How Can We Remain Open To Higher Offers Without Losing The Buyer?

Dave,

There are four siblings involved in trying to sell a house. The Realtor has it listed a price that two of us feel is too low. His hope/plan is to have an offer at the open house the day the house is listed. It seems like this will trigger an aggressive buyer to either offer this lower list price or an even lower lowball offer.  Can we hold out if an offer is less than the list price? So, this is the flip side to your article "Making an Offer Before the Open House." How can we remain open to higher offers without losing the buyer?

-Jake (area withheld)

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Jake,

Okay, there are several angles to the question and answer. First, good luck with the four siblings “trying” to sell a house! I have found over the years that trying to get four siblings, or fewer for that matter, to agree on anything if quite difficult. I come from a family where I have three older sisters and as you can guess unanimous agreement is as rare as a Yeti sighting! That being said, I believe the strategy of your real estate agent is a bit risky…by putting all his (your) eggs in the proverbial open house basket!  For the purpose of this answer, I will assume that the home in question is being sold locally, as we do from time to time get questions submitted from outside our area and the location was not included with your question.

For anyone who has read this column for the past four or five years, you will know that I am not a huge fan of the traditional open house! Why am I not a fan of the open house? Simply put, they are not impactful at generating offers on the house being held open. Does this mean that they don’t work? No, it just means that in our market they are not very effective at creating a feeding frenzy type of atmosphere. I know, I also watch HGTV and see the open house frenzy at the end of each episode of Flip or Flop, Good Bones or Hometown. (BTW these are about the only kinds of shows, outside of football or hockey, that we watch at the Kimbrough house!) Unfortunately, I have just never seen it work this way… they call it reality tv, but it is far from any reality I have ever seen. Again, this does not mean it will not work, just means that the statistical chances are not high! If this magic open house does not work and you do not receive any offers at all or the offers you receive are from “low ballers” (any time I hear the word ballers I think of The Rock) you can certainly hold out for a higher price from another buyer on down the line. If you do receive an offer at your asking price and you do not accept, there may be some potential issues with agent commission being due, but that’s a question for a completely different column. The last part of your question is kind of like having your cake and eating it too!  How can we hold out for higher offers and not lose our low-ball buyer? This answer is also simple…you can’t!

I have heard my mother say it many times…you are either pregnant or you are not! As it relates to real estate, you are either under contract or you are not! You cannot, at least no self-respecting buyer would allow you to shop their contract, be under contract with one buyer and still soliciting offers from other buyers that may be higher and then just go kick your current buyer out of bed! It just does not work that way…or maybe it does in some weird “reality” tv show! You need to list the home for a price you are willing to sell it at and then market it to solicit offers. An angle that we will use from time to time when we think there may be an unusually high demand for a property is to put it on the market and then hold any and all offers for a period of 5 days. This allows more than just an open house to take place, it allows a fair amount of market saturation to occur and the generation of traffic and interest in hopes to accumulate several offers where you end up with buyers competing for the property. At times this works great, but it works best when the property is unique, in a high demand price range or in a high demand area. 

Ultimately you can look at this as any family would when there is dissent in the ranks…two of you are going to be right and two of you are going to be wrong! Sometimes being right is the only consolation you get!

Hope this helps.

Dave Kimbrough
The Kimbrough Team

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Lots of Showings, Reduced Price, Still No Offers...What Can Be Done?

Dave,

I have my house on the market since January 2, 2019. Lots of showings but the potential buyers do not stay long 5 or 10 minutes then they leave. My home needs masonry work in the basement and floors are sloping. My home is 100 years old but I sunk plenty of money into the house, new bathroom, new kitchen. I reduced the price by $15,000 and still no offers. The feedback is too small, sloping floors. I asked my listing agent if she knows any contractors as I want to unload my home asap. I want to relocate and I am not getting any offers at all. What can be done?

Linda     

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Linda,

I am going to break this down almost line by line. There is a lot of meat on this bone, so let’s get right to it!  First, patience is the one thing this time of year requires. Remember that you listed in what is traditionally considered the slowest (from a sales perspective) time of year and it is always hard to interpret showing traffic and feedback so moving with a bit of caution might be prudent. “Lots of showings” is somewhat relative and can depend on your definition of “lots”, but nationwide statistics on the number of showings before you should have an offer is somewhere between 8 & 13 depending on the market, time of year, etc!  Clearly this is not an exact number or science, but it does provide one statistical guideline to have some guardrails that will help keep you on the road! Along that line, there really is no typical length of showings.

From years of experience I would say that the average showing is somewhere around 20 minutes, but keep in mind that is an average, meaning some look quicker and some take longer! As a Realtor, everyone loves the buyer who is a quick looker, but some people need to look in and under every nook and cranny, even if they know they are not interested! Much depends on how large the home is etc. I have seen statistics and studies over the years that indicate that a buyer will internally “know” if the house is a contender within a minute or two, which shows that the final determining factor has a lot to do with having a gut feeling. All that to say that 5-10 minutes is probably a bit light. I even wonder if they are there long enough to get to the basement to see the area in need of masonry work? 

“Regardless of if they are making it to the basement or not they are bailing quickly and the reason is most likely the sloping floors. They should be aware of the size before they come to see and the fact that you have had showings tells me that the sloping floors are expediting their exit.”

Regardless of if they are making it to the basement or not they are bailing quickly and the reason is most likely the sloping floors. They should be aware of the size before they come to see and the fact that you have had showings tells me that the sloping floors are expediting their exit. These two issues are even outweighing your kitchen and bathroom updates, which I am sure makes it more disheartening.  Remember sometimes it takes patience to find the right butt for the saddle. Finding that butt can take longer when you have significant hurdles and a sloping floor would check the significant hurdle box. To overcome significant hurdles it generally takes one of three things, time, just the right buyer or price reduction(s).

Your price reduction of $15,000 is a significant move in the right direction. It’s not clear when you made the price reduction, but you need to give it at least 2-4 weeks to season and see if it brings any new buyers to the table. If this price change does not bring in serious new lookers then you will need to decide between time and money! Sounds like time is very important, so you may need to keep adjusting your price until you find the right value that makes accepting the sloping floors an attractive choice for a buyer. With every significant hurdle, there is a price that makes a buyer believe it is an acceptable risk. You will likely need to find that price if you need to sell asap. Your other option is to evaluate what needs to be done to correct the problem and get it fixed! This would significantly increase your buyer pool and appeal.

For your average buyer, the cost to correct sloping floors would loom large in the decision making process because fixing it would require cash they would likely choose to spend elsewhere and expertise that most don’t have. Fixing it would be a great option, depending on cost and timeline to correct. With every home sale there are two lines (price and time) that start off parallel and eventually meet. Adjusting your price is your quickest (notice I did necessarily say best) solution to speeding up the process! Sorry I don’t have a magic bullet, but these options should help you sort it out…best of luck!

Dave Kimbrough
The Kimbrough Team

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Are Open Houses Effective in the Winter Months?

Dear Dave,

Our house has been for sale for about 2 months now.  It is in a higher price bracket and we aren’t having many showings at all.  What is your opinion on open houses this time of year?  Are they worth the work and the hassle for us and our Realtor? 

We would appreciate your opinion.

Thanks,

Bob - Montrose, CO

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Bob,

I believe this to be our first question from Montrose, thus I can’t resist a quick answer. Open houses are not a significant part of our marketing efforts, not because we don’t want to sell houses, but because they are not statistically effective at selling houses. Open houses are a very good place for real estate agents to meet new home buyers and sellers and add them to their client list, however they are low on the impact meter for directly impacting home sales.

“Open houses are a very good place for real estate agents to meet new home buyers and sellers and add them to their client list, however they are low on the impact meter for directly impacting home sales.”

In summary, it is my opinion that open houses are overall fairly benign as a marketing tool. If you and your agent want to have one then you should have one, as any activity is at least “activity”… you know the blind hog theory? To that end, I would advise you to not hold your breath while you are away from home that Sunday afternoon, as it is statistically not probable to produce a sale, but it may help get you more traffic through you home if traffic is what you are looking to achieve. Realize the open house is another tool to potentially sell and advertise your home, however like most marketing methods it will not be the silver bullet you are likely wanting it to be. Try to be patient, we are just about to enter prime selling season…Winter is almost in the rear view mirror!

Dave Kimbrough
The Kimbrough Team

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Would it be Better to Sell or Rent Out Our Home?

Dave,

How do you decide if someone should sell or rent their home? I was recently promoted at my job and we’re scheduled to move to Denver in about two months. Do you have a set of questions we can ask ourselves that will help us know if we’d be better off renting or selling? We’d really appreciate any guidance you have to give!

Derek, Grand Junction

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Derek,

Congratulations on your promotion! A promotion generally means there are good things ahead for you and that is exciting. There are so many things to consider when you are deciding whether it is best to rent or sell? I will give you a few questions to ask yourself and these should help you evaluate which decision is best for you and your family. Keep in mind this is just the tip of the iceberg. There are countless other things to consider, but these are the biggies. 

1. Are you cut out to be a landlord? Some people are and some are not. You have to accept that your renter will not take care of your old home like you did. For some this is one item proves more stressful than some can handle.

2. Will the property cash flow and if not, can you afford for it to be short month after month?  Remember If your mortgage is $1,600 per month and you can only rent it for $1,300, you will be coming out of pocket $300 per month (plus maintenance) and that will quickly add up to over $4000 -$5000 per year. Can you afford the payments in full if it sits empty for a month or two or three? 

3. If your renter does not pay or are constantly late with their payments, are you built to handle conflict? Do you have the personality to evict them? 

4. Do you have the time to manage a property from out of the area? Renting a property out will take extra time, some more than others. Answering phone calls, scheduling maintenance, repairs, property checks…all this takes time and doing it from afar can be really risky.

5. Are you pretty sure that the market is headed in the right direction? If you are holding on and the market is trending down the upside for renting it out will only be if you are going to hold it long term. 

Remember, not all renters are created equal. Some are easier than others. If you decide renting is the right choice, but don’t want the potential headache you can always hire a property manager. Trust me, it can be the best 10% you ever spend! Even though renting might be an appealing option, don’t underestimate the upside to just selling and moving on.

If you decide to just sell you can walk away and move on and that can be huge! If you don’t plan to come back, then you are just prolonging the inevitable and in many instances just ripping the band aid off is the best option…even if it is painful at the time! Don’t undervalue the freedom of being able to leave the old house in the rear view mirror. If you have equity in your home, you can use that equity for a down payment on your next home. Selling also relieves you of the stress of dealing with renters and the maintenance of a home that you are no longer living in. 

Honestly, my experience has shown that selling is the most popular choice if you are moving out of the area. If you do decide to rent it out, I would highly recommend you hire a property manager and NOT go the “do it yourself” route. Best of luck with the new gig and Merry Christmas!

Dave Kimbrough
The Kimbrough Team

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How to Market Your Home When It Goes Back on Market

Dave,

Help! We listed our home about a month ago. We had a decent number of showings, great feedback and we even got an offer not long after listing it. We accepted the offer, but unfortunately after two weeks of being under contract the buyer's loan fell through. Now our home is back on the market, but it seems like everything has done a complete 180. It's been radio silence! We have only had 2 showings since coming back on the market! What could have possibly changed over the last two weeks and what can we do to get things moving again?

Dennis & Gail, Grand Junction

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Dennis & Gail,

Ugh, I am sorry…I can’t tell you how many times I have seen this scenario play out and its almost never an easy answer! When a property first hits the market there is an innate amount of momentum that is generated by just being a new property. The amount of momentum generated, if done properly, can be exponentially increased based on condition, marketing and price etc. It is always our goal to generate as much momentum as possible. Riding the momentum wave after launch is key and the more momentum you generate the longer you can ride the wave. Momentum in real estate is often overlooked and undervalued, but it is a vital goal when putting together a purposeful marketing strategy and turning back to that strategy to kick things back into gear again is where you must turn! Just like in a football game when big “MO” is on one team’s side it seems like they can do no wrong, but nothing kills momentum like a turnover, penalty or some other miscue. A property that falls out of contract is like a turnover in the big game, it can often times kill the momentum and to get it back you must dig deep into your marketing tool box!

It is absolutely one of the most frustrating parts of selling a home. The excitement of getting an acceptable contract to the agony of losing the buyer and having to start over again. It is not only emotionally painful, but the reality of the re-start can be another unexpected blow, especially when it is hard to wrestle the momentum back. This impact can be compounded right now as we are entering the winter months and the holiday season where fewer buyers are roaming the streets and contracts are nearing 50% of the spring/summer time highs. When this situation happens on our team, it is an all hands on deck affair. We know that getting that old engine going again is harder the second time around. Hopefully your agent has a proven marketing strategy that you can fall back on to rekindle the fire of a listing that has lost its spark. 

“When this situation happens on our team, it is an all hands on deck affair. We know that getting that old engine going again is harder the second time around.”

We start by messaging the entire database of real estate agents, especially those who may have previously shown the property, about the fact that we are back on market and often times offer some kind of small incentive or price reduction to give a fresh look and price. We also might switch up photos or re-work the write up so it appears fresh and new. We immediately focus on our electronic footprint (all electronic marketing) to ensure re-distribution happens as soon as possible and this includes making sure to re-run or re-launch social media campaigns to get the word out in as many arenas as possible. Obviously the more marketing you can do to get the word out and making the effort to track down any previous “warm” leads to inform them of the property’s new found available status can significantly help your cause. Make sure to employ every method possible to proactively spread the word.

The most important trait you must exhibit under your current circumstance is patience. Patience in this situation is going to be the key to your sanity and give you the ability to wait out the process as it gets back underway. Focus on moving forward and working with your agent to get the ball rolling again. Realize that it is likely not going to happen overnight. Give it some time and trust your agent and their ability to spread the word! Hang in there, ultimately things will get moving in the right direction, but in a world where we expect everything now you might just need the realization that the new journey may be an opportunity for personal growth! Lastly, remember it only takes one showing (and one offer) to make everything better. Best of luck.

Dave Kimbrough
The Kimbrough Team

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Common Closing Costs for Home Sellers

Dave,

We are currently in the process of selling our home and it just went under contract—yay! We want to know what to expect financially from this point forward. What are common closing expenses for sellers?

Thanks!

Cheryl, Palisade

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Cheryl,

Oh my gosh, this is such a great question and one that I get ALL the time! As a seller you have the privilege of paying the sales commission you agreed to with your listing agent, assuming your home is listed with a Realtor. The other costs associated with selling your home (outside of the real estate commission) that are the seller’s responsibility are varied, but you can almost always calculate an additional 1% if your sales price is UNDER $300,000 and about .7% if your home is over $300,000. If you calculate it that way you will, almost always, come up with a slight over estimate of your closing costs. 

The most common cost that is overlooked is your property tax. What most people don’t fully realize, as I did not prior to becoming a real estate agent, is that our property taxes are paid in arrears. It’s probably something most folks just don’t think much about and it often times is a bit of a surprise. How it works is, the title company will pro-rate the current taxes from January 1 to the day of closing and you will have that amount debited on your settlement sheet. The two largest debits you will see (outside of real estate commissions and your mortgage payoff) will be the taxes and the title insurance policy. Title insurance simply indemnifies that the title to the property will be passed from you to the new owner in good standing and free of any liens. For a $250,000 home you can expect this expense to be in the $900-$1000 range, these costs are on a sliding scale based on purchase price.

“The most discussed fee on the seller’s settlement statement is often the charge for water & sewer. The bills for water and sewer, if left unpaid, can be held as a lien against the property and thus MUST be settled at the time of close to ensure the passing of a clean title.”

The most discussed fee on the seller’s settlement statement is often the charge for water & sewer. The bills for water and sewer, if left unpaid, can be held as a lien against the property and thus MUST be settled at the time of close to ensure the passing of a clean title (as discussed above). In order to ensure that the amount that is owed is covered, the title companies always hold out an amount significantly over (generally around $200) your typical water and sewer bill. This ensures there is enough to pay it off and they will refund the difference back to you shortly after close. This one always creates a fair amount of discussion about how you never have had a bill that high, but believe me they will refund you the difference in short order. Always remember that your other services like gas, electric, telephone, television, etc. are your responsibility and you should call 24–48 hours prior to close and let them know you will be moving and the service will be transferring to a new owner on the date of close.

One last tip. Your mortgage statement always provides a payoff for you to reference, however the day it is printed you start accruing interest so your payoff is always higher than what is printed on your statement. I always tell our sellers to just add one extra payment to the amount on the settlement statement and that will provide a safe payoff amount. In my experience when closing day comes people are happy they overestimated and get a little money back, rather than under estimate and have to go digging for that little extra! I hope this help and by following these guidelines you should have a safe estimate of your closing costs.  Congratulations on getting your home under contract and best of luck on your new journey!

Dave Kimbrough
The Kimbrough Team

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Contingent Offers—To Accept or Decline?

Dave,

We recently, about a month ago, turned down an offer on our home that was contingent upon them selling their current home. They asked us to take our home off the market for two months while we waited for their home to sell. They had already had their home on the market and we decided we did not want to risk having our home off the market while we just waited for their home to sell. We asked our Realtor last week if they had sold their home yet and found out they did have it under contract, but have decided to purchase a different home. 

We are very frustrated and feel like they should have come back and put a contract on our home, as they said they would surely bring us another offer when their home was sold. We just feel like we have been left at the alter and now are starting over. What should we have done differently? 

Jake and Laura, Grand Junction

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Jake and Laura,

This is one of those classic darned if you do and darned if you don’t, that is the lesson learned from contingent offers.  When we receive a contingent offer, it boils down to a calculated risk. You have to work with your agent and determine, to the best of your ability, how probable it is that their home will sell? If the buyer is coming from the Denver area, it is HIGHLY likely their home will sell quickly, so the risk is VERY limited, as that market is very hot! When deciding to take a contingent offer, it also is dependent on how good the offer is. If it is a good offer, then sellers are generally willing to take on a little more risk. As it is with every contingent offer, you must decide if the probability of their home selling outweighs the risk of taking their offer and waiting to see if their home sells. Remember, you always have options.

Your first option, the option you chose, is to not accept their offer with a contingency and count on them coming back when/if their home goes under contract. My experience is that few people come back after they have been spurned. Remember, buying a home is an emotional process and you want to capture that buyer while they are emotionally invested in your property. When you turned down their offer, they may have felt like they had been spurned and started to look around again at competing homes, in essence, looking for a new partner. Bad analogy, I know, but you get my point. I have found it a better option to find some common ground to work with them on, which indicates that you want to sell the home to them, but you also need them to recognize your need to continue trying to sell your home if someone else comes along and wants to buy it.

“ I have found it a better option to find some common ground to work with them on, which indicates that you want to sell the home to them, but you also need them to recognize your need to continue trying to sell your home if someone else comes along and wants to buy it.”

This leads us to other options, the 48 hour and 72 hour first right of refusal. This means that you continue your efforts to sell and if you get another offer, they have 48 or 72 hours, you determine the length of time here, to remove the contingency on the sale of their home. If they cannot remove the contingency, then you can sell it to your new prospective buyer. Most buyers appreciate the fact that you, like them, are looking to sell your home and understand your need to take the first ready, willing and able buyer who will meet your terms for sale. You have now shown them that you want to sell your home to them and they are likely to receive this response in a positive fashion. They are now still emotionally connected to your home and feel like the next showing on their home may deliver a contract and get them into your home. They are still invested and still working toward the goal of getting their home sold, so they can purchase yours. Again, it has to make sense and it is a calculated risk.  

The key to everything is the ability to continue marketing the property and solicit other offers. There are several creative ways to create a win-win for the buyer and seller and have everyone involved, agents included, working toward a common goal. 

Remember, you turned down their offer, there is nothing that says they can’t change their mind and that is exactly what they did. You ran that risk when you turned them down and played hard ball. I do, at times, recommend taking a contingent offer, but often leave the seller with the contractual ability to continue to sell their home should they receive another offer and in my mind this is key. Sometimes you have to be willing to take on a little risk, as long as it does not leave you out of the game. I hope this helps and I am hopeful another offer is right around the corner.

Dave Kimbrough
The Kimbrough Team

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Handling Showings When You Have Small Children

Dear Dave,

We are preparing to put our house on the market in the next month or so and I need some advice. I have two small children and...can you guess where I might be going with this? We need to sell our home, but we also need to still live in it! I think our home is in an area that is going to attract buyers with their own kids, but I am just worried that I will get a call and have to be out of the house in 20 minutes. What are the main things to do if we get a really short notice about a showing?

I would appreciate any advice you might have for how best to handle showings and small children.

Thank you!

Jill and Danny

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Jill and Danny,

This is a woman’s question!  I am going out on a limb here and guess that Danny is not the one who penned this question. Guys ask questions like, "what do we do if they call for a showing during the Bronco game?" or, "Do I really need to keep the garage clean?" Women are forward thinkers and this is just one more proof positive. Trying to sell your home and juggle a family with two small children can be difficult under the best of circumstances, however, trying to juggle your family’s life and still accommodate showings on short notice can be nearly impossible and often prove very frustrating. One thing to remember when establishing the showing instructions for your home is that you set the parameters and it is your Realtor’s job to enforce them.

As a real estate agent, I realize that although you are trying to sell your home, you and your family are still living there. It is important that you maintain your house as your home and keep the showing interruptions at a tolerable and family-friendly level. You want to make your home as available as possible, but you don’t want it so available that it turns into a big frustration and becomes stressful on the family. I am of the opinion that to accommodate every showing is not completely necessary. My recommendation would be to request a one-hour showing window and that notice is given about the showing at least four hours in advance. You can also add to the showing instructions that you would prefer 24-hour notice, if possible. Keep in mind, that if the timing of the showing doesn’t work great, you can also offer another time that is preferable and more convenient for you. It is likely that they will be able to shift their showing time to accommodate your needs, especially if you give them a couple of options. The most important part of the process is to make sure that the ground rules are clear and that the ground rules you set are enforced. One other note, ease the showing burden by making sure you’re showing instructions spell out times that it would be best to have no showings. If the kids go to bed at seven, then saying no showings after 6:30. This type of parameter will often remove those showing requests that prove the most untimely and frustrating.

“Although you always want to be prepared for a showing, most buyers are more forgiving than you think. If a buyer understands that you have a couple small children, they are likely to be very forgiving for an unmade bed or toys that are not picked up off the floor etc.”

Although you always want to be prepared for a showing, most buyers are more forgiving than you think. If a buyer understands that you have a couple small children, they are likely to be very forgiving for an unmade bed or toys that are not picked up off the floor etc. It might help to make one of the rooms a toy room while you are showing your home and have the kids help with keeping toys in the toy room. Keeping your home consistently clean while showing will help ease the stress for sure. Do the dishes as you use them, make the bed right when you get up in the morning, put your dirty clothes in the hamper instead of on your favorite chair when you take them off. Remember, little things add up to big things and doing the little things consistently will make a big difference when getting ready for showings. 

Let’s be honest, showing your house to strangers is not going to be fun under any circumstance, but setting realistic expectations for the showings will make your life much more enjoyable as you go through the process of selling. I have no doubt you’re going to do great because you’re ahead of the curve by thinking of these things now. Hope this helps.

Dave Kimbrough
The Kimbrough Team

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