricing is a bone of contention or a question mark. The appraisal industry is experiencing change of its own right now. But, one of the positive processes is the practice of time-sensitive appraisal. Home prices and market conditions are changing rapidly, for good and bad. Appraisers are using the most current data that is available to help come to an objective answer.
To put it simply, DO NOT SELL if you don’t have to sell right now or if you are razor thin on your loan to value ratio. Job transfers, family growth, downsizing, life transition and other factors may lead you to sell at this time. Be assured that all is not lost if you find yourself in that scenario. There are things that you can do to benefit your situation and achieve some of your goals.
3. Marketing - Realtors must work harder now. Wide-ranging, sustained marketing campaigns are necessary at this time to achieve the same results of two years ago. When you pick an agent, take time to explore their marketing strategies for your property. The internet, professional photography, PDF brochures, creative websites, “guerilla techniques”, and print media must be wrapped into a coherent, branded project in order to achieve results.
Make sure you choose an agent with the tenacity, time and knowledge to market in this highly competitive period.
I wish you the best. Please feel free to check out my website at www.richardbarbee.com , email me at Richard@richardbarbee.com , or call me at 693-3232 (office) / 388-1621 (cell). Thank you.
Office Space Leasing
Richard Barbee, M.Ed., GRI
Broker - Commercial and Residential
The Richard Barbee Team
Realty Executives Associates – Landoak
Office 693-3232
Cell 388-1621
Email: richard @richardbarbee.com
Office Space Leasing I admire business owners and entrepreneurs. Economies, from the macroscopic to the microscopic, are heavily influenced by the actions and decisions of the brave ones that take the risk and bear the burden of running a business. The recent downturn in the U.S. economy has had a deleterious effect on many small and medium business owners. As a commercial real estate agent, my work is focused on helping business owners and decision makers to consider the pros and cons of the place in which they make their way.Of the many services offered by commercial brokers, one of the most valuable is the consideration of, negotiation for, and possession of business space. Whether leasing or buying a place to conduct business, business owners face a daunting, complex set of challenges in making the most profitable, wisest decision. Issues such as rentable space, amenities, maintenance costs, insurance policies, operating expenses, potential foot traffic, type of lease, local demographics, and much more must be examined in order to bolster the chances of success.One specific example is the office / store lease. In the book Negotiating Commercial Real Estate Leases, Martin Zankel (2001) noted that “contrary to popular belief, there is no such creature as a standard lease form” (p. 1). The negotiation over commercial leases can seem more like a battle, a power play, a war, or an illness. The job of a commercial real estate broker is to assist the business owner in this decision-making process. Attorneys, financial professionals, building owners, employees, and many more folks have a role to play in this process. The commercial broker helps to facilitate and coordinate all these elements. Do you have a trusted commercial broker to advise your business?Martin Zankel has worked in commercial real estate since 1965. Zankel (2001) wrote, “I would not advise any client of mine, landlord or tenant, to sign any lease that had been drafted by the other side in a transaction without negotiation” (p. 1). With so many forms of commercial leases, any business owner would have difficulty in the details of this document. I have known several residential real estate brokers that have hired a commercial broker to represent them when acquiring office space. I have attorney friends that are happy to hire a commercial real estate broker to locate, assess, and acquire office space. The field of commercial leasing is highly technical, requiring a skill set that includes calculation, market awareness, contract assembly, negotiation, remodeling, and so on.As an example, here is a short list of the types of general leases available (not including sub-types): gross lease, industrial gross lease, retail lease, bond net lease, triple net lease, full-service lease, office lease, etc. Years of study and experience with commercial leasing only begin to prepare a commercial broker for the hard work of offering wise guidance. Make sure that your commercial lease sets your business up for profit and success. A good or bad decision in this area could make all the difference.Business owners and decision-makers do well to develop a relationship with a well-trained, ethical, smart commercial real estate broker. Commercial brokers can provide ongoing consultation and offer a range of possibilities when the business grows or shrinks. I love working with first-time business owners. I have had a chance to work with a number of first-time business owners that are fulfilling their lifetime dream. Many have worked in medicine, sales, education, military, and other professional careers. Some have never been to college while others have Ph.D.s. Working to help a high achiever and dreamer to bring their vision into reality is a thrill. With so many businesses failing in the first two years, it is vital to give great consideration to the location and lease terms for the business.There are many professional, hard-working commercial agents in this area. I call several of them “friend.” If you have or want to start a business, please call a commercial real estate agent when it is time to find the space to make your dream a reality.I wish you well in your efforts. Email me at richard@richardbarbee.com if you have any questions or wish to schedule a consultation.2008 Home Buyers Want....
Richard Barbee, M.Ed., GRI
Broker
The Richard Barbee Team
Realty Executives Associates – Landoak
Office 693-3232
Cell 388-1621
Email: richard @richardbarbee.com
Today’s Home Buyers Want Wants are powerful factors in making decisions. Needs may be more or less powerful, depending on the situation and the person. In today’s increasingly competitive housing market, home sellers are faced with the task of trying to attract buyers through a variety of means. Bishop, Barlett, and Lautz (2007, www.realtor.org) wrote an article that highlighted results from the 2007 NAR Profile of Buyers’ Home Feature Preferences. This helpful overview indicated that there are specific items that increase home sellers’ chances of appealing to today’s buyers. One of the smartest and most effective ways of attracting buyers is making sure that your home features the top 5 items wanted most by buyers. Interestingly, the survey found that there is a significant difference between buyers of new homes and buyers of existing homes. Buyers of new homes seemed to desire luxury items such as whirlpool tubs, hardwood, huge closets, upgraded kitchens, and so on. Buyers of existing homes valued features related to the efficient, consistent functioning of the home. The top 5 features for which buyers are willing to pay more are as follows: 1. Updated / New Central Heating and Air – Buyers of existing homes valued this feature most. Seventy-four (74%) percent of survey respondents considered this feature to be very important. If buyers are like me, they don’t want to be hot or cold in their home. And, it seems that they don’t want to worry about the expense of a new heating/cooling system after spending money on closing costs, moving costs, new furniture, drapes, new appliances and other items associated with moving into a new home. The survey indicated that buyers ARE willing to pay more for this feature. In this market, would it profit you to look into updating your heating/cooling system? 2. Large, Walk-In Closet in Main Bedroom – Sixty (60%) percent of survey respondents considered this feature valuable. Closets are used for more than clothes today. Many of us have piles of clothes, but we use our closets to store valuables, firearms, decorations, files, photo albums, seasonal accessories, and more. The closet must be big. Could you spend a little to make your main closet bigger? Could you bring in a professional closet organizer to make the space more accessible and efficient? 3. Hardwood Floors – I love this feature. Fifty-seven (57%) percent of survey respondents thought this feature was worth a bigger offer. The entryway, main walk-way on first floor, dining room, and living/family room are the most desirable locations for hardwood. The elegance and potential profit from installing hardwood is worth the consideration. If you shop around, you can find quality hardwood with installation. 4. 2-Car (or bigger) Garage – We have too much stuff! Do you agree? The garage is for much more than automobiles and yard equipment these days. A number of people park outside because they have so much stuff! Young couples and families want big garages. Two ½ or three-car garages are preferable. It may be cost-prohibitive to expand your garage, but you may consider hiring a professional garage organizer to increase the storage capacity. Survey respondents indicated that this was a very important feature. Would your home be more competitive if you improved or expanded the garage? 5. Backyard / Rear Play Area – A full fifty (50%) of survey respondents considered a medium-sized backyard that is sufficient for children at play to be very important. Whether for children or grandchildren or nieces/nephews or pets or whatever, at least half of buyers are looking for a nice yard in the back. Some seek to buy a home with a playable backyard just for the re-sell value. Consider your backyard. Would it benefit you to consult with a landscaper or Realtor about the low-cost possibilities for your yard? Now, these are only the top 5 features from this one survey. There are a number of other features that can set your home above and apart from competing houses on the market. What is the condition of your patio, your fence, your roof, your appliances, and especially your flooring? Outside the home, landscaping, cleanliness, driveway condition, gutters, and more can play a big role in helping you compete well in today’s tough selling market. I wish you well in your efforts. Email me at richard@richardbarbee.com if you have any questions or wish to schedule a consultation.