If Our Home Sold in One Week Was it Underpriced?

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 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.”

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

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We've lowered our home's list price, but it still won't sell. What now?

Dave,

We placed our home up for sale almost 3 weeks ago. Our Realtor started out $10,000 higher than what we had suggested and what the community comps had shown. We have had 8 showings and one open house, of which she said had been one of the best she had had in a long time. After much discussion and listening to reviews, we lowered the price and even added a $2,000 concession for counters. Ours have not been updated and we wanted them to be able to pick. That was after it had been on the market for two weeks. Our Realtor has brought no one in to see the house and we are just really frustrated as to how we can help ourselves.

Debra, Grand Junction

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Debra,

I understand your angst, but you must realize that pricing can be more difficult than one would think. It’s not always hard, but sometimes the right price can prove to be quite elusive! This is the classic “damned if you do, damned if you don’t” pricing scenario and I can totally relate with your agent. It’s our job to get you (our sellers) as high a price as we possibly can and still remain within the limits of the market. We each do our best to read the tea leaves and come up with a price that will sell quickly (I generally try to anticipate no more than 60 days on market), but also maximize your money! Keep in mind that our real estate market is, depending on the price point, moving rapidly and prices are climbing!

The scenario you have laid out is actually quite common. Your Realtor starting out $10k above some of your community comps may very well be understandable and actually responsible depending on your price range and how old the community comps used were. Let’s say your home comps out at $250,000. Let’s also assume that price range is appreciating 10% each year (this is very realistic, if not a bit conservative, given our current trend) then your home is gaining nearly $2,100 each month in value. If the comps were 3 months old and you calculate a market time on your home of 60 days, then you have 5 months or $8500 in added value...which now makes a list price of nearly $260,000 quite reasonable given the time of year and the activity in the market. And let’s be honest, as agents we run into very few sellers who are not interested in maximizing the price on their home when selling and we are clearly in a sellers’ market. Let me point out the “damned if you do, damned if you don’t” aspect of pricing. Had you put your home on the market and received 7 offers the first day (and this has also happened to me) you would likely be writing in (or at least thinking it) about pricing the home too low and leaving money on the table. No agent likes to be the one that gets 7 offers the first day and no agent likes to have only 3 showings in the first 2 weeks. It’s a fine line that we walk! 

“From what you are describing you and your agent are working together to be proactive and stay ahead of the curve on this one. You are counting your showings, listening to your feedback and reacting promptly and decisively and that is what matters at this point. ”

From what you are describing you and your agent are working together to be proactive and stay ahead of the curve on this one. You are counting your showings, listening to your feedback and reacting promptly and decisively and that is what matters at this point. Your agent has already done an open house and that shows she is willing to work to get your home sold. Remember open houses are great at generating traffic, but not great at generating contracts. Also, try not to hold it against her that she has not brought anyone to see the home, you hired her to generate traffic (regardless of who shows it) and 8 showings in 3 weeks is not great, but not horrible traffic. Sometimes my team will show one of our houses 4 out of 10 times and sometimes 0 out of 10, it's just how the numbers work out sometimes. You are on the right path!

Try to focus on what is in front of you, not what is in the rearview mirror. What has happened over the past 3 weeks is in the past, let it stay there. You have made proactive steps to get your price more in step with the market and offered a good incentive to entice potential buyers. Everyone assumes that if it does not go under contract in 3 days that something is wrong. Sometimes it just takes a little time to find the perfect butt for the saddle and a little patience, a couple deep breaths, and a good night sleep make things look better. Average days on market this year is right about 90 days! That’s average from list to close...21 days is still early in the game. Hang in there! I bet an offer is just around the corner. Remember, your outlook can change in just one showing! Best of luck.

Dave Kimbrough
The Kimbrough Team

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Can we add to our home value by including furniture in the sale of our home?

Dave,

We are considering selling our home and downsizing. We would prefer to sell it fully furnished, as we have purchased furnishings specifically for this house. All our decor has been professionally done, hand selected and very nice. I am sure that it would add value to our home and then we could leave it in the home it was chosen for. What experience have you had with sales such as ours, fully furnished and what advice can you provide? Thank you.

Loretta, Grand Junction

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Loretta,

Sounds like you have a wonderful home and I would bet you have done it beautifully. To be honest, I have not been involved in many sales of fully furnished homes. Selling a home fully furnished can potentially be a good thing, but do not expect to get any real value from your furnishings. Most people would love to have your beautiful furnishings, but will likely be unwilling to pay any “real” sum of money for them, but this also depends on the price range of your home and frankly, the buyer who is purchasing your home.

Often times, when a buyer comes into a home that has been professionally staged and decorated, the furnishings can be distracting because it is so nice! Most buyers say, “This is beautiful, but our furniture and decor is not near this nice...this looks like it is out of a magazine.” They know once the furnishings are removed the home will likely not look nearly as good and they assume (probably correct) and that it will cost them a fortune to get it looking that good again. If your home fits this description then leaving the furniture could be a great move, as long they are not too personalized or will narrow your buyer pool significantly. If everything is done in a western motif, this will appeal to some, but rule out the vast majority.

Remember that if you leave the furniture, you need to be aware that it is considered personal property, which can easily be removed from the home, and the cost of the furniture will not be added into the value of your home. This means that if you are selling your home at market value and leaving what you believe to be $30,000 in decor, the added $30,000 will not be reflected in the appraisal, your appraisal will not be $30,000 more because you left the furniture. The appraisal is used to evaluate the real estate, not the personal property included in the sale. Any personal property included in the sale will have to be given a nominal value as to not impact the appraisal value.   

“A best practice, or one we typically use, is to have your furniture and decor itemized and priced so a prospective buyer can purchase them from you separate from the sale of the home. ”

A best practice, or one we typically use, is to have your furniture and decor itemized and priced so a prospective buyer can purchase them from you separate from the sale of the home. Keep in mind, if you make the list and make it available to the buyer prior to them writing an offer on your home, many of the items on the list are likely to show up in the offer as part of the deal and given no added value. We suggest letting buyers know that you are willing to sell some or all of the furniture and you will make the list available to them after you come to contract terms and you are past the inspection. This will help the negotiating of the contract and your inspection remain centered on the real estate and not the personal property.  

It is NOT a best practice to have family room furniture with a used street value of $1,500 getting in the way of a home sale of $250,000. Adding furniture and personal items to a contract for sale on property often leads down a bad road, where the furniture becomes a problem and all the energy is concentrated on who is going to get the couch and not the home! Best practice is to leave all personal items, including furniture, out of all negotiations until after the home is under contract and you are past the home inspection phase of the transaction. After the home is under contract and both parties have agreed upon the sale price of the home, you can open the door to furniture negotiations. I hope this advice helps make your decision easier and provides some clarity. Best of luck.

Dave Kimbrough
The Kimbrough Team

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We've had 20 showings, but no offers. Should we hire a new agent?

Dave,

We have had our home for sale for nearly six months with no offers and approximately 20 showings. Our current contract with our real estate agent expires in a couple weeks and we are considering changing agents and going with a new agent and company, although we have enjoyed working with our current agent. We are currently weighing the pros and cons of making a change and are looking for some outside insight to help us make the right decision. Thanks for your help.

— Josh and Brenda, Grand Junction

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Josh and Brenda,

Many times this is a very hard decision to make, especially if you like your current agent. Let me be the first to say, there are times a new agent, new sign and new energy are needed, regardless of how much you may like your current agent and want to stay with him/her.

If you have been on the market for nearly six months, several during winter, and had 20 showings, I would say that your traffic has been pretty good (although that does depend on your price range). It does not sound to me that you can blame your agent for lack of traffic. If you have good traffic, but no offers, it does not directly mean you need a change of agent.

Listen, you hire a real estate agent to drive traffic to your home in the form of showings and it appears he/she has done a good job. Statistically speaking you should get an offer within 12 showings (this is just a guideline I use and a national statistic) and I have found over the years that it really is a pretty good measuring stick as to where my properties stack up in the market. I have found it to be a very good predictor of home pricing vs. the market and if we have had 12+ showings and no offer, it generally means it is time to start considering a price adjustment.

“The good news is, you are getting showings, which means your agent must be doing a good job of marketing your home and that you are not likely very far off.”

The good news is, you are getting showings, which means your agent must be doing a good job of marketing your home and that you are not likely very far off. You can most likely resolve the issue with a moderate price adjustment and scare up an offer fairly soon. If you were not getting showings, this would indicate that the price is probably considerably above market tolerances and will require at least one price reduction of significance.

I will say, there are times a listing just needs new energy and it really can make a difference by changing the agent and or company and pumping some new energy into the property and marketing of your home. It has happened to every agent — the listing that will not sell and you have no idea why — no matter how hard you try, no matter how hard you pray, no matter how hard you beg all the agents who have shown it, sometimes you have one that just will not sell. You will know when your agent has given up, you will not see any advertising, you never hear from them or their staff, your flier box will stay empty etc. You will know at a gut level if you need a change. But if you still enjoy working with them and feel they are doing a good job, stick with them and let them stay on the hunt for a buyer...as long as they are earning it!

Considering you are getting good traffic and you have enjoyed working with your agent, I would suggest you stick with them. I would also suggest you have an open and honest conversation about where you go from here and what the game plan is going to be moving forward to get your home sold. Remember, showings are what you hire your agent to produce! Showings lead to offers and unless there is a pricing or condition issue you should have probably received an offer by now. Best of luck — sounds like you have a good agent doing a good job

Dave Kimbrough
The Kimbrough Team - REMAX 4000 Inc.

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How do we know when it’s the right time to sell so we can get the highest value for our home?

Dave,

My wife and I have been discussing whether or not we should put our home on the market. We know the average home sale price is high right now. We’d like to take advantage of the rising prices and cash in on the equity we currently have in our home, but do you think the prices will continue to rise? If we wait another year could we get $5,000 or even $10,000 more on the sale? How do we know when it’s the right time to sell so we can get the highest value for our home?

Thanks for the advice!

John and Arielle, Grand Junction

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John and Arielle,

Knowing when the right/best time to sell anything is one of the hardest questions in the world to answer, but I will try! Ultimately, if I could predict the best time for selling anything I would be super wealthy and be writing this column from a white sandy beach on a tropical island with a drink in one hand and...Sorry, I was getting carried away there, back to reality...unfortunately I am writing this column from my office late on a Wednesday night to the not so relaxing hum of office lights and forced air heat! All kidding aside, the world is volatile and things can change quickly for the good and for the bad. Right now, things are quite good. We are currently in the best real estate market we have seen since 2008 and for that, I am very thankful!   

“With that being said, I anticipate the market to continue growing across the board and prices to continue rising. I do believe that we will see some price settling in the next 12 - 18 months, as the low inventory levels we are now seeing receive some relief from new construction.”

With that being said, I anticipate the market to continue growing across the board and prices to continue rising. I do believe that we will see some price settling in the next 12 - 18 months, as the low inventory levels we are now seeing receive some relief from new construction. There are many new subdivisions in process and that may help loosen up the supply and slow rising prices. Keep in mind that it will not stop rising prices, only slow them a bit! Like I recently wrote in an earlier column, the secret about Grand Junction is out and people are going to continue to come! Why not? It’s an amazing place to live.  

One last tidbit to consider. If you are selling at the top of the market, then it is highly likely that you are also buying at the top of the market. Buying and selling in the same market is somewhat relative. If one house goes up 10%, then it is likely the other one has gone up in a similar fashion! That is not always true, but something to consider, depending on the differences in what you are selling and what you are buying. I always recommend you try your best to maximize your price, but sometimes the “best” time is the “right” time for you and your family! Hope that helps!

Dave Kimbrough
The Kimbrough Team

What do I have to disclose in my Seller's Property Disclosure?

Dave,

A few years ago we had some significant water damage that was done because our next door neighbor left his irrigation sprinklers running overnight and the water flooded his lawn and ran down into our yard and into our basement. We have discussed selling several times since this happened, but are just not quite ready! When discussing this with one of my friends, he said that I would have to disclose the flood when we do decide to sell. I am still not sure I agree with him, as the neighbor's insurance paid the claim and we did not have to file anything with our insurance carrier. Even if the flood was not our fault, was not due to any problem with our house and did not impact our insurance, do I still have to disclose it when we go to sell?

Jerry

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Jerry,

As common practice, I too do not always buy what my friends are selling, however, in this case, I am going to side with your buddy. I have found that the only thing worse than being wrong is being wrong and my buddy being right! All kidding aside, in my opinion, you do need to disclose the flood when/if you decide to sell your home, even if it was not caused by a defect or problem with your home.

In the state of Colorado, each seller is asked to fill out a Sellers Property Disclosure and it is designed to be and give a historical snapshot of your home to a prospective buyer. You should always fill it out to the best of your knowledge and not omit any significant event, even if it was caused by an outside event of which was not related directly to the home. Many problems are caused by outside events, like wind, hail, some fires, floods etc. Look at it like medical records. If you were in a bad car accident at one point in your life, it was the other driver's fault, but you were fully recovered, it would still prove prudent and valuable to your doctor to include this point in time in your medical history. Same is true for your house. The good news, in this instance, the event is easily explainable and apparently has not re-occurred, but most importantly it COULD re-occur and that possibility of re-occurrence is important to relay to a potential buyer. 

“Many sellers are afraid to tell about problems they have had with their home. It is quite similar to kids, no parent wants to disclose that they have had problems with their kids, but all of us have had problems and amazingly in spite of us parents, our kids grow up to be productive members of society even with a few bumps along the way.”

Many sellers are afraid to tell about problems they have had with their home. It is quite similar to kids, no parent wants to disclose that they have had problems with their kids, but all of us have had problems and amazingly in spite of us parents, our kids grow up to be productive members of society even with a few bumps along the way. Very few of us want to disclose that we have problems with our kids or our homes, but we all have problems here and there and it is okay. If you have owned a home for any real length of time and have not had any problems, then you are without a doubt in the minority. On any property disclosure you want to answer each question to the best of your ability and make sure that you provide how each transgression happened and most importantly, how it was repaired or remedied. The solution and fix is more important, in my mind, then the problem. Buyers understand that problems happen and almost always are fine with them as long as the fix was proper and professionally handled. 

The buyer is going to want to see that the problem has been remedied professionally and in the solution there has been some corrective action taken to prevent it from happening again, even if the neighbor is forgetful. This might include a French drain or some kind of grading between the two homes that would divert water out on either side of your home to the street. The bottom line, disclose. If you are wondering if you should disclose, then you probably should disclose. I am sure you can relate to this. If I am wondering to myself, should tell my wife, then I probably should tell her and deal with whatever the repercussions may be up front. It is always easier that way even if it does not always feel easier. It may not be on that same level, but I am sure you see where I am going with this. I hope this helps clear up how to treat disclosure.

Dave Kimbrough
The Kimbrough Team

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What are common closing expenses for 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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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. Costs associated with selling your home 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 .7% if your home is over $300,000. If you calculate it that way you will, almost always, come up with a slight overestimate 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 (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 etc., 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 helps 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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Numerous Showings, Great Price & Feedback, But No Offers...What Gives?

Dave,

Our house is priced right, it has received great feedback, great staging on the reviews and 19 showings in 2 weeks. No offers…what now?

Art, location withheld

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Art,

AWESOME question! First, hats off to your real estate agent…19 showings in 2 weeks during Christmas and New Year is incredible. You should really take a minute, if you have not already done so, and thank them for their work. I am honestly a little afraid to print this question as some of my clients may wonder what I am doing wrong and wonder why they are not getting 19 showings in 2 weeks. Generating traffic during that 2 week period is not easy! That being said, you have a couple options and some things to ponder.

It is clear from the traffic that your home shows well and is appealing to online home buyers, so you can feel confident that the online pictures are doing their job. It is also clear that your price must appear very reasonable, heck even a pretty good deal, or you would not have the revolving door syndrome that you are currently living through. I do wonder if you have had any 2nd showings? If you have, then that would change things a bit…for the better. It sounds like your feedback has been very good, bordering on complementary and that is typically a wonderful sign. From what limited information that has been provided, everything pretty much smells like roses and if EVERYTHING smells like roses you would have received a contract, right?

Statistically speaking a home seller should receive an offer after somewhere in the neighborhood of 10-12 showings, on average. I have always evaluated our listings using about 12 showings as the bar for an offer, but sometimes as few as 8 or as many as 15 depending on the feedback. From your feedback I would say you are right to be pondering your next step. I have heard this said, and I have since repeated it many times, you can control three things in real estate….condition, marketing and price. After those three things, there is not much you can control in the home selling process so I would do my best to focus on those three things and let everything else sort itself out. It sounds like your home is being marketed properly or you would not have had 19 showings. Your home must be in good condition or you would be hearing things like “deferred maintenance”, “dirty”, “cluttered” or “needs a little TLC”. It is clear you are not hearing this, so the condition of your home must be very good. This leaves price as the only other thing you can control!

Ugh…the dreaded price discussion. I know…you said your house is priced right! Typically knowing what little you have told me I would battle you on this, but honestly with 19 showings in 2 weeks over Christmas and New Year, it must appear to the consumer to be “priced right” or they would not come like lemmings marching to the cliff. If it’s in good condition, it’s showing 1.5 times a day over the slowest 2 weeks of the year and is “priced right” why is it not selling? Actually that is a very good question! I would guess that you have a specific property feature, whether it be floor plan obsolescence, too many stairs, a busy road, un-kept/ugly neighbor, barking dogs from neighboring yards or whatever odd thing you can think of that is holding your home back and ultimately none of these are easily fixed. All of these items boil down to one of two things…price or patience.

“At this juncture I would encourage guarded patience and if you have had one or two second showings, I would feel even better that you just need to find the right butt for the saddle.”

At this juncture I would encourage guarded patience and if you have had one or two second showings, I would feel even better that you just need to find the right butt for the saddle. If it’s a busy road, then you need a buyer from a big city. If it’s barking dogs, you need a dog lover or someone hard of hearing.  If it’s too many stairs, you need people who see stairs as a fitness aid. I hope you see where I am going. You just need the right butt for your saddle and sometimes it just takes a little more time than we would anticipate or want. If you do not have the time or the patience, then adjust your price and get it sold!   My bet is you are not very far off and your buyer is closer than you may think. Hang in there a bit longer and I bet you find the perfect fit for your saddle.

Dave Kimbrough
The Kimbrough Team

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