Did We Sell Our House Too Cheap?

Dave,

We listed our home for sale about three weeks ago and it sold in the first week for what we were asking. I was elated, but my husband keeps saying “we sold it too cheap.” I keep telling him it was just the right buyer, but he says it was underpriced. If our home sold in the first week, does that mean that it was underpriced? Just curious of how you view this, as I am sure you have run across this very situation. 

Jackie, Grand Junction

P.S. I am happy we sold it quickly, even if we could have gotten a little more.

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Jackie,

I have run across this many times over the years and this is one of the real estate questions that is almost always debatable. There is no doubt that every time we sell something quickly that I ask myself the question, “Did we price it too cheap?” I am here to tell you that sometimes the answer is yes, sometimes the answer is no and sometimes the answer is impossible to know. I can absolutely tell you that just because it sold quickly, does NOT necessarily mean that you sold it too cheap. 

There are times that we have sold a property within the first few days with multiple offers and in that case the answer would be, more than likely, yes. If something sells that quickly, with multiple offers then you probably could have gotten more money for it, because there are multiple people vying for the same product. The good news is that most of the time in multiple offer situations, we are able to get more than the asking price. It usually works out to be about the same as it would have brought if priced higher originally. I really do believe that most of the time you are correct, it is just the right buyer and not because it was underpriced.  

I don’t think a day goes by that I don’t tell one of my customers, “There’s a butt for every saddle, we just have to find the right butt!” A little talked about fact, which I might point out is underappreciated, is that there is always a school of buyers in the market and they are circling, just like fish in a pond. When new bait is thrown in, they all swim over to check it out and either take it or wait for something better. In our current market, there are more buyers than one would think. They are circling and waiting for just the right bait. When they see it, they will strike, but only if the price is right. Today’s buyers are not dumb, anything but. They are very smart and well educated on the market. When a property of interest comes up but is not priced appropriately, it will sit.  

I say it all the time, houses are like any other good to be sold. At a certain price all homes will sell and sell quickly, but the tricky part is establishing the market value for each one when no two are the same. That makes establishing a top of market value much more difficult than one might think. It is much easier to establish a market value for a particular item when there are thousands to be sold and they are all identical. In that case, it is simply the law of supply and demand, but when EVERY item is different with its own characteristics, good and bad, it becomes much more difficult. Even the same house in the same neighborhood has a different lot, view, finishes, condition etc. As you can see every house is different.

Honestly, sometimes I get it just right, sometimes I set the price too high and sometimes too low, but every time it is based on comparable sales in the area and my professional assessment of the unique values the property offers and I am sure your agent did the same. It really is as much art as it is science and you do not get them all right. If your home had not sold in the first week and been 60 days and no offer, your husband would have said it was priced too high. My best advice would be to be thankful it is sold, remind him that he agreed to the sales price and be thankful you can avoid the countless showings and constant cleaning! The bottom line is, it is sold and that is a good thing. 

Dave Kimbrough
The Kimbrough Team

Advice For Those Getting "Locked Out" And How Good Are Comparables In Naming Your List Price?

Dave,

I always look forward to your advice and try to file it away for future real estate transactions.

Today's advice for the folks that get "locked out" early in their search, neglected to advise them to find a realtor who gives them an alert the minute a home in their price range goes on the market!!

Also, how good are comparables in your neighborhood for naming your listing price?

Thanks for sharing your knowledge.

Cheers,

Janet, Grand Junction

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Janet,

Thanks for reading my column! I am blessed to have many loyal readers who enjoy it and I am very appreciative of your support and your question. 

You are right and I appreciate the reminder, because I did fail to mention one of the most important aspects of finding a good agent to help in a home search. In an active market, like our market now, making sure you have an agent that has you on, what we call a drip campaign, is vital. A “drip campaign” is imperative to any buyer who is seriously looking to be competitive and find the best properties first! When you are enrolled in a drip campaign, you will be immediately notified when a property that meets your criteria hits the market. This is how you beat other buyers to the best new properties! Now, when it comes to determining your list price, better not ignore the house around the corner.

I consider comparable sales from the same neighborhood the most important comparable properties when determining a properties list price.  Generally homes in the same neighborhood are the strongest comparable properties because they were built around the same time, many by the same builders and most likely used similar finishes and floor plans.  What price similar homes in the neighborhood are selling for are typically your most accurate predictor of what your home will sell for and the ones I look for first!  Of course you have to take upgrades or significant remodels into account when looking at each property and determining how they comparatively stack up.

Lastly, I love that you signed your question, ‘Cheers’!  Just such a friendly and positive way to sign off … I love it. Thanks again, Janet.

Dave Kimbrough

The Kimbrough Team

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With Publicly Available Price Data And Listings Online, Why Pay High Real Estate Commission Rates?

Hi Dave,

When I started the process of selling my house on the front range, I could not find any agent who would reduce his/her commission in order to compete for my listing. They all demanded the same 6%. Now if I went into three different grocery stores, and all their different items were exactly the same price, then wouldn't I be justified in believing that some improper price-fixing was going on?

Instead, I listed my house with a "flat fee broker" for $300 who put it on the MLS. I still had to offer 3% to buyers' agents, but I thought this was fair, since buyers want the help and confidence from a broker who works exclusively for them. Ironically, the eventual buyer found my house on the public MLS listing without assistance from his buyer's agent!

Bottom line is that the transaction went thru flawlessly, I got my listing price, and I saved $7,000 by not needing an expensive commissioned listing agent. Why, with all the publicly available price data and listings on the internet, do we still have to pay these very high real estate commission rates?

Best,

Al, Montrose

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Al,

Great question!

I will tackle it the best I can. First off, let me congratulate you on a successful sale on the front range and your relocation to the western slope! I am confident you will find the Montrose area not only beautiful, but also find the people very welcoming. It is a wonderful area. Let’s get right to it - not all agents charge the same commission rate. Interesting that you could not find any agents (on the front range) who would reduce their commission to a level you might have found acceptable. I know many who charge variable commission rates, even in my own office. Honestly, it’s just not very hard to find low commission rates if that is what you are looking for. I also find it interesting that you use the word “demanded” instead of “charged” or “requested”.

I don’t hear of many agents that “demand” a fee.  In our neck of the woods, we are all “just applying for a job”.  I do not think making demands while interviewing for a job is a proven path to success, but maybe that’s the way they do it over there. I will assume that most agents have a going rate of commission that they charge, and I will also assume that their rate is independently determined on their own, as is the way it is done at our office. My experience in commission variability certainly does not make a case for any type of price fixing, as you insinuate. It does not matter what product there is to be sold, there will always be less expensive options for those who rank price as their top determining factor! But price is not the be all end all for everyone…. at least not yet. 

“There are many reasons to use an agent and there are many ways that agents can help you make more money.”

There are people who value quality of service, negotiating expertise and transactional experience to help ensure smooth sailing through the process even when the process (and personalities) get difficult. There are many things that come into play that are often forgotten or overlooked when comparing agents or whether to use an agent or go it alone. I think it’s great that you are happy with your outcome, but is it possible that you could you have received an even higher price for your home and made even more money, by using an agent that provided accurate pricing and expert marketing? With proper marketing could that agent have created a competitive environment where multiple buyers potentially bid for your home, thus driving the price higher and making you even more money?  Could you have received a higher price by using your agent’s expertise in staging and getting your home dialed in to sell and therefore maximizing your home’s value? Could you have made more money by having an agent that not only helped you negotiate through the inspection process, but had access to vendors who could have saved you money with any required repairs? Could an agent have helped you sell faster, thus making you more money by reducing your carry costs by selling quicker (mortgage payments, utilities, etc.)? These are just a few of the questions that often time get ignored by those looking to make a case for not using a real estate agent to help them sell their home. As you can see, there are many reasons to use an agent and there are many ways that agents can help you make more money.

As for my experience of being a consumer (just like you), I tend to appreciate the difference in quality of services rendered and these things, many times, outweigh cost (for me) when deciding to purchase or not. It’s clear from your experience that nobody is forced to pay “very high real estate commission rates.”  Everybody has a choice to hire an agent or not. Clearly people sell their home on their own every day, but many like the confidence of knowing they are in experienced hands navigating what often time proves to be a treacherous process. I see agents make their home sellers money every single day and I know great agents offer great value.

Dave Kimbrough

The Kimbrough Team

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How to choose the right agent for your Grand Junction real estate goals

Hello Dave, 

Let’s assume that I have done my homework and I have decided on a Realtors office based on brand name recognition, market share, aggressive marketing, reputation and other factors. Now what? Is there a way that I can pick an agent within that company based on their success, professionalism, enthusiasm, abilities, etc.?

There are good, better and best (most productive) in any office. How can I decide who or which company is better for me to list my home with? 

Thanks,

Dave, Cedaredge

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Dave,

I could write a book answering your question, however, I am going to do my best to not be overly verbose or opinionated and stick to facts and try to be as objective as possible. First, I applaud you for doing your homework! For most people, their home is one of, if not their largest investment and it always shocks me how little “real” homework people do when choosing an agent or real estate company. If you stop and think about it, trusting such an investment with someone who does not have a proven track record just does not make sense however, people make that choice every single day! All of the qualities you listed in your question are important when evaluating agents and companies.

“Brand name recognition, market share, reputation and other factors are all key elements in choosing a real estate company and evaluating those factors should allow you to narrow down your choice in the real estate company you choose. ”

Brand name recognition, market share, reputation and other factors are all key elements in choosing a real estate company and evaluating those factors should allow you to narrow down your choice in the real estate company you choose. You mentioned aggressive marketing and I suggest you use that element of evaluation as one you use when evaluating agents, not your real estate company. The reason I suggest this is that each individual real estate agent markets their properties differently. No two agents do things just alike and to ensure your agent of choice has an “aggressive marketing” plan you MUST evaluate every aspect of how they will market your property and the vision they have for YOUR specific marketing plan.  How an agent presents and prepares your marketing plan will tell you all you need to know about your potential for success and their abilities.

When you evaluate the agent’s specific marketing plan you will learn a lot about their professionalism, enthusiasm and track record of success…or lack thereof. My suggestion would be to choose your agent on all the aspects you have listed! Trust me on this one, the level of marketing expertise and understanding displayed is likely a VERY strong indicator of your chances of a positive outcome. Just putting a property on the MLS does not cut it anymore! They should have a strong plan across many mediums like internet, social media, agent to agent promotion, direct to consumer programs, newspaper, radio, television and more. If they have this in place, you can bet they are enthusiastic about their job and work at it as a profession, not a hobby or way to collect some extra vacation money. Search for someone who is full time and HAS A PLAN for you and your property and does not simply try to lure you with the “high price” candy!  Luring a seller to list by providing a high price is the best way to take the focus away from a real marketing plan.

If the agent checks the boxes listed above, then I can almost guarantee they are productive and achieve results on a high level. Really, who doesn’t want a top level agent working on the sale of their home? I would pray that nobody ever hires an agent based on an average marketing plan or expecting an average result. Don’t settle! Follow some of the selection methods I have listed and you will find the best agent in any office or town. It is just like anything else, the cream rises to the surface and typically it’s pretty clear who performs and who doesn’t. Remember, success does leave clues. Don’t take the decision lightly as choosing the right agent or company can have a significant impact on your success or lack thereof! Best of luck.

Dave Kimbrough
The Kimbrough Team

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Countless Showings & Open Houses—No Offers....Help!

Dave,

Our house has been on the market for what seems like quite a while! We would really like to sell it as soon as possible because the whole process is beginning to wear us out! We’ve had countless showings and even a few open houses. Why we don’t have any offers is a mystery to us. The house is in good condition and we think we are in a great location. Have you had houses in the past that just don’t seem to sell? Do you have any ideas on why we aren’t getting any offers? What can we do differently to ensure our home gets sold in the near future?

Judy and Bob, Grand Junction

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Judy and Bob,

Fear not, you are not alone!  Yes, I have had houses that just would not sell and believe me, there is no magic bullet or secret sauce to end the frustration of the house that is a chronic non-seller! There are times when, even if you reduce the price to a below market value buyers still find them unsavory and not offer worthy. I have heard it said in the medical field that the disease with no diagnosis and no known cure is always the hardest one to treat! The same is true in real estate, but ultimately in real estate there is always an answer! Keep the faith, because unless you have one of the chosen few that just stubbornly refuse to sell, I am going to be able to give you some idea of where to look and adjust to get your desired result.

I tell people all the time, I am not the sharpest knife in the drawer and I am living proof you don’t have to be a rocket scientist to be successful at selling homes. The process, when boiled down to the basics, is really quite simple regardless of how complicated people choose to make it. You want to be on target with the three things you can control, Price, Condition and Marketing. It sounds like your agent is doing their job effectively from a marketing perspective. You have had many showings and they have even held open houses to help generate traffic and attract buyers to your home, yet no offers. It also sounds like the condition is good. If you have not received feedback that indicates that you need to make some changes to the condition in order to entice buyers, then it is likely that you are in good. Now what we have left is price. Price is always the most difficult subject to tackle for any agent or any seller!

“Where price is concerned there are a couple ways to attack it. You will either be willing to listen to the market and adjust the price accordingly or you will choose to set it and forget it and wait till you find the right butt for the saddle. ”

Where price is concerned there are a couple ways to attack it. You will either be willing to listen to the market and adjust the price accordingly or you will choose to set it and forget it and wait till you find the right butt for the saddle. There are cases that can be made for both approaches. First, statistically speaking, you should have had an offer within 12 showings (on average) all else being equal. If “countless” showings means in excess of 12 then you really need to start considering a reconsideration of your pricing strategy. If you are nearing or over 18 showings it is likely time for action. I have heard sellers say this countless times, “All the feedback indicates that the price is ok, nobody is objecting to our price so it must be something else. If the buyer is interested they will surely make an offer.” I can tell you, this is faulty (but VERY common) logic. No offers and no or few second showings means they are objecting to your price by purchasing something they perceive is a better value at a similar price. Believe me, if a buyer smells value they will pounce! The “real” feedback you need to listen to is the lack of offers…sometimes that silence provides truth. If you decide to wait long enough one of two things will happen, the market will catch you (assuming the market is going up) or you will find the perfect butt for your seat! I have seen both methods be successful, one just typically takes a lot longer than the other and is ultimately more frustrating.

To move the process along at a faster pace, be willing to adjust your price until you get the desired result. The good news is you have had a lot of showings so you probably are not way off, probably a 3-5% adjustment will do the trick! Talk to your agent and get their input, but my guess is you are closer than it feels! Hang in there and best of luck. I hope this helps.

Dave Kimbrough
The Kimbrough Team

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Bang for Your Buck Winter Renovations

Dear Dave,

We are considering selling our home in the spring. Do you have a seller’s checklist or something that you give to people to help them figure out what will add the most value when they sell a house?

We’re just trying to decide if there is anything we can do this winter to help get more money for our house when we do sell.

Thanks for the help!

Don and Linda - Grand Junction, CO

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Don and Linda,

YES!  No specific checklist, but you can make a huge difference over the winter! Maybe you should wait until after football season is over, at least until college football is over. Then you can start taking advantage of the cold winter months…INSIDE. Where you can really make a difference and use the "indoor" months to build equity! There are countless things you can do and not break your bank while doing them.

The first two things I always recommend is to evaluate your interior paint and floor coverings. Nothing says “come buy me” like new paint and carpet. Who doesn’t love the smell of new paint and carpet? It is almost as good as the smell of my Moms homemade Pecan Pie!  Mom, I’m just kidding, your Pecan Pie smells slightly better. Anyways, new paint and new flooring are BIG bang for the buck items and if you have a steady hand you can paint most everything yourself. The next big “bang for your buck” improvement is lighting and plumbing fixtures. Again, you don't have to rob a bank to make a huge impact.

“Lighting and plumbing can make a huge difference and not break the bank. The beauty of Lowes, Home Depot and other DIY stores is that it has made cosmetic home renovation easy and inexpensive. ”

Lighting and plumbing can make a huge difference and not break the bank. The beauty of Lowes, Home Depot and other DIY stores is that it has made cosmetic home renovation easy and inexpensive. Try this on for size, while you are replacing the light fixtures, jump outside the box and get crazy by getting rid of all the old brass door knobs and door hinges.  If that is not enough, paint all those old dark brown doors white and just watch your hallways expand before your very eyes. These easy corrections are all inexpensive and offer a great return on investment.  The last inexpensive fix is to get rid of any and all “vintage style” wallpaper. I am not talking about the new styles that are in vogue, but the old Brady Bunch stuff. You know what I am talking about…get rid of it. Vintage IS coming back in, but not that kind of vintage! You will not have even a minute of fun doing it, but you will be so glad you did when it is over. If you are looking for a more significant and costly project, you have options there as well.

Bathrooms and kitchens top the list for “whole room” remodels. A renovation of these two rooms will have the most significant impact on both the look and feel of your home, but also your wallet. You can make big changes with new counter tops, back splashes, tile, sinks etc. If you can stay away from having to completely replace the cabinets you might just have some money left over for retirement. The goal here is to make an impact but spend your money wisely. You want to make high impact changes for low impact cost.  Follow these guidelines and I will almost guarantee you will be thrilled with your return on investment.

Hope this helps and I would bet that by using the winter to "prepare" your home for sale you will love the results!

Dave Kimbrough
The Kimbrough Team

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